While sustainable investing is a trend that continues to gain traction across the globe, South African investors appear to have a particularly heightened awareness of sustainability. This is according to the Schroders Global Investor Study 2018, a survey conducted by global asset management firm, Schroders, of over 22,000 wealth investors* across 30 countries.
The study found that over half (55%) of South African investors said that they often invest in sustainable funds rather than funds that don’t consider sustainability factors – 13% more than the global average – and that sustainable investments represented close to half (45%) of South Africans’ investment portfolios – 8% more than the global average.
Jessica Ground, Global Head of Stewardship at Schroders, says that this survey underlines the rapid growth of interest in sustainable investing globally, but especially in South Africa. “The study confirmed that 88% of South African investors indicated that sustainable investing is more important to them now than it was five years ago, compared with 76% of investors globally stating that investing sustainably has increased in importance to them over the same timeframe.
“This increased importance was evident in terms of asset allocation, with over three-quarters (76%) of South African investors having increased their allocation to sustainable investments over the past five years, compared to a global average of 64%,”
Ground adds that younger people – particularly the demographics which largely comprise of ‘Millennials’ – are more likely to have increased their exposures to sustainable investments over the last five years, with 71% of 18-24 year-olds and 75% of 25-34 year-olds having increased them globally. “This proportion consistently drops for older age groups, culminating in 43% of investors aged 65+ having done so.
“Younger people also said they allocate a larger proportion of their portfolios towards sustainable investment funds with 18-24 year-olds investing 43% of their funds in this manner, compared with 33% for the portfolios of 45-54 year-olds,” she says, referring to the graph below.
Another interesting finding, says Ground, is that investors who consider themselves to have a higher investment knowledge are more likely to invest sustainably. “Globally, those that considered themselves to have ‘expert’ levels of knowledge said they invest 54% of their investment portfolio sustainably. This compares with 33% for investors who class themselves as ‘beginners’, signalling that investor education could be key to creating a more sustainable financial system – a growing focus of policymakers globally.”
There wasn’t one single dominating barrier to South Africans investing in sustainable investments, says Ground. “While more than half (57%) of investors globally said that a lack of information or understanding prevented them from investing sustainably, in South Africa, the lack of information on how fund managers engage with companies they invest in (35%), and a lack of advice on sustainable investments (35%) remain the two main barriers to investing in sustainable investments.”
However, she points out that South Africans appear to be driven towards sustainable choices by a tendency to support local businesses, while avoiding controversy. “While the majority (65%) of South African investors often/always prefer to support locally produced products and services (compared to global average 53%); 71% said they often/always avoid businesses with a track record of controversy, compared to global average of 56%.
* In April 2018, Schroders commissioned Research Plus Ltd to conduct an independent online survey of over 22,000 people who invest from 30 countries around the globe. The countries included Australia, Brazil, Canada, China, France, Germany, India, Italy, Japan, the Netherlands, Spain, the UK and the US. This research defines “people” as those who will be investing at least €10,000 (or the equivalent) in the next 12 months and who have made changes to their investments within the last ten years