Investing in a way that considers your values could help you align your decisions with the impact you’d like to have on the world and society. Discover what investors believe the most important sustainability issues are.

ESG investing means considering other factors alongside financial ones when you make investment decisions. These factors are typically split into three broad categories – environmental, social, and governance (ESG).

These areas don’t replace your regular investment strategy, so it’s often still essential to consider factors like your investment goals, the appropriate level of financial risk, and other assets you might hold.

Investors deem governance issues as important as environmental ones

When you think of sustainable investing, it may be the environmental challenges that come to mind first. In the past, they’ve often dominated the headlines and polls when investors were asked what they were most concerned about.

However, according to the annual ESG Attitudes Tracker from the Association of Investment Companies (AIC), which was published in October 2024, there is a mindset shift happening. Governance is now considered equally as important by investors. When asked which of the three pillars is most significant, both environmental and social earned 37% of the votes.

Indeed, the number one issue recognised by 60% of investors was transparency and disclosure. Other top issues include:

• Climate change (54%)
• Pollution (47%)
• Human rights (44%)
• Waste/preserving resources (39%)

Interestingly, when the investors surveyed were asked about what would lead them to exclude or avoid a business when investing, social issues were among them despite falling behind environmental and governance when asked which pillar was most important.

Child labour, pornography, and oppressive regimes were the top three red flags for investors who were considering excluding businesses.

The number of investors considering ESG issues fell to 48% in 2024

The AIC report suggests fewer investors are considering ESG issues when compared to just a few years ago.

Indeed, 48% of those surveyed by the AIC said they were considering the ESG pillars when making investment decisions. In 2021, the figure was 66%.

Similarly, the proportion of investors who describe themselves as “fans” of ESG investing fell from 50% to 43% over the same time frame.

There are many reasons why investors might be less inclined to incorporate ESG practices into their investment strategy than they were previously. However, the survey indicates that perceived lower returns could be the driving force.

Just 17% believe ESG investing is likely to improve performance. Yet, with only 9% saying they believe ESG investing is “pointless” there could still be an appetite for making ESG factors part of their overall strategy.

The good news is that you may be able to balance your ESG goals with financial ones.

An investment strategy could help you balance different goals

If you want to make ESG factors part of your overall financial plan, it can be difficult to balance conflicting goals.

On one hand, you might want to invest in a way that will allow you to retire comfortably. But, on the other hand, if you want to consider ESG issues you might worry about how it could affect your investment returns.

While these two goals might seem at odds, the good news is that it’s often possible to create a balanced portfolio that not only incorporates your personal financial goals but your values too.

As you’ll typically consider financial information alongside ESG data when deciding if an investment fund or opportunity is right for you, you can select those that meet your needs.

Get in touch to talk about ESG issues that are important to you

If you’d like your investments to reflect your values, we could help. Whether you already have an investment portfolio you’d like us to review or you’d like to understand how to incorporate ESG investing in a way that aligns with your goals, please contact us to arrange a meeting.

Please note: This blog is for general information only and does not constitute financial advice, which should be based on your individual circumstances. The information is aimed at retail clients only.

The value of your investments (and any income from them) can go down as well as up and you may not get back the full amount you invested. Past performance is not a reliable indicator of future performance.

Investments should be considered over the longer term and should fit in with your overall attitude to risk and financial circumstances.