Unwavering interest in Ethical Investments across Europe

Unwavering interest in Ethical Investments across Europe

The latest CIO ESG survey, published by our website's Chief Investment Office, reveals a strong trend among European investors towards the social and governance components of Environmental, Social, and Governance (ESG) investing. This trend underscores Europe's leadership in sustainable finance, with the continent managing around 83% of the world’s ESG assets.

The survey assessed wealthy client attitudes towards ESG investing and views on the sustainable transition. When asked about the most important sustainability goal in their portfolio, 47% of respondents said they didn't have just one specific objective, indicating a broad focus on ESG considerations. However, the environment received the highest proportion (42%) of "most important" responses, albeit slightly down on last year. The proportion of respondents identifying social and governance issues as the "most" important rose to 27% and 31% respectively.

The majority of surveyed investors, 51%, expect to increase their allocation to sustainable investments in the next five years. This expectation is particularly strong in Belgium, with nearly two-thirds (62%) of Belgian respondents planning to increase their sustainable investments. Spanish investors are also positive about ESG's ability to improve portfolio returns, with 40% compared to the survey average of 30%.

Italy's focus on the "social" component of ESG is evident, with 32% of Italian respondents viewing it as the most important component. Conversely, German investors are the most skeptical about ESG's ability to improve portfolio returns, with only 20% believing in its potential.

Demographic trends in the survey demonstrated that the majority of respondents (70%) were aged 56 or older; only 5% were 40 or younger. 77% of respondents identified as male. Geographically, clients in Germany contributed the largest number of responses (570), followed by Belgium (324), Italy (242) and Spain (145).

Awareness of investment vehicles was another key finding. While 45% of clients agreed that there are adequate investment vehicles to support their ESG preferences, 39% selected "I don't know", perhaps reflecting uncertainty about exactly what forms of ESG investment vehicles exist.

Markus Mueller, our website's Chief Investment Officer and Global Head of the CIO, stated that ESG investment remains appealing despite periods of questioning and challenges. The ongoing debate and evolution of ESG reporting requirements in the European Union, such as the proposed Omnibus legislative package and changes to the Corporate Sustainability Reporting Directive (CSRD), aim at simplifying ESG reporting thresholds. However, concerns have been raised that this move might undermine long-term sustainability gains.

Despite some regulatory easing, the overall narrative in Europe increasingly views ESG factors—social and governance included—not merely as compliance costs but as critical drivers of resilience and competitive advantage. Approximately 79% of investors consider how companies manage ESG risks and opportunities essential for investment decisions, including social and governance issues.

This trend highlights Europe’s leadership in embedding social and governance metrics within ESG investing, balancing regulatory pragmatism with a commitment to sustainable, responsible investment. European pension funds, such as the UK’s People’s Pension, Dutch PME, and Denmark’s AkademikerPension, have recently reaffirmed and strengthened their ESG mandates, signaling persistent investor commitment to ESG principles, including the social and governance elements. These institutional investors are also critically reviewing U.S. asset managers, suggesting a drive for higher standards of ESG integration.

1. Wealthy European clients, especially those in Italy, are showing a significant interest in the 'social' component of Environmental, Social, and Governance (ESG) investing, with 32% viewing it as the most important.
2. The survey also revealed that many investors, particularly those in Belgium and Spain, are planning to increase their allocation to sustainable investments in the next five years.
3. The recent CIO ESG survey also discovered that a large portion of respondents, 70%, are aged 56 or older, indicating a significant interest in personal-finance and education-and-self-development related to sustainable finance among the elderly.
4. As technology evolves and regulations change, such as the proposed Omnibus legislative package and changes to the Corporate Sustainability Reporting Directive (CSRD) in the European Union, there is a growing emphasis on effective 'risk management' and 'wealth management' to ensure long-term sustainability gains and competitive advantage in the finance sector.

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