A large group of investors want to take their sustainable investing to the next level by actively exerting pressure on companies that exhibit unsustainable business practices, according to a study released Monday by Newton Investment Management, a BNY Mellon Investment Management firm with $53.3 billion in AUM.
Led mostly by millennials, these investors do not want to stop at just investing in companies that use sustainable business practices, the Newton Sustainable Investment research study said. Twenty-nine percent of the 1,000 United States ESG investors said they want to actively pressure companies that are not using sustainable business practices.,
“We believe that ESG is not a label, it is Finance 101,” said Andrew Parry, head of sustainable investment at Newton Investment Management. “That is, environmental, social and governance insights are not add-ons, but part of the mosaic of inputs that influence good investing decisions.”
According to the survey, 39% of participants said they are most concerned about environmental issues, compared with just 28% who are most concerned about social issues, and 23% who said governance issues are most important. “This interest runs counter to where much of the asset management industry has historically been focused – on governance,” the report said.
“While today’s individual investors are most concerned with environmental issues, it is in the area of corporate governance – in the form of active engagement with leadership at companies and informed proxy voting power – where the asset management industry might exert its largest and most immediate positive influence,” Parry said.
The survey also showed that most people, 80%, do not know if they have a sustainable investing option in their retirement plans. But for those who were aware of the option, 53% selected the sustainable investing choice, with millennials five times more likely to select sustainable than baby boomers.
“The study data [shows] how companies might better align themselves with the concerns of the next generation of investors,” said Seyi Bucknor, head of Newton Americas for Newton Investment Management. “Younger investors increasingly want to see their values, interests and concerns reflected in their investment."