The steady rise of sustainable values-based investing

Millionaires are becoming increasingly aware and demanding of values-based investing

The war in Ukraine may serve to further increase investment in sustainable technologies and millionaires are likely to be at the forefront.

Sustainability is becoming an ever more important element of investing. Applying a values-based filter to investment portfolios is not new but the scale of demand and the pace of supply adaptation is ever increasing.

Through our MillionaireVue omnibus, we asked millionaires in the US and UK about their experiences of ethical and sustainable investing. In the US, about 1 in 3 have had no experience of ethical and sustainable investing. And this is twice the proportion in the UK (16%)

In the UK, 42% have seen adverts or read about it, and a similar proportion (39%) currently invest in ethical and sustainable funds or have given this mandate to their adviser. And this has steadily grown from 35% in Q3 2021. Initially this was led by advisers. But more and more investors are taking the lead and asking their advisers about the option and filter on their portfolio.

Maybe unsurprisingly it is younger millionaires who are driving the demand by asking their advisers. Whereas 1 in 4 over 55’s have not engaged with the area at all. But where the conversations are being had high net worth individuals (HNWIs) are more satisfied. Promoters of their investment providers are more likely to be currently invested in ESG (environmental, social and governance) portfolios with 1 in 2 having it mentioned to them by their adviser, a much higher proportion than the fewer than 1 in 3 detractors who have had it mentioned to them. The engagement or responsiveness from the adviser on this issue is clearly a driving force in creating happy clients willing to speak positively about their relationship.

The future of sustainable investing looks bright. Not least as HNW investors become more clued about the nuances of the approach and the importance of engaging with highly polluting industries to encourage them to develop new technologies and alternatives.

Given the war in Ukraine, institutional and government funds are also likely to flood into the area as Europe is spurred to act faster to reduce reliance on Russian oil and gas. Increasingly they will find the wealthiest private investors are their allies in using their funds to prevent a climate disaster.

Data source: Savanta’s MillionaireVue Omnibus, a representative survey of the UK and US millionaire population. N=491 conducted in the UK and n=311 conducted in the US in February 2022.

Savanta’s MillionaireVue is a quarterly omnibus with c. 500 HNWI’s in each of UK, US and China. For more information please click here.

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