3rd EUROSIF Study on High Net Worth Individuals and Sustainable Investment Shows that Wealthy Europeans are Deepening and Expanding their Commitment to Sustainable Investments and Impact Investing
EUROSIF, the European Sustainable Investment Forum, today releases its 3rd study on High Net Worth Individuals and Sustainable Investment, created with the support of Bank Sarasin.
The study shows that sustainable investments by European HNWIs has increased by nearly 60% over the past two years, compared to an 18% increase in overall European HNWI wealth over the same period. Sustainable investments rose to €1.15 trillion compared to €729 billion in 2009, reflecting persistent demand even in volatile markets.
The growth mainly derives from inflow of new money from new clients (44%) and from existing clients deepening their commitment (37%). Many HNWIs have been testing the merits of sustainable investment over the past few years, and are now expanding their use of sustainable investment strategies: the report shows that the number of HNWIs with more than half of their assets attributed to sustainable investments has doubled over the last two years to reach 25% of respondents. Positive screening strategies (such as best-in-class) and sustainability-themed investments are still the most used. The most popular sustainability themes are clean energy, water and green technology.
The study also covers impact investing for the first time. The survey shows that impact investing is common among HNWIs, with 1 out of 2 respondents allocating assets to this type of investment. While the most frequently mentioned motivation for impact investing by HNWIs is ‘contribution to sustainable development’, it is interesting to note that just behind this, ‘alternative to philanthropy’ is mentioned as the second most important motivation. Impact investing is actually more often seen as an alternative to philanthropy than other sustainable investment strategies, which 51% of respondents now consider as financial discipline.
Looking to the future, 87% respondents continue to predict a steady or even sharp increase in sustainable investments by HNWIs, especially as more and more view sustainable investment as a financial discipline to be integrated across all assets. While perceptions of financial performance remains a barrier to sustainable investment adoption, it is noteworthy that those HNWIs who overcome their initial skepticism and try sustainable investment have a tendency to become increasingly devoted despite (or maybe because of) the continued market turmoil.
Commenting on the results, Eurosif Executive Director François Passant states: “The value proposition of sustainable investment and impact investing, combining both financial interests with sustainability concerns, make these strategies a valuable fit with any HNWI investment portfolio. The fact that many HNWIs who have tested sustainable investments are shifting more assets into these strategies reflects that. This should be no surprise, even in terms of great market uncertainty, as the effects of these strategies are magnified over time and align well with the long term perspective and wealth preservation objectives of HNWIs”.S