More than half (57%) of investors think that ESG investing can be a way to make positive change in the world, but only 24%  can correctly define what ESG investing means, according to a survey by the Finra Investor Education Foundation and the National Opinion Research Center at the University of Chicago (NORC).

In contrast, 37% agree or strongly agree that a company’s role should be to ”maximize earnings and not pursue social or environmental goals,” according to the survey of  1,228 retail investors.

The survey also found that investors under age 30 (17%), those with annual incomes under $30,000 (15%,), and non-white investors (12%) said they hold ESG investments most frequently. In general, only 8% of investors said they held ESG investments in their portfolios.

Right now, fewer than one in t10 en retail investors say they own ESG-focused investments in their taxable investment accounts and over a third of all investors with taxable accounts do not know if their portfolio includes ESG investments (36%), according to the survey.

“Although media coverage of ESG investing has substantially increased in recent years, only 28% of investors report being at all familiar with ESG investing,” the study stated.

For instance, only 24% of study participants correctly defined ESG investing, and only 21% knew what the letters in ESG stand for. In addition, some 25% of investors incorrectly believed ESG stands for “Earnings, Stock, Growth,” the report stated.

Women have substantially lower levels of familiarity with ESG; only 23% indicated they are at all familiar with ESG investing, compared to 33% of men.

Self-reported familiarity is highest among investors under age 30 (37%), investors with annual incomes under $30,000 (40%), and African-American investors (44%)—all groups historically underrepresented in investing, Finra said.

“There does appear to be an association, although nuanced, between ESG ownership and gender. Although there are no gender-based differences in the proportion of men and women with ESG holdings, significantly more women report they don’t know if they own ESG investments (42%) than men (32%),” the study found.

It’s important for advisors to understand that environmental issues motivate many ESG investors, even if they lack sophistication, the study's authors said.

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