When it comes to deciding on which companies to invest in, an increasing number of Americans are focusing on environmental, social and governance issues.
And while much attention has been placed on the environmental, investors are saying the social and governance record of a company is equally as important, according to a survey by Allianz Life Insurance Company of North America.
The study also found that a majority of Americans believe that a company’s ESG profile is significant in its overall reputation and indicative of its long-term prospects.
The survey was done in December and included 1,000 respondents, all 18 years or older, the company said.
Seventy-three percent of U.S. consumers said environmental concerns such as natural resource conservation and a company’s carbon footprint and impact on climate change is important when making a decision to invest. The same percentage emphasized social issues such as working conditions of employees and racial and gender diversity. And 69 percent highlighted governance topics such as transparency of business practices and finances, or level of executive compensation, as being significant in their decision-making.
Even more pronounced, the report noted, is the preference for positive social and governance issues in relation to consumers’ decisions to doing business with a company. More than a third (34 percent) of respondents said a company’s stance on social issues was the most important factor, followed by 27 percent who indicated corporate governance issues were a top priority. Less than a quarter (22 percent) cited a company’s record on environmental issues as their chief concern.
Todd Hedtke, chief investment officer for Allianz Investment Management, said that as an institutional investor, he sees this sentiment as a “huge opportunity and an emerging one.’’
“I don’t think it’s a fad. I think it’s an opportunity to deal with the general public,’’ he added.
Most consumers, the report found, agree that a focus on ESG makes good financial sense. Nearly 80 percent said they “love the idea of investing in companies that care about the same issues” they do, and 74 percent believe an ESG investment strategy is “not only one that you can feel good about, but one that makes long-term financial sense.”
In addition, 71 percent percent said they would stop investing in a company if it behaved in ways they consider unethical.