Schroders Global Investor Study 2022: ‘Expert/Advanced’ investors in Southeast Asia believe sustainable investing most likely to drive long-term returns

Environmental impact is the main reason Southeast Asian investors are attracted to sustainability investing.“Expert/Advanced” investors in Southeast Asia are more likely to believe that investing sustainably is key to driving long-term returns compared with people who rate themselves as less knowledgeable, Schroders Global Investor Study 2022 has found. The sustainability-focused findings of Schroders’ flagship study, which has surveyed close to 24,000 people who invest from 33 locations globally, including Indonesia, Malaysia, Singapore and Thailand, found that more than two-thirds (72% versus 68% globally) of Southeast Asian investors who class themselves as having “expert/advanced” investment knowledge believe that sustainable investment is the only way to ensure profitability in the long term. This compares with 60% of “intermediate” investors in Southeast Asia (versus 52% globally) and 62% of those who believe they have “beginner/rudimentary” investment knowledge (versus 43% globally).

“Expert/Advanced” investors in Southeast Asia are more likely to believe that investing sustainably is key to driving long-term returns compared with people who rate themselves as less knowledgeable, Schroders Global Investor Study 2022 has found.

The sustainability-focused findings of Schroders’ flagship study, which has surveyed close to 24,000 people who invest from 33 locations globally, including Indonesia, Malaysia, Singapore and Thailand, found that more than two-thirds (72% versus 68% globally) of Southeast Asian investors who class themselves as having “expert/advanced” investment knowledge believe that sustainable investment is the only way to ensure profitability in the long term.

This compares with 60% of “intermediate” investors in Southeast Asia (versus 52% globally) and 62% of those who believe they have “beginner/rudimentary” investment knowledge (versus 43% globally).

Similarly, 72% of “expert/advanced” investors (similar to 69% globally) share the view that investing sustainably can support positive change when it comes to challenges such as climate change.

Hannah Simons, Head of Sustainability Strategy at Schroders, commented: “The interaction between sustainability and returns has seen some polarising results this year. While beginner investors appear more sceptical, the majority of Southeast Asian believe sustainability is crucial to delivering long-term returns. This is encouraging to see and further emphasises the crucial role asset managers have to play in terms of helping investors better understand how investing sustainably can not only help overcome challenges such as climate change, but also support their long-term returns. Indeed, we see an intrinsic link between long-term sustainable investment returns and solving some of the world’s social and environmental challenges.”

Specifically, the study found that environmental impact was the main reason people are attracted to sustainability investing (58% in Southeast Asia versus 52% globally). Societal principles came second at 44% (versus 43% globally), and financial gains ranked third in Southeast Asian investors’ list of priorities (37% in Southeast Asia and 36% globally).

However, a focus on delivering financial returns unsurprisingly still remains a priority for many investors. More than half (63% versus 56% globally) seek a fund that focuses primarily on delivering financial returns while integrating sustainability factors. That is particularly the case for people in Asia (61%) and the Americas (60%), while people in Europe were more likely to choose a fund with sustainability characteristics (51%).

The study also found that people would increasingly invest in sustainable funds if they were able to invest in line with their preferences. More than half of Southeast Asian investors (63% versus 57% globally) across all self-defined expertise levels said that the ability to choose investments that align with their personal sustainability preferences would encourage them to increase their allocation to sustainable investments.

In terms of investors’ specific sustainability goals, quality education was seen as the most important in Southeast Asia, with a fifth of those surveyed (both 20% in Southeast Asia and globally) ranking this option first. Good health and wellbeing came second at 17% (versus 12% globally) and no poverty at third place (both 15% in Southeast Asia and globally).

Apart from the ability to choose investments aligned with their personal sustainability preferences, some 52% of Southeast Asian investors (versus 44% globally) stated that more data and evidence showing that investing sustainably delivers better returns would encourage them to increase their investments.

Completing the top three, around half (51% versus 48% globally) said that more education around sustainable investing would encourage them to allocate more sustainably. The lack of clear definitions of sustainable investments was cited as one of the most significant barriers to investing sustainably by all knowledge levels.

Andy Howard, Global Head of Sustainable Investment at Schroders, said: “This year’s survey results show that environmental challenges remain one of the key reasons individuals are looking to invest sustainably. However, the ‘S’ in ‘ESG’ can’t be forgotten, with human capital, education and equality all top of people’s investment priorities. Financial education is a key element in driving more capital towards sustainable investing. It is clear from our research that what people seek is essentially guidance and clarity. The more people are able to understand the products they invest in and their impact on society and the environment, the more capital we should see flowing into sustainable investing. That is why, each quarter, Schroders provides an update on the themes shaping the sustainability landscape. These reports have been created to demonstrate Schroders’ commitment to integrating ESG factors into the firm’s investment processes.”

Schroders’ quarterly Sustainable Investment Reports can all be accessed here.