Responsible investing – what members want and care about most

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Workplace Thought Leadership Team

August 30, 2022

3 mins read

Returns and managing risk are members' top priorities when it comes to responsible investing. But most also want to avoid causing harm and to help drive positive change, while some want to support specific sustainable goals.

Growing pension returns and managing financial risk are people's top priorities when it comes to responsible investing. In fact, a third of respondents agreed with the statement, 'I only care about growing my money.'

These findings are from our annual customer responsible investing research1. This year saw a continuation of some trends, but also some surprises.

The importance of climate change dipped slightly in relation to other factors since 2020 (see Figure 1). Our latest research was conducted during the early stages of the war in Ukraine and the cost of living crisis, so these global and economic situations may be tempering some concerns.

However, whatever the cause, a decrease (albeit slight) in concern for climate change when investing is something we'll continue to monitor. That said, overall there's still a strong desire to tackle sustainable issues.

Investment returns and protecting their pension from risk are people's main priorities

Making a difference

The majority of customers surveyed (84%) want to avoid doing harm while aiming for growth. Seventy-percent consider it important to exclude companies or industries that have a negative impact on society, have poor corporate governance or are damaging the environment - even if they intend to change this in the future.

Seventy-percent of people also consider it important to invest in a way to positively influence change in these areas.

Once again we see climate change and human rights ranked as the top responsible investment issues to consider. And 64% agreed it's important to invest in a way that commits to net-zero carbon emission status by 2050 (or earlier).

Climate change and human rights are the responsible investing factors that matter most

Pensions that take care of all this for them

The large majority of customers want their pension provider to take care of all this for them and expect their pensions to be invested responsibly. More than three-quarters (78%) expect Standard Life already to take into account environmental, social and governance (ESG) considerations when choosing where to invest on their behalf.

Seeing the financial sense in making a difference

While morally 'doing the right thing' to help tackle sustainable issues may be fuelling some member preferences, our research suggests that many are also making the financial connections.

For instance, 81% of customers recognise that it makes financial sense to consider ESG factors. And 72% agree that a company's management of the ESG-related risks and opportunities it faces will affect its future financial performance. Please note, these are personal views of our survey respondents only and not actual returns or a forecast of future returns.

The opportunity to choose if they want to

Some customers are keen to align their investments to specific ethical views, or explore the potential growth opportunities of specific sustainable themes. In fact, 11% agreed strongly that they would like to choose specific investments based on their values or ethics.

Although this is a smaller group of customers, we'll likely see more members become even more engaged in responsible investing as their understanding grows.

To know more - an opportunity to engage members

Six-in-ten people in our study want to know more about responsible investing. This appetite is even greater among those aged 18-34. Meanwhile, only 26% of all respondents have a good idea if their current investments have an ESG approach applied to them.

Are members aware how their pension is invested for growth, and also avoids harm and helps to influence positive change? Explaining these topics is an opportunity to reassure while bringing their pensions to life.

Pension investments can feel inaccessible to many. Yet responsible investing provides a source of topical and emotive subjects - things people can see and feel in their lives, communities and the media - more so than other pension concepts. If effectively explained, responsible investing could therefore help to boost engagement in long-term savings.

Topics can be positioned whether a member is interested purely in the financial implications of, say, climate change, or in supporting specific sustainable themes. And this will become easier as definitions, measurements and real-life case studies become more consistent across the industry.

With a range of member views to satisfy, responsible investing is a relatable way to show the potential power of their pensions in supporting their quality of retirement and the future they will retire into.

The value of investments can go down as well as up and may be worth less than what was paid in.

The information here is based on the understanding of Standard Life in August 2022 and shouldn't be regarded as financial advice.

We share more of our responsible investing research results in:

Responsible investing - the gender and generational differences

Responsible investing - meeting the needs and preferences of all your members

Top findings summary - how customers really feel about responsible investing

Find out more about how we invest pensions responsibly and the role of stewardship in driving improvement in ESG behaviours and practices.

1Standard Life Responsible Investing Research Report, Q1 2022, comprising a random sample of customers, with 1,600 responding.

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