MINNEAPOLIS (April 20, 2022) – Environmental, Social and Governance (ESG) investing is here to stay, though financial performance and return on investment (ROI) have risen markedly relative to ESG impact as top priorities for investors.
A recent survey conducted by RBC Wealth Management – U.S. found that one in three clients (31%) feel it is important that the companies they invest in integrate ESG factors into their policies and decisions. This is particularly true for female clients (23%), who are more than three times as likely as males (7%) to say it is extremely important.
At the same time, there was a 17% increase in those who said financial performance and ROI is their highest priority versus ESG impact, rising to 49% in 2022 compared to 42% in 2021. Not surprisingly, clients who prioritize financial performance and ROI are not at all likely (74%) to have a discussion with their financial advisor about ESG.
Further, nearly two-thirds (63%) of clients feel ESG investing is the way of the future, though there is skepticism around the information companies provide about their ESG initiatives. Consistent across both male and female respondents, 74% believe many companies provide misleading information about their ESG initiatives.
“Investing responsibly does not necessarily mean sacrificing returns, and as ESG investing has matured and evolved, companies have stepped up their efforts to report comprehensively on their environmental, social and governance initiatives,” said Kent McClanahan, Vice President of Responsible Investing at RBC Wealth Management – U.S. “These survey results point to the continued need for advisors to educate their clients about ESG and the case for allocating a larger portion of portfolios to responsible investments. RBC Wealth Management provides advice and resources to help advisors confidently guide those conversations.”
Gender and Divergent Views on ESG
The views of male and female clients toward ESG vary significantly, creating both opportunities and challenges for advisors when speaking with clients about responsible investing.
Though 57% of clients are interested in increasing the share of ESG in their current portfolios, significantly more female clients are interested (72%) compared to their male counterparts (47%). The primary reason clients cite for not being interested in an increased allocation to ESG is that it’s “just not a priority” for their investment strategy. While 34% of respondents cited this as their primary reason in 2021, 43% did so in 2022, an increase largely driven by male clients (49%) versus female clients (26%).
As in 2021, Governance elements make up the top three most important elements of ESG to clients, with corporate ethics ranking at the top of the list, followed by regulatory compliance and transparency, and accounting practices. Also as in 2021, there are significant differences in what male and female clients rate as the most crucial elements of ESG. Men are much more likely to rate Governance elements as important, while women are more concerned about human rights and climate change.
“The results of this survey show that clients’ priorities and views on ESG investing vary for a broad range of reasons, but perhaps the most significant and consistent is gender,” McClanahan said. “Meaningful conversations begin with an understanding of each client and the issues that are most important to him or her. From there, advisors can educate, counsel and guide clients to create impact with their investment strategies. Our survey provides useful insight to enable advisors to effectively engage clients, male and female, about the case for ESG.”
While most clients would turn to their RBC Wealth Management financial advisor to find out more about ESG investing, female clients are more likely to do so (89%) than male clients (80%). Women are also more likely (54%) to have a discussion with their advisor about ESG within the next year than men (38%).
About the Survey
Survey results are based on responses from 976 RBC Wealth Management – U.S. clients in February 2022. The survey was sent via email with a link to an online survey to 20,000 clients, representing a 4.9% response rate. Of the client responses, 40% are high net worth (HNW) clients with investable assets of $1 million or more.
Click here for additional information on RBC Wealth Management’s ESG capabilities and offerings.
About RBC Wealth Management – U.S.
In the United States, RBC Wealth Management operates as a division of RBC Capital Markets, LLC. Founded in 1909, RBC Wealth Management is a member of the New York Stock Exchange, the Financial Industry Regulatory Authority, the Securities Investor Protection Corporation, and other major securities exchanges. RBC Wealth Management has $537 billion in total client assets with more than 2,100 financial advisors operating in 183 locations in 42 states.