Are The Rich Becoming Greener?
by Arnab Dey Finance Published on: 22 March 2022 Last Updated on: 23 March 2022
In recent years, the UK has faced unprecedented challenges — which have continued into 2022 — impacting the way we live and the level of risk to our wealth. But during the pandemic, the rich are becoming greener.
Alongside the effects of the pandemic, global uncertainty, and rising inflation, climate change is one of the top financial worries of wealthy Brits. So, what are the views of these High-Net-Worth individuals (HNWIs) concerning the economic prospects of the UK, their own personal and financial lives, and the protection of the planet?
Financial Report Of 2021
Saltus, a financial planning and investment firm, set out to answer these questions through their inaugural Wealth Index. They surveyed over 1,000 HNWIs with investable rich assets over £250,000 and revealed the results in October 2021.
So, despite rising concern about sustainability and the environment, how green are the wealthier population, and what do they think about the impact of green stocks?
What Is ESG?
First of all, it’s worth understanding what it means to invest in green. Environmental, Social, and Governance (ESG) investing is a way to responsibly invest, integrating a set of factors into the construction of an investment portfolio.
This type of investing can look at the following factors:
- Environmental — protection of the natural world
- Social — equality, and diversity of people
- Governance — standards of which the company is run
These factors can be analyzed through the beliefs and processes of the company in question, the evidence of change rich people have brought about, alongside the risk level of sustainable investment.
Related Resource: Going Back to the Basics: The Criteria for ESG Sustainability Reporting
A Strong Desire Amongst The Younger Generation
The Saltus Wealth Index discovered that two-thirds (64%) of the wealthy individuals surveyed are actively investing in ESG, and this choice to invest in greener stocks increases amongst the younger generation.
Eight in ten (80%) of rich people surveyed aged 18 to 24 years old revealed they invest in green stocks. However, this falls to just 24% for those aged over 65.
There are also variations in responses from different areas of the UK. The survey found that investors from the capital are more likely to invest in ESG than other HNWIs three quarters were from London, compared to just half (50%) in Scotland and less than half in the Midlands, South West, and Wales.
Skepticism About ESG Investing
With the older generation less inclined to consider ESG investing, what are the reasons for wealthy people who are yet to invest in green stocks?
The survey conducted by Saltus discovered the main reason was the fact ESG investments do not generate sufficient returns, with 31% of respondents stating so. Furthermore, 27% believed that green stocks do not make a difference, whilst 26% thought sustainable investing is ‘just hype.’
Another reason involves the strength of reporting in this area, as 24% of those surveyed do not believe the analysis of ethical investments is robust enough.
One Respondent Stated:
“There aren’t enough funds – and right now the funds there are, are over-bought.”
In addition, mistrust in ESG amongst HNWIs stems from the idea that green funds aren’t truly environmentally friendly, as 22% of respondents stated this doubt.
With a plethora of current concerns when it comes to wealth, it’s important to explore the views of those who are likely to be funding such critical change in the UK through the tax they pay and the wealth they create.
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