Every two years, we run our Sustainable Investor Survey – a chance for our clients to tell us how they think about environmental, social and governance (ESG) issues and what they want from their investments.
In December 2024, we sent the latest version of the survey to clients, and received more than 1,600 responses. It’s only the second time we’ve run it – the first was in 2022 – but already we’re seeing some clear shifts in attitudes, and where HL clients want us to focus our efforts.
Here’s what we learnt.
This article isn’t personal advice. If you’re not sure if an action is right for you, ask for financial advice.
What matters most to investors
Against a backdrop of rising global tensions, conflict and cybercrime, HL clients are thinking about how these risks play out in their portfolios. When asked to rank ESG issues by importance, security and governance came out on top – with cyber security, anti-corruption and anti-bribery leading the way.
Pollution prevention, water security and food security also featured highly. These are issues that affect health, wellbeing, and the stability of everyday life. They’re also becoming harder for businesses to ignore, with growing pressures from regulators, consumers and supply chains.
By contrast, areas like diversity and inclusion and artificial intelligence (AI) scored lowest overall. That doesn’t mean these topics aren’t important – but it could reflect a lower perceived link to financial outcomes or long-term value creation.
Views also varied noticeably between groups. Women were far more likely to prioritise inclusion and diversity, perhaps reflecting their lived experience.
Percentage of clients who rate this issue as 'very important' or 'extremely important' by gender
Where clients draw the line
We also asked about how comfortable our clients were to invest in specific sectors which can be deemed controversial – and there was a mix of pragmatism and principle in the responses.
Clients were most comfortable investing in nuclear energy, oil and gas, and alcohol. A big jump was 81% of clients being comfortable investing in companies that make money from nuclear energy, compared to 61% in 2022. There is an argument the energy crisis and climate transition have helped shift perceptions – with nuclear seen as part of the solution, not just a source of risk.
At the other end of the scale, deforestation and animal testing were the least palatable areas. These are themes where the link to environmental harm or ethics is clear, and where many clients don’t want their money to be involved – regardless of potential returns.
There were also generational divides. Older clients, for instance, are more comfortable with military contracting than younger investors – a reminder that ESG views can be shaped by life experience as much as values.
Engagement over exclusion
One of the most revealing questions asked whether clients would be willing to invest in a fund that didn’t fully align with their ESG values – if the fund manager was actively pushing for change on their behalf.
Nearly half said yes. That’s a powerful endorsement of stewardship and engagement – the process of using influence to encourage better behaviour from companies and fund groups.
This reinforces our belief that responsible investing doesn’t have to avoid whole sectors or companies.
Find out more about HL’s approach to engagement in our Stewardship and Engagement Report.
Meanwhile, 34% said they’d rather avoid these investments entirely – a figure that’s increased from 29% in 2022. This shows some clients are also taking a firmer stance on aligning their portfolios with their personal values.
Why clients care
From the results, clients want to grow their money over the long term, and increasingly can see responsible investing as a way to help achieve it.
38% said they’d consider responsible investing specifically to improve long-term financial returns.
It shows that ESG isn’t just about ethics – it’s about performance, too. Clients want companies that are well-run, forward-looking and resilient in the face of global risks.
2 Responsible investing fund ideas
If you want to make sure ESG is considered in your portfolio, a fund could be a great solution.
We look at two funds from our Wealth Shortlist that consider ESG factors when investing.
Investing in funds isn’t right for everyone. Investors should only invest if the fund’s objectives are aligned with their own, and there’s a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a diversified portfolio.
All investments can fall as well as rise in value, so you could get back less than you invest.
BNY Mellon Sustainable Real Return
The BNY Mellon Sustainable Real Return fund aims to reduce volatility by providing some shelter during market wobbles, while also delivering some long-term growth in a sustainable way, by investing in companies that comply with their in-house environmental, social and governance (ESG) criteria.
The fund's sustainable 'red lines' mean companies that violate the UN Global Compact Principles (a UN pact on human rights, labour, the environment and anti-corruption) are not considered for the fund. It also won't invest in companies that make more than 10% of their revenues from tobacco, alcohol, gambling and several other contentious industries.
The managers believe that responsibly managed companies are better placed to achieve sustainable competitive advantage and provide strong long-term growth. The team engage with the companies they invest in on a range of ESG issues.
The team also has the flexibility to invest in high-yield bonds, emerging markets and derivatives which, if used, adds risk.
Liontrust SF Corporate Bond
The Liontrust SF Corporate Bond fund aims to deliver a combination of income and capital growth over the long term by investing mostly in sterling-denominated, investment grade corporate bonds.
The fund excludes areas some may find unethical, such as tobacco, coal and armaments and invests mostly in companies making a positive difference to the environment or society with high levels of governance.
Sustainability and ESG analysis is fully integrated into the team’s investment process. They aim to identify bonds issued by high-quality companies whose core products or services make a positive contribution to society or the environment. This sustainability analysis is completed within the team for every bond issuer in the fund.
The managers believe investing in sustainable companies provides greater return potential, and less risk, than other companies, and that many other investors fail to value the sustainability of a business correctly.
The managers have the flexibility to invest in derivatives and high yield bonds which add risk.
Despite the fund’s sustainability credentials, investors should note that, of the 100 funds under research coverage, this is one of the most carbon intense. The companies within the fund may face increased scrutiny from investors and regulators, as well as higher costs associated with carbon emissions management and potential carbon pricing mechanisms, potentially impacting the fund’s performance.
