ESG factors drive more investment decisions

19 February 2019

The influence of the environmental, social and governance (ESG) factors have been on the rise when it comes to the investment decision making process, according to the latest annual Legg Mason Global Investment survey.

The study found that 43 per cent of Australian investors were more eager to choose funds and companies based on these principles, while more than a half of investors (55 per cent) said they were trying to avoid businesses with controversial track record.

What is more, the majority of investors (88 per cent) were of the opinion that fund managers should actively police companies they invested in to ensure they acted responsibly.

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According to Australian managing director Legg Mason, Andy Sowerby, the research highlighted that a lack of information, understanding or advice was the main barrier to investing more into ESG, with 56 per cent of Australian investors being of that opinion.

Following this, this rate was higher for millennials (67 per cent) versus baby boomers (48 per cent) and advised investors (61 per vent)  “They are equally likely as Baby Boomers to feel fund managers should consider a company’s effect on their local community (28 per cent versus 24 per cent) but more likely to feel they should consider diversity of workforce (35 per cent versus 16 per cent),” he said.

“Companies need to take note of the greater scrutiny placed on them by consumers and investors.  For instance, investors are most likely to avoid businesses with a controversial track record (55 per cent), to buy from businesses with a good social responsibility record (49 per cent) and to buy from local businesses rather than those that transport over long distances (56 per cent),” he said.



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