Trump’s ESG hostility pushing more UK investors towards sustainability
Sentiment towards ESG investing has seen a “modest improvement” among UK private investors, according to a recent survey.
The ESG Attitudes Tracker, commissioned by the Association of Investment Companies and conducted by Research in Finance, canvassed responses from 400 private investors and 200 intermediaries in July this year.
Instead of seeing a continued decline in sentiment towards ESG, there were more favourable signals this year, especially from younger investors and parents. In fact, some said President Donald Trump‘s (pictured) hostile attitude to ESG has actually made 20% of private investors more positive about funds. 66% stated they were indifferent, and only 8% of investors said they were now less favourable to ESG as a result of Trump’s approach.
One respondent said: “Donald Trump’s an extreme example of someone who just is really, in my view, focused on money. And so much environmental legislation is being ignored. The environment’s being ignored. At the end of the day, America’s part of our planet, the UK is part of our planet. We need to do more for the environment.”
See also: Sustainable investing still makes sense in a Trump world
Further, more than half of investors (53%) consider ESG factors when investing, reversing a steady decline since 2022 and a remarkable uplift from the 48% of investors who said they considered ESG factors last year. 49% said they are fans of investments that consider ESG factors, up from 43% last year, and 55% said they hold at least some sustainable investments, up from 52% last year.
Nick Britton, research director at the AIC, said: “After getting steadily worse since 2022, sentiment around ESG investing has seen a modest improvement among private investors this year. It’s not a dramatic reversal but it is a definite shift, driven in particular by younger investors and parents.
“There’s evidence that the strength of the backlash against ESG in the US has actually made UK investors less likely to adopt a similarly hostile stance.”
The trends are being driven by investors aged 45 and under, with 75% of this age group considering ESG – a jump from 53% recorded last year. The AIC noted those with children are also more likely to be favourable towards ESG: when asked whether they consider ESG when investing, 62% of respondents with children said yes, compared to 48% of those without, and 61% of respondents with children said they were fans of investments that considered ESG factors, compared to 42% of those without children.
However, there are still a number of factors holding back private investors when it comes to ESG, including performance and greenwashing.
Only 19% of respondents said ESG is likely to improve performance and more than two thirds (71%) said they prioritised performance over ESG issues. One respondent commented: “I’ve lost money and I can cope with some losses, but some of them have been quite significant when other non-environmental funds have actually done pretty well.”
See also: Trump’s energy policy ‘a temporary setback’ but momentum will recover
Further, some 68% said they were concerned about greenwashing and 46% said they had uncovered actual examples of greenwashing, up from 36% last year.
However, they were hopeful the FCA’s SDR sustainability labels will held alleviate greenwashing as fund houses need to adhere to strict criteria to gain a label. Over half (54%) said labels are likely to increase their trust in ESG claims, with this increasing to 70% among those who hold sustainable investments.