Finance & Investment

Private Investors Want Funds, Pension Plans to Actively Address Climate Change

In a new GlobeScan survey of 5K retail investors in 10 countries, all express similarly high levels of support for investment funds becoming more active in the climate space.

Published 9 months ago | About a 4 minute read

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New global public-opinion research by GlobeScan, in collaboration with InfluenceMap, shows that retail investors support investment funds being more involved in addressing social and environmental sustainability.

Public support is particularly strong for investment funds encouraging governments to act on climate change, followed by financing companies advancing cleaner energy.

Conducted in summer 2023, the survey of nearly 5,000 retail investors — individual, nonprofessional investors who own and invest in stocks, bonds or funds; or who participate in company or government pension or retirement schemes — in 10 countries and territories (Australia, Canada, France, Germany, Hong Kong, Italy, Japan, Singapore, UK and the US) gauged the importance to the investors of several social and environmental concerns — climate change, the protection of nature and wildlife, and resolving economic inequality.

The poll surveyed those who said they own shares (“Own and invest in stocks/bonds directly,” “Own and invest in ETFs [exchange-traded funds] or mutual funds directly,” and/or “Participate in a company or government pension or retirement scheme”). Results show that retail investors in the 10 markets surveyed express similarly high levels of support for investment funds becoming more active in the climate space.

44 percent of individual investors strongly support investment funds advocating for governments to act on climate change, with another 43 percent somewhat supporting it.
More than four in 10 investors surveyed (42 percent) also strongly support investment funds that finance companies advancing cleaner energy, with another 47 percent somewhat supporting it.
Almost four in 10 (39 percent) also strongly support investment funds that proactively encourage companies they are investing in to act on climate change, with another 48 percent somewhat supporting it.
In addition, 38 percent of retail investors also strongly support investment funds that avoid investing in companies that contribute significantly to climate change, with another 43 percent somewhat supporting it.
There is also relatively strong support among retail investors for investment funds to provide information on the impact of investments on nature and wildlife (38 percent strongly support, 49 percent somewhat support), on economic inequality (37 percent strongly support, 50 percent somewhat support), and on climate change (30 percent strongly support, 56 percent somewhat support).

“Not nearly enough attention is being paid to the hopes, values and expectations of retail investors — the owners of so many assets across the world,” said GlobeScan CEO Chris Coulter. “This research showcases the opportunity for asset managers to be much more responsive to their investor base and shift their investment strategies towards more low-carbon, nature-positive and inclusive investments."

While initiatives such as the Fossil Free Banking Alliance have emerged to help steer individual investors toward funds that more closely align with their values, employees tend to have less input into where their employers direct their retirement funds. Unfortunately, many companies’ 401(k) plans tend to be invested with asset managers such as Vanguard — which has long been under watch by environmental campaigners for its lack of action on climate change, and whose target retirement funds have exposure to carbon-intensive industries and companies responsible for deforestation in the Amazon and Indonesian rainforests. These high-carbon investments not only have the potential to risk short-term returns but create significant risk for young employees' future retirements following decades of climate impact.

And sadly, recent Global Canopy research found that even more conscientious pension funds and providers — including the majority within the Glasgow Financial Alliance for Net Zero (GFANZ) and the UN-backed Race to Zero campaign — have not issued comprehensive policies or commitments to tackle deforestation: Deforestation driven by the four highest forest-risk commodities currently accounts for 11 percent of the world’s greenhouse gas emissions; so, effective climate action won’t be possible without addressing it.

“GlobeScan’s research shows the extent of retail investors’ demand for ambitious climate action by their fund and pension managers,” said Daan Van Acker, Program Manager at InfluenceMap. “This stands in stark contrast to InfluenceMap’s findings that the world’s 45 largest asset managers are investing almost three times more assets in fossil fuel companies than green ones, while the proportion of managers with ambitious investee company stewardship has almost halved since 2021.

“These asset managers, while holding significant influence over sustainable finance policy, are not engaging to support it — either in the US or the EU. In fact, 86 percent of the fund-management firms we assessed are members of industry associations that are strategically opposing sustainable finance policy globally.

“If these fund managers are to meet expectations of their retail-investor clients, it’s time for them to match their top-line statements with ambitious action on climate.”