President Trump’s hostile attitude towards climate change, net zero and DE&I initiatives appears to have made UK investors more positive towards ESG investing.
Research by the Association of Investment Companies (AIC) found 20 per cent of UK private investors were more favourable about ESG investing, while the majority (66 per cent) said the President’s negative position on these issues had not swayed their views. Only 8 per cent of investors said they had become less favourable towards ESG as a result of Trump’s approach.
Overall the AIC’s ESG Attitudes Tracker shows that more than half of UK investors (53 per cent) now take ESG factors into consideration when investing. This reverses a steady decline since 2022.
Last year, 48 per cent of investors said they considered ESG factors, however back in 2021 almost two thirds of investors said they looked at ESG factors when making investment decisions.
A more positive trend towards ESG is seen in other questions in this tracking survey. Overall almost half of investors (49 per cent) described themselves as “fans” of investments that consider ESG factors, up from 43 per cent last year. And in total 55 per cent of investors polled said that they hold at least some sustainable investments, up from 52 per cent last year.
The AIC said these trends are being driven by investors aged under 45. For example, 75 per cent of investors in this age group said they considered ESG when investing, up from 53 per cent last year. The same proportion, 75 per cent hold at least some sustainable investments. Those with children were also more likely to be favourable towards ESG.
However despite this more positive reception, it is clear sceptism remains, particularly in regards to whether ESG factors help deliver outperformance.
Only 19 per cent of investors believe ESG investing is likely to improve performance and more than more than two-thirds (71 per cent) of investors said they prioritised performance over ESG issues.
There were also widespread concerns about ‘greenwashing’ — firms exaggerating or misrepresenting their overall environmental credentials. In total two-thirds of respondents (68 per cent) said they were concerned about greenwashing, and 46 per cent said they had seen actual examples of greenwashing, up from 36 per cent last year.
However, the AIC found that investors were hopeful that the sustainability labels launched by the Financial Conduct Authority (FCA) last year would help stamp out bogus ESG claims.
A majority (54 per cent) said the labels are likely to increase their trust in ESG claims, increasing to 70 per cent among those who hold sustainable investments.
AIC research director Nick Britton says: “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. That said, ESG investing is still less popular than it was in its heyday in 2021. Poor performance of sustainable funds is the main culprit and greenwashing is still a concern.”
The research also highlighted comments from specific investors. 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.”
When it comes to poorer performance another respondent added: “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.”
