Responsible investing is poised to become a dominant strategyA new survey by RBC Wealth Management reveals growing interest in Environmental, Social and Governance (ESG) and responsible investing, especially among women, with financial advisors ranked as a top source for information to guide investment decisions.
MINNEAPOLIS (April 6, 2021) – The winds of investing in the U.S. are shifting and women are a driving force behind the change. A recent client survey conducted by RBC Wealth Management – U.S. shows that responsible investing, namely Environmental, Social and Governance (ESG), is gaining traction. Women are leading the charge for ESG investing and are more likely to have a positive outlook toward this growing investment trend.
Client respondents who identified as women are more than twice as likely as men to say it is extremely important that the companies they invest in integrate ESG factors into their policies and decisions. The survey also found that 74% of women were interested in increasing their share of ESG investments in their current portfolios and were significantly more likely than men to have an interest in learning more about ESG investing.
While the survey revealed that women are leading the charge in ESG investing, more than half of male respondents (53%) also expressed interest in increasing the share of ESG in their current portfolio, and 61% of clients overall shared this position.
Women Are Leading The Adoption
“The results from this survey reinforce a belief we’ve had for several years: that responsible investing is poised to become a dominant strategy in the U.S. and that women are leading the adoption,” said Kent McClanahan, vice president, Responsible Investing at RBC Wealth Management – U.S. “As responsible investing continues to gain momentum, it is essential to have the right resources to help investors meet their standards in ESG investing and to learn more about the different elements that integrate ESG factors into an investment portfolio. Our advisors are ready to educate, counsel and guide clients to create impact with their investment strategies.”
Overall, about a third (31%) of RBC clients acknowledged the importance of integrating ESG factors into their investment decisions, with female clients rating all elements within the “E” for Environmental and “S” for Social categories in ESG significantly higher than male clients. The “G” for Governance was the one factor that showed no difference by gender and ranked the most important to clients across all ESG elements. Corporate ethics, regulatory compliance followed by transparency were the most important of governance elements for clients.
The results of RBC’s survey support the growing industrywide enthusiasm for ESG investing. A new report from non-profit foundation US SIF: The Forum for Sustainable and Responsible Investment found that at the start of 2020, $17.1 trillion was invested in responsibly invested assets in the U.S., up a staggering 42% from $12 trillion just two years prior. ESG investing was among most popular responsible investing strategies, accounting for a third of all managed assets in the U.S.
The “S” Factor
Among the other ESG factors, when it came to the “S” in Social, women ranked human rights at 80%, workplace health and safety at 75%, and social justice at 64% as the most important elements for them.
“While these issues likely have been important to women for some time, the growing interest in the “S” factor has no doubt also been impacted by the events of 2020, which put a spotlight on social justice and the effects of systemic racism,” McClanahan said.
Men also thought these “S” elements were important but at lower levels of 62%, 67% and 44%, respectively. On the Environmental side, water scarcity and cleanliness, and pollution and waste management were the most important elements, particularly among female clients.
Financial Advisors Top Source for Information, Education
RBC’s survey also revealed a vast majority of clients (86%) would turn to their financial advisors to find out more about ESG investing, signaling the need for advisors to be ready to guide current and future generations of investors on topics around responsible investing and how they can integrate different ESG considerations into an overall investment portfolio and long-term plan. Advisors have to also recognize that while many clients are interested in ESG investing, they don’t always know where to start in the learning process.
“Advisors need to be prepared to engage in conversation and proactively approach the topic of responsible investing with clients, who are seeking their expertise and guidance as they navigate through new ESG investing opportunities,” McClanahan added. “Responsible investing is an area that will continue to grow as clients express greater interest. RBC Wealth Management will be ready to provide the advice and tools to confidently include ESG investments in clients’ portfolios.”
About the Survey
Survey results are based on responses from 1,003 RBC Wealth Management – U.S. clients in February 2021. The survey was sent via email with a link to an online survey to 20,000 clients, representing a 5% response rate. Of the client responses, 43% are high net worth (HNW) clients with investable assets of $1 million or more.
About RBC Wealth Management – U.S.
In the United States, RBC Wealth Management operates as a division of RBC Capital Markets, LLC. Founded in 1909, RBC Wealth Management is a member of the New York Stock Exchange, the Financial Industry Regulatory Authority, the Securities Investor Protection Corporation, and other major securities exchanges. RBC Wealth Management has $463 billion in total client assets with more than 2,000 financial advisors operating in 178 locations in 42 states.