Investors more pragmatic than responsible
Investors are more interested in returns than socially responsible investing, a new report has found.
Produced by Opinion Leaders, the survey found individuals are concerned about issues such as global warming, but this doesn’t affect their investing decisions.
“We tried to look at the issues affecting corporate social responsibility (CSR) and how this related to investor behaviour,” Opinion Leaders director John Reid told Money Management.
“The interest is in the returns, but we found this is due to the shorter investment time horizon with individuals.”
Reid said institutions are concerned about the company and industry being sustainable for long-term returns.
“Because the institutions have a longer investment timeframe, they are more interested in sustainability,” he said.
Respondents to the survey expect governments to set targets on carbon dioxide emissions and then enforce them. However, 42 per cent of the respondents also expect companies to set their own emission targets, and mining companies were singled out as being responsible in this area.
Reid said individuals had certain sectors they would not invest in, and 65 per cent put gaming companies at the top of the list.
Defence suppliers (37 per cent) were second on the list and alcohol and tobacco were joint third, with 24 per cent of those surveyed saying they wouldn’t invest in these companies.
“We are seeing individuals become more aware of CSR issues, but that still has not affected their investment decisions,” he said.
“However, institutions are concerned with only self-preservation, and growth of the funds remains the key objective.”
Reid said the institutional interest in CSR only extends as far as seeing if the business or industry is sustainable.
“An institutional investor exists for only two reasons — to ensure an adequate return in investor’s capital and not to lose the capital,” he said.
“This means institutional investors can stay true to their raison d’etre and focus on simply ensuring continuity of adequate returns.”
The report — Investor Attitudes to Corporate Social Responsibility — interviewed 763 individuals, with more than two-thirds owning more than 14 different stocks. From this list, 20 were interviewed in depth, while industry organisations such as the Investment and Financial Services Association, Australian Shareholders Association and Institutional Shareholders Services were also interviewed.
Reid said the report was the first of what will become an annual survey in CSR.
“In the future, we will be able to track the changes in attitude to CSR by both individuals and institutions,” he said.
“At this stage, everybody thinks CSR will become more important over a period of time.”
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