MINNEAPOLIS – Perhaps once considered a passing fad, sustainable investing has solidified its place at the investing table and will likely hold that position for years to come, according to a new study* released today by Allianz Life. In addition, the study found Americans are now turning their attention to financial services and insurance companies with an expectation that they implement sustainable investing standards as part of their standard investing process.
Interest Remains Strong
The 2021 Allianz Life Sustainable Investing Study found that sustainable investing remains top of mind and in favor with Americans despite the ongoing volatility of the past several years. In fact, nearly two-thirds (64%) of study respondents currently hold a positive overall opinion on this type of investing. Looking beyond perception, many Americans are also interested in taking action. More than half of the survey respondents (52%) who are not currently participating expressed interest in allocating funds to sustainable investments.
For those who have already taken the plunge and are choosing sustainable investing, they appear to be committed. The study found that respondents (already investing) are putting nearly half (46%) of their total investment portfolio toward companies adhering to sustainability principles. In addition, they are not afraid to use their investments as a way to reward or punish companies for their sustainability practices – or lack thereof. More than two-thirds (68%) of Americans believe that reallocating investments away from companies not adhering to sustainability principles (to those that do) is an effective way to punish or reward companies for their actions.
Focus On Financial Services And Insurance Companies
Findings from the study also indicate an increased focus by Americans on the role that financial services companies and insurance carriers play in sustainable investing. Nearly two-thirds (64%) of respondents agreed that a financial services company can have a significant impact on environmental sustainability efforts, and that, collectively, a commitment in the financial services industry to environmental sustainability could make a positive difference (68%). They held similar beliefs about the role insurance companies can play in supporting these efforts. More than 61% indicated that an insurance company can have significant impact on environmental sustainability efforts, and that if the insurance industry committed to these efforts it would make a positive difference (64%).
“Sustainable investing leads to sustainable outcomes,” said Todd Hedtke, chief investment officer, Allianz Life. “Financial services and insurance companies are in a unique position and can play a critical role in the adoption of sustainable investing principles. Industry leaders have adopted a set of investing criteria that uses a sustainability lens for evaluating potential investments. It has a powerful domino effect toward bringing more companies in line with efforts to create a more sustainable future.”
This increased focus on the financial services and insurance industries is also leading to a new expectation. More than six in 10 Americans (63%) believe that financial services companies have a responsibility to do whatever they can to mitigate the climate crisis, and 59% felt insurance companies have the same obligation.
Interestingly, respondents also are drawing a clear line between sustainable investing and better outcomes. Sixty-two percent of Americans believe that financial services companies who embrace environmental sustainability are better positioned for long-term success, with 58% feeling the same way about insurance carriers. Diving even deeper, more than 63% said that if they were making a decision on which life insurance policy to choose, they would choose the policy from the carrier that is committed to incorporating principles of sustainability into their investment decisions.
“Sustainable investing has moved from being an aspiration to an expectation,” added Hedtke. “Financial service and insurance companies that follow sustainable investing practices are well-positioned to deliver superior long-term financial results. The firms that choose to ignore these principles will face increasing costs, rising negative sentiment among investors, and, ironically, a less than sustainable future themselves.”
With these increased expectations comes a need for greater awareness of the investing process though. Only 52% of people understand how financial services companies make decisions about how to invest their money, and fewer (38%) are aware of specific financial services companies that successfully invest their assets in environmental sustainability efforts. Fewer understand how insurance companies make investment decisions (46%), and know any insurance companies successfully investing in environmentally responsible ways (31%).
*Allianz Life conducted an online survey in April 2021 with a nationally representative sample of 1,000 respondents age 18+ with an annual household income of at least $50,000.