How much does ESG really matter to investors?

Performance, charges, fund manager and asset management company all come first according to new research.

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Performance, charges, fund manager and asset management company all come first according to new research.

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Although nearly two-thirds of private investors (65%) say they consider ESG, most prioritise other factors when choosing an investment, according to research from the Association of Investment Companies (AIC).1

When asked what was important to them in choosing an investment, respondents ranked ESG as the least important of five factors. This was true for men, women, investors under 45, and those aged 45 and over. Among all respondents, the most important consideration was an investment’s performance record, followed by fees and charges, the fund manager’s reputation, and the asset management company’s reputation (see table below).

One female respondent aged 59 said: “In my personal life I do give consideration to these things, I drive an electric car, I have a plant-based diet, I definitely have quite strong feelings about that – but hand on heart when it has come to my investments, the first thing I would look at is returns.”

ESG is more important to women than men, and more important to investors under 45 than those over 45.

Although the average investor is not primarily motivated by ESG, a significant minority of respondents (26%) rate ESG as their most important or joint most important concern when investing. Of these ESG-motivated investors, about half (53%) are over 45.

Importance of considerations when choosing investments


Importance of… (on a scale of 1 to 5)

All respondents



Aged under 45

Aged 45 or over

Performance record






Level of fees and charges






Fund manager’s skill/reputation






Asset management company’s reputation






ESG factors (environmental, social, governance)






Source: AIC/Research in Finance. Respondents ranked each issue on a 1-to-5 scale, where 5 meant “very important” and 1 meant “not at all important”.

Why don’t some investors consider ESG?

The research found that over a third (35%) of investors don’t consider ESG when making investment decisions. Among these investors, 57% agreed with the statement “I prioritise performance over ESG issues”. A lack of trust in asset managers’ ESG claims was another barrier to considering ESG, with 27% of those who don’t consider ESG stating that they are not convinced by such claims. Meanwhile, 22% of those who don’t consider ESG said they simply hadn’t thought about it.

The difficulty of researching ESG-focused investments is clearly another barrier to wider acceptance. A majority (57%) of all respondents agreed with the statement: “I am supportive of ESG investing, but I find these investments harder to research.

A 56-year-old male investor said: “I’m not sure I know enough of what I don’t know! It is a massively complicated area and there are huge gaps. I think it’s very hard to say for example ‘an ESG score of 19 out of 20 is good’ because it’s impossible to judge on that sort of basis.”

Impact of ESG investing on performance, charges and risk

The AIC’s survey also throws light on how private investors believe ESG investing will affect performance, risk and charges.

When it comes to performance, opinions are divided. A third of investors (33%) believe investing with ESG considerations in mind is likely to improve performance, while 20% think it is likely to have a negative impact, and 29% say it will have no overall impact.2

Views on risk are mixed too, with 20% believing ESG investing is likely to be lower-risk, 23% saying it will be higher-risk, and 43% thinking it will have no overall impact.

But on charges, opinions are clearer. Only 10% of investors believe ESG investing will mean lower charges, with 43% saying it will lead to higher charges and 36% expecting no overall impact.

Exclusion versus engagement

Funds that use either positive or negative screening to select investments appeal to more investors than those that adopt an approach of “ESG integration”.

When asked about the appeal of different types of ESG fund, the most popular was “funds that actively include investments that have positive effects on the environment or society”, with 22% of respondents finding them very appealing.

This was followed by funds adopting a negative screening approach, “that exclude investments that are harmful to the environment or society”, with 21% of respondents saying they were very appealing. Funds “that invest around a specific sustainability theme” were found very appealing by 14% of respondents. Finally, funds “that integrate ESG into the investment process but don’t rule out any particular investments or sectors” were very appealing to only 12% of respondents.

Appeal of different types of “ESG fund”

Type of fund

How much do the following types of fund appeal to you?
(5 = very appealing; 1 = not at all)






Don’t know

Funds that actively include investments that have positive effects on the environment or society







Funds that exclude investments that are harmful to the environment or society







Funds that invest around a specific sustainability theme







Funds that integrate ESG into the investment process but don’t rule out any particular investments or sectors







Source: AIC/Research in Finance. Percentages are % of respondents who ranked each type of fund 5, 4, 3, 2 or 1 on a scale where 5 meant “very appealing” and 1 meant “not appealing at all”.

Some respondents were unsure about the concept of engagement on ESG issues. One female investor aged 68 commented: “What are the rules? People say ‘Oh we talked to company X to make sure that our specifications were followed’, but I’m not very sure what those specifications were… and what did they actually discuss? Have they actually had companies change?”

AIC comment on the research

Annabel Brodie-Smith, Communications Director at the Association of Investment Companies (AIC), said: “ESG has never been a hotter topic within the investment industry, but this research provides a reality check by showing how much it matters to the average investor.

“Private investors do care about ESG issues, but some care more than others, and there is still a lot of confusion about funds’ ESG claims. Investors also have different priorities when it comes to ESG, which are complicated and sometimes competing.

“This year we have launched ESG disclosures on the AIC’s website, so that investors can look up the strategies and policies of investment companies. These initial disclosures now cover 76% of the industry by assets and help investors to identify investment companies that align with their values and priorities. As company activity, regulatory requirements and investor demand evolve, we will work with the sector to develop these disclosures to ensure they provide investors with useful information to guide their decision making.”

Further details of the research, including more survey questions and verbatims from investors, are available on request. Please contact the communications team (details below).


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Notes to editors

  1. An online survey of 454 private investors was commissioned by the Association of Investment Companies (AIC) and conducted by Research in Finance. Respondents were mixed by age and gender, investable assets and region but all had at least some money to invest and owned at least one investment product. All respondents self-select some of their investments, though 35% also invest through a financial adviser or wealth manager. The online survey was followed by 10 in-depth phone interviews with selected participants to gain further insights. Fieldwork was conducted between 7 June and 25 August 2021.
  2. “Don’t know” responses account for the remainder of responses for this question and the questions on risk and charges. For the question on performance, 18% of respondents selected “don’t know”, for the question on risk, 14%, and for the question on charges, 11%.
  3. The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment. Today, the AIC represents a broad range of closed-ended investment companies, incorporating investment trusts and other closed-ended investment companies and VCTs. The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help members add value for shareholders over the longer term. The AIC has 361 members and the industry has total assets of approximately £266 billion.
  4. Disclaimer: The information contained in this press release does not constitute investment advice or personal recommendation and it is not an invitation or inducement to engage in investment activity. You should seek independent financial and, if appropriate, legal advice as to the suitability of any investment decision. Past performance is not a guide to future performance. The value of investment company shares, and the income from them, can fall as well as rise. You may not get back the full amount invested and, in some cases, nothing at all.
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