Wells Fargo

Investors Want More Information on Sustainable Investing

Three in four U.S. investors are not familiar with the concept of sustainable investing, saying they have heard little or nothing about it, according to the latest Wells Fargo/Gallup Investor and Retirement Optimism Index survey. This is in part because relatively few U.S. investors report hearing about sustainable investing from a financial professional, family members or friends, or through the media. For 24% of U.S. investors, their largest source of investment knowledge comes from their own research.

However, when informed about sustainable investing, a majority of investors express interest in learning more and believe it performs on par with or better than the market average. Moreover, 71% of investors say they would be very or somewhat likely to purchase stock or funds invested in companies that align with their values.

“The consumer demand we see today for sustainable investing is just the tip of a potential iceberg,” said Tracie McMillion, head of Global Asset Allocation Strategy for Wells Fargo Investment Institute. “U.S. investors’ fundamental desire to align their investments with their personal preferences, combined with their lack of exposure to information about sustainable investing to date, points to significant growth in this market as consumer awareness grows.”

According to the survey, 25% of investors have heard a lot or a fair amount about sustainable investing funds, while 38% have heard only a little and 37% nothing. Only 12% of investors say they have heard about sustainable investing from a personal financial advisor and 9% from an investment or fund manager. Among employed investors with a 401(k), just 4% have heard about sustainable investing through their employer’s 401(k) program.

Lack of familiarity is the biggest reason investors give for not currently using sustainable investing funds:

• Nearly half (47%) of investors who don’t currently engage in sustainable investing say that not knowing enough about it is a major factor explaining their lack of participation; another 24% say it is a minor factor.
• A third (34%) say that concern the investments won’t perform well is a major factor, and 28% say it’s a minor factor.
• More than a third (37%) say that their advisor or 401(k) plan not offering the funds is a major factor, with 14% citing this as a minor factor.

The Wells Fargo/Gallup Investor and Retirement Optimism Index survey was conducted online Feb. 10-16, using the Gallup Panel. One in nine investors (11%) polled for the survey reports having money invested in sustainable investing funds. The results are based on 1,029 U.S. adults with $10,000 or more invested in stocks or bonds, either individually or as part of a retirement or mutual fund.