Danske Bank unit Danske Invest recently conducted a study on investor preferences in Denmark, and the analysis revealed that women are more willing than men to sacrifice returns to uphold environmental, social and governance (ESG) goals.
In fact, 59 percent of men were ready to invest in companies that ignored sustainability, provided they generated higher returns. Among women, the figure was 41 percent.
Despite that Denmark is one of the world’s greenest countries. Nevertheless, investors don’t seem ready to put their money in ESG assets.
It might be that they are conflicting with consumers’ concerns – especially since they are facing higher inflation and the geopolitical uncertainty triggered by Russia’s invasion of Ukraine.
Disclosing obligation
Europe’s revised Markets in Financial Instruments Directive requires that financial advisers ask their clients about their sustainability preferences.
This follows the Sustainable Finance Disclosure Requirement that entered into force in March 2021 in Europe. It forces the investment industry to document its ESG allocations.
ESG are underperforming
At the moment, ESG funds are underperforming. According to Bloomberg, the European ESG funds have lost an average of 8.9 percent this year. The survey shows that this outcome has less impact on women’s commitment to ESG.
“Men are generally more sceptical when it comes to sustainable investments,” said Natalia Setlak, a senior strategist at Danske Bank.
According to her, 23 percent of the men surveyed thought ESG had a “decidedly negative effect on returns”. Only 10 percent of women had the same view.
Investing in ESG shouldn’t involve a choice between sustainability and returns, Setlak said.
“There’s no reason to assume that companies with a strong profile within sustainability will perform worse in the future,” she added.
