Individual Investors in the U.S. Outpace Their Global Peers in Sustainable Investing

G&A's Sustainability Highlights ( 02.15.2024 )
Mar 5, 2024 10:00 AM ET

Individual investors in the U.S., often referred to as “retail” investors, are important factors in the capital markets. estimates that 61% of all adults in the U.S. are invested in the stock market, while the latest Gallup poll says that up to 84% of households with $100,000 annual income are invested in the stock market. The equity investments of individual investors can be held in individual trading accounts, stock or bond mutual funds, ETFs, or self-directed IRA or 401(k) accounts.

Given the influence that individual investors have through the large percentage of trading volume and the influence this has on domestic capital markets, we are thinking about what do individual investors think of sustainable or ESG investments.

According to a new report from Morgan Stanley, examining a survey of approximately 3,000 active individual investors across the U.S., Europe, and Japan, “close to 80% of individual investors believe that it is possible to balance market rate returns with a focus on sustainability,” notes Jessica Alford, chief sustainability officer of the company.

The survey was conducted by Morgan Stanley Wealth Management and the Institute for Sustainable Investing. The majority of participants expressed the desire to have their investments help to advance positive environmental and social impact.

For those surveyed in the U.S., 84% of individual investors “are keen on sustainable investing." Breaking this down:

Millennials, Gen Xers, and Hispanic are the most enthusiastic at 91%.

LGBTQ+ are just behind at 89%.

Female investors are at 87%.

One of the most important findings of the survey is that U.S. investors allocate a larger percentage of their portfolios to sustainable investing compared to global peers in Japan and Europe. Climate change is the top consideration for sustainable investing, followed by healthcare, water solutions, and circular economy.

While the survey results are good news for capital markets professionals focused on sustainable investments, survey participants also expressed concerns over transparency and trust in corporate sustainability reporting. Morgan Stanley’s research findings included fears of greenwashing and uncertainty for individual investors on how to invest with ESG themes.

As our Top Story, G&A Institute is sharing details of the Morgan Stanley/Institute for Sustainable Investing survey as reported by Leo Almazora of Investment News. The G&A Institute team is available to help publicly-traded companies with their sustainability / ESG disclosures to attract both institutional and individual investors. 

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