Impact Investing Appeal Reaches All-Time High

Appeal of Impact Investing Reaches All-Time Highs

American Century Investments^®' impact investing survey shows growth of greenwashing concerns and individuals' willingness to sacrifice returns for impact

May 25, 2022 - Kansas City, Missouri.

The appeal of impact investing has reached all-time highs in the fifth impact investing survey  by global asset manager American Century Investments^®. Respondents were surveyed at the end of 2021 in the United States, United Kingdom, Germany and Australia. Responses reflected rising interest in impact investing compared to results going back to 2016 in the U.S., to 2019 for the UK and 2020 for Germany. Australia was new to the 2021 survey.

"We see a rising demand across geography, generation and gender, along with favorable economics and a supportive political and regulatory environment that will drive changes and advances in sustainable investing over the coming year," said Sarah Bratton Hughes, senior vice president and head of ESG and sustainable investing for American Century Investments.

Appeal of impact investing increases across geography, generation and gender
In the United States, 61% of respondents found impact investing appealing, up from 51% in 2020. Similarly, the appeal in the United Kingdom rose to 63%, up from 48% in 2020. The appeal in Germany increased from 35% in 2020 to 44% in 2021. The lower appeal of impact investing by German respondents relative to the other countries was driven by the statistically significant larger share who reported they didn't know if it was appealing or not (35%) compared to the U.S. (17%), UK (17%) and Australia (18%). Statistically similar shares of respondents in the U.S. (22%), UK (20%), Germany and (21%) Australia (24%) indicated they found impact investing unappealing.

The majority of respondents in the U.S. (61%), UK (63%) and Australia (57%) found impact investing appealing, with appeal even higher among millennials (66%) and Gen Xers (64%) in the U.S.; millennials (67%) in the UK; and millennials (68%) and Gen Xers (60%) in Australia. While baby boomers generally found impact investing less appealing than the overall population, their interest increased year over year in each country surveyed again. The appeal of impact investing increased 10 points to 55% for American baby boomers, increased 29 points to 63% for UK baby boomers and increased 6 points to 32% for German baby boomers.

Impact investing gained appeal for men and women over the years surveyed. In the United States, appeal was up to 63% for men (from 57% in 2020) and 59% for women (from 46% in 2020). In the UK, appeal was up to 66% for men (from 48% in 2020) and 60% for women (from 48% in 2020). In Germany, appeal was up to 50% for men (from 40% in 2020) and 38% for women (from 29% in 2020). In all four countries, women were less likely than men to say impact investing was unappealing.

Environment the largest concern internationally, while health care topped American concerns
The top cause for respondents in the UK (34%), Australia (30%) and Germany (34%) was the environment and climate change, whereas in the U.S. the top concern was health care and disease prevention and cures (25%).

As an asset manager with an impact on global health, American Century Investments has a unique perspective on sustainable investing. More than 40% of American Century dividends go to the Stowers Institute for Medical Research, a world-class biomedical research organization with an equity stake in American Century.

"With the Stowers Institute as our controlling owner, doing good for the world comes from doing well for our clients. Over the last 22 years, we have generated more than $1.87 billion for their medical research as we work to generate returns for our clients. With our history and culture, we are better positioned than anyone in the industry to help clients navigate sustainable investing that can do good for the world while helping our clients prosper with purpose," said Jonathan Thomas, president and chief executive officer of American Century.

In its 2022 environmental, social and governance (ESG) outlook, American Century identified those top concerns among those surveyed, as well as empowerment (labor), sustainable living (food crisis) and digitalization (cyber), as areas that would dominate the ESG space in the coming year and beyond.

"Our approach to ESG and sustainable investing focuses on the opportunities within the areas of empowerment, sustainable living, environment, digitalization and health care to innovate solutions, address critical challenges and transform society. These important themes shape our research agenda, engagement and proxy voting activities to not only contribute to transforming society but doing so while delivering superior, long-term, risk-adjusted returns," said Bratton Hughes.

Alpha plus: Sustainable investing as an alpha generator
A significant, and increasing, share of people are willing to sacrifice returns for a positive impact. In the U.S., 38% of respondents reported a willingness to sacrifice returns for a positive impact, up from 33% in 2020. A staggering 50% of U.S. millennials are willing to sacrifice returns for a positive impact, with similar numbers in the UK (49%) and Australia (45%).

"In our view, this trade-off isn't necessary and isn't the future of sustainable investing. Sustainable investing is more than just a risk mitigator. We believe it's an alpha generator. This is alpha plus: sustainable and impact strategies have the potential to provide market-beating returns coupled with societal and environmental alpha," said Bratton Hughes. "We expect this alpha-plus approach to appeal to the majority of people who are either unsure or unwilling to sacrifice returns for a positive impact."

Greenwashing concerns also continue to increase, but don't deter appeal
Concerns about greenwashing continue, with half or more of respondents in the U.S. (50%), UK (58%), Germany (50%) and Australia (51%) believing greenwashing has increased. Despite this, less than half of respondents in the U.S. (44%), UK (39%), Germany (38%) and Australia (39%) reported greenwashing influenced their interest in impact investing.

"We expect greenwashing not only to remain a concern, but to expand beyond environmental or climate claims to claims related to all Sustainable Development Goals. The combination of regulatory pressure, investor demand and industry cooperation will help drive clarity, consistency and transparency across the sustainable investing space," said Bratton Hughes.

• Infographic:

   

  The Growing Appeal of Impact Investing 

Survey methodology
Impact investing is financial investments designed to have a positive impact on society, while providing potential long-term returns. The 2021 survey was conducted among a representative sample of 1,008 U.S. adults, 1,003 UK adults, 1,016 adults in Germany, and 1,006 adults in Australia 18 years of age and older from November 17-19, 2021 in the U.S. and November 16-21, 2021 internationally. The study was fielded using ENGINE's Online CARAVAN^® Omnibus Survey. The results from the survey were weighted by age, sex, geographic region, race and education to ensure reliable and accurate representation of the adult U.S., UK, Germany and Australia. Previous years' survey results can be found here.

Interest in Impact Investing at All-Time High Worldwide

American Century Investments^®' impact investing survey shows growth of greenwashing concerns and individuals' willingness to sacrifice returns for impact

May 25, 2022 - London

The appeal of impact investing has reached all-time highs in the fifth impact investing survey by global asset manager American Century Investments. Respondents were surveyed at the end of 2021 in the United States, United Kingdom, Germany and Australia. Responses reflected rising interest in impact investing compared to results going back to 2016 in the U.S., to 2019 for the UK and 2020 for Germany. Australia was new to the 2021 survey.

"We see a rising demand for impact investing across geography, generation and gender, along with favorable economics and a supportive political and regulatory environment that will drive changes and advances in sustainable investing over the coming year," said Sarah Bratton Hughes, senior vice president and head of ESG and sustainable investing for American Century Investments.

Appeal of impact investing increases across geography, generation and gender
The appeal of impact investing has grown in the UK more than any other country surveyed as a result of the COVID-19 driven global economic downturn, rising to 63% (more than three-in-five), up from 48% in 2020. In the United States, 61% of respondents found impact investing appealing, up from 51% in 2020, while the appeal in Germany increased from 35% in 2020 to 44% in 2021.

While the majority of respondents across geographies found impact investing appealing, the highest interest was registered among millennials (67%) in the UK, U.S. (66%) and Australia (68%). Nearly as many Gen Xers in the UK (62%), U.S. (64%) and Australia (60%) found the concept appealing. While baby boomers generally found impact investing less appealing than the overall population, their interest increased year over year in each country surveyed again. The appeal of impact investing increased 10 points to 55% for American baby boomers, increased 29 points to 63% for UK baby boomers and increased 6 points to 32% for German baby boomers.

Impact investing gained appeal for men and women over the years surveyed. In the United States, appeal was up to 63% for men (from 57% in 2020) and 59% for women (from 46% in 2020). In the UK, appeal was up to 66% for men (from 48% in 2020) and 60% for women (from 48% in 2020). In Germany, appeal was up to 50% for men (from 40% in 2020) and 38% for women (from 29% in 2020). In all four countries, women were less likely than men to say impact investing was unappealing.

Environment the largest concern internationally, while health care topped American concerns
The top cause for respondents in the UK (34%), Australia (30%) and Germany (34%) was the environment and climate change, whereas in the U.S. the top concern was health care and disease prevention and cures (25%).

As an asset manager with an impact on global health, American Century Investments has a unique perspective on sustainable investing. More than 40% of American Century dividends go to the Stowers Institute for Medical Research, a world-class biomedical research organization with an equity stake in American Century.

"With the Stowers Institute as our controlling owner, doing good for the world comes from doing well for our clients. Over the last 22 years, we have generated more than $1.87 billion for their medical research as we strive to generate returns for our clients. With our history and culture, we believe we are better positioned than anyone in the industry to help clients navigate sustainable investing that can do good for the world while helping our clients prosper with purpose," said Jonathan Thomas, president and chief executive officer of American Century.

In its 2022 environmental, social and governance (ESG) outlook, American Century identified those top concerns among those surveyed, as well as empowerment (labor), sustainable living (food crisis) and digitalization (cyber), as areas that would dominate the ESG space in the coming year and beyond.

"Our approach to ESG and sustainable investing focuses on the opportunities within the areas of empowerment, sustainable living, environment, digitalization and health care to innovate solutions, address critical challenges and transform society. These important themes shape our research agenda, engagement and proxy voting activities to not only contribute to transforming society but doing so while striving to deliver superior, long-term, risk-adjusted returns," said Bratton Hughes.

Greenwashing concerns highest in the UK, but don't deter appeal
Concerns about greenwashing continue, with half or more of respondents in the UK (58%), U.S. (50%), Germany (50%) and Australia (51%) believing greenwashing has increased. Despite this, less than half of respondents in the U.S. (44%), UK (39%), Germany (38%) and Australia (39%) reported greenwashing influenced their interest in impact investing.

"We expect greenwashing not only to remain a concern, but to expand beyond environmental or climate claims to claims related to all Sustainable Development Goals. The combination of regulatory pressure, investor demand and industry cooperation will help drive clarity, consistency and transparency across the sustainable investing space," said Bratton Hughes.

Alpha plus: Sustainable investing as an alpha generator
A significant share of people are willing to sacrifice returns for a positive impact. In the UK, 39% of respondents reported a willingness to sacrifice returns for a positive impact, followed closely by respondents in the U.S., 38%. A staggering 50% of U.S. millennials are willing to sacrifice returns for a positive impact, with similar numbers in the UK (49%) and Australia (45%).

"In our view, this trade-off isn't necessary and isn't the future of sustainable investing. Sustainable investing is more than just a risk mitigator. We believe it's also an alpha generator. This is alpha plus: sustainable and impact strategies have the potential to provide market-beating returns coupled with societal and environmental alpha," said Bratton Hughes. "We expect this alpha plus approach to appeal to the majority of people who are either unsure or unwilling to sacrifice returns for a positive impact."

• Infographic:

   

  The Growing Appeal of Impact Investing 

Survey methodology
Impact investing is financial investments designed to have a positive impact on society, while providing potential long-term returns. The 2021 survey was conducted among a representative sample of 1,008 U.S. adults, 1,003 UK adults, 1,016 adults in Germany, and 1,006 adults in Australia 18 years of age and older from November 17-19, 2021 in the U.S. and November 16-21, 2021 internationally. The study was fielded using ENGINE's Online CARAVAN^® Omnibus Survey. The results from the survey were weighted by age, sex, geographic region, race and education to ensure reliable and accurate representation of the adult U.S., UK, Germany and Australia. Previous years' survey results can be found here.

American Century Investment Management (UK) Limited is registered in England and Wales. Registered number: 06520426. Registered office: 12 Henrietta Street, 4th Floor, London, WC2E 8LH.

Survey: In the US, Acceptance of Impact Investing Has Been Steadily Increasing Since 2016–German Investors Lag Behind but Are Catching Up–Millennials Particularly Open-Minded

Frankfurt am Main, 30. 2022

The fifth edition of the impact investing survey by global asset manager American Century Investments^® shows an all-time high for the appeal of impact investing. Although interest in the concept of explicitly achieving positive impacts on the environment and society through financial investments is also growing in Germany, German investors have a lot of catching up to do compared to the US, the United Kingdom and Australia.

While 61 percent of respondents in the US find impact investing attractive, only 44 percent in Germany do (compared to 35 percent last year). "Here, many investors do not seem to be aware of the corresponding opportunities yet," Volker Buschmann, Vice President Strategic Relationship Management EMEA of American Century, explains this difference to other countries. "This can be seen in the relatively high percentage of those who, when asked how appealing they find the idea of impact investing, answer with "I don't know" (35 percent compared to 17 percent in the US). Nevertheless, it is very clear that there is a growing awareness that investment decisions have an impact on social and ecological developments."

This is also reflected in everyday purchasing decisions. Some 38 percent of the US citizens surveyed said that they intentionally choose to do business with companies that make a positive contribution to society. In Germany, by contrast, only 21 percent do so, but 36 percent say they would consider doing so in the future. The survey was conducted before the start of the war in Ukraine.

Germans' investment decisions continue to be dominated by classic considerations such as return, risk and investment duration. Only 29 percent of investors are willing to sacrifice returns for a positive impact. In the US, as many as 38 percent say this, which is an increase of five percentage points compared to the previous year.

"In our view, this trade-off isn't necessary and isn't the future of sustainable investing. Sustainable investing is more than just a risk mitigator. We believe it's also an alpha generator. This is alpha plus: sustainable and impact strategies have the potential to provide market-beating returns coupled with societal and environmental alpha," says Sarah Bratton Hughes, Head of ESG at American Century. "We expect this alpha-plus approach to appeal to the majority of people who are either unsure or unwilling to sacrifice returns for a positive impact."

Debates about so-called greenwashing have not done lasting damage to interest in impact investing. It is true that across all countries surveyed, about half of investors believe that more companies are portraying themselves as more sustainable than they actually are. However, only 38 percent of German investors say that greenwashing has affected their interest in impact investing.

"We expect greenwashing not only to remain a concern, but to expand beyond environmental or climate claims to claims related to all Sustainable Development Goals. The combination of regulatory pressure, investor demand and industry cooperation will help drive clarity, consistency and transparency across the sustainable investing space," says Bratton Hughes.

A generational issue
What is equally true for all regions: younger people are more likely to feel attracted to the concept of impact investing than older people. The study distinguishes between the millennials, Generation X and Baby Boomers. The biggest supporters of impact investing are millennials in the UK, two-thirds of whom find the idea "very appealing" or "appealing." Among German millennials it is still half, but among German Baby Boomers only one third. They are also the group of which almost half answer "I don't know."

There are different views in the regions surveyed about the goals to be pursued with impact investing. In Germany, environmental protection and climate change are given the highest importance; this area is named as a top priority by over a third. This is followed by the fight against poverty (19 percent) and the area of health care / prevention and research into therapies (17 percent). This area is at the top of US investors' priorities (25 percent) and in second place in the UK with 28 percent.

Volker Buschmann: "When investors think about the goals of impact investing, health systems and medical care are among the top priorities everywhere. As an asset manager with more than 40 percent of our dividends going to the Stowers Institute for Medical Research, we believe we are better positioned than anyone in the industry to serve this goal. Since 2000, 1.87 billion US dollars in dividends from the fund business have flowed to the institute. We also see ourselves as experts in 'medical impact' investment solutions."

An overview of the key findings of the survey can be found here. You can obtain the complete results here.

• Infographic:

   

  The Growing Appeal of Impact Investing

About the survey methodology
Impact investing is financial investments designed to have a positive impact on society, while providing potential long-term returns. The 2021 survey was conducted among a representative sample of 1,008 U.S. adults, 1,003 UK adults, 1,016 adults in Germany, and 1,006 adults in Australia 18 years of age and older from November 17-19, 2021 in the U.S. and November 16-21, 2021 internationally. The study was fielded using ENGINE's Online CARAVAN^® Omnibus Survey. The results from the survey were weighted by age, sex, geographic region, race and education to ensure reliable and accurate representation of the adult U.S., UK, Germany and Australia. Previous years' survey results can be found here.

American Century Investments (EU) GmbH is registered with the German Federal Financial Supervisory Authority (Bundesanstalt für Finanzdienstleistungsaufsicht (BaFin)).

Millennials And Generation X Leading Impact Investing Charge: American Century Investments^®

May 25, 2022 - Sydney, Australia

Australian millennials and Generation X are leading the rise of impact investing among local investors, according to a global study conducted by US-based asset management firm, American Century Investments.

The fifth impact investing study assesses the role of impact investing on society as well as perceived financial returns, with respondents from the US, UK, Germany and, for the first time, Australia, participating in this year's study. Results were weighted by age, sex, geographic region, race and education to ensure reliable and accurate representation of the adult population in these jurisdictions.

The majority of respondents in the US (61 per cent), UK (63 per cent) and Australia (57 per cent) found impact investing appealing. Appeal was even higher among millennials and Gen Xers in the US (66 per cent and 64 per cent respectively); millennials in the UK (67 per cent); and millennials and Gen Xers in Australia (68 per cent and 60 per cent) in Australia.

While baby boomers generally found impact investing less appealing than the overall population, their interest has increased over consecutive years of running the study.

According to American Century's head of ESG and sustainable investing, Sarah Bratton Hughes, there is a rising demand for impact investing across geography, generation and gender, along with favorable economics.

"This demand is further backed by a supportive political and regulatory environment that will help drive changes and advances in sustainable investing over the coming year."

"The combination of regulatory pressure, investor demand and industry cooperation will also help with consistency and transparency across sustainable investing, including alleviating any investor concerns around greenwashing," she said.

The practice of greenwashing refers to inaccurate information or a lack of information, relating to a company's sustainability practices, including its environmental credentials.

"We expect greenwashing not only to remain a concern, but to expand beyond environmental or climate claims to claims related to all Sustainable Development Goals, including those more aligned to social values such as diversity and inclusion," she said.

The study also revealed the leading catalyst for a third of impact investors in the UK (34 per cent), Germany (34 per cent) and Australia (30 per cent) is the environment and climate change. As well, 30 per cent of Australian respondents cited health care/disease prevention and cures as a catalyst. In the US, 25 per cent of respondents cited the top impact investing concern as health care and disease prevention and cures. American Century has a unique perspective on sustainable investing. More than 40 per cent of American Century dividends go to the Stowers Institute for Medical Research, a biomedical research organisation with an equity stake in American Century.

Other concerns for Australian investors include improved education (10 per cent), racial equality and social justice (8 per cent), mitigating poverty (8 per cent) and gender equality (7 per cent).

Of particular significance is the increasing share of investors willing to sacrifice financial returns for a positive impact. In all, 38 per cent of US respondents reported a willingness to sacrifice returns for a positive impact, up from 33 per cent in 2020. Further, 50 per cent of US millennials are willing to sacrifice returns for a positive impact, with similar numbers in the UK (49 per cent) and Australia (45 per cent).

"This trade-off isn't necessary and it is not the future of sustainable investing. Sustainable investing is more than just a risk mitigator; we believe it's also an alpha generator. Sustainable and impact strategies have the potential to provide market-beating returns coupled with societal and environmental alpha.

"This alpha-plus approach will soon appeal to the majority of people who are either unsure or unwilling to sacrifice returns for a positive impact," she said.

American Century Investments has identified five key themes which frame its approach to ESG and sustainable investing, and informs investment decisions across all funds and strategies. These include empowerment, sustainable living, environment, digitalization and health care to innovate solutions.

"These important themes shape our research agenda, engagement and proxy voting activities to not only contribute to transforming society but doing so while striving to deliver superior, long-term, risk-adjusted returns," said Ms. Bratton Hughes.

• Infographic:

   

  The Growing Appeal of Impact Investing