Climate change ranked top influential factor among investors

The proportion of investors who view climate change as a top factor in their investment decisions rose, according to a survey from Deutsche Bank

More than half of investors view climate change as the most important factor affecting their investment decisions, according to the latest ESG client survey from Deutsche Bank’s private bank chief investment office.

According to the 2022 survey, which surveyed 900 clients from its private bank and business banking division globally between the end of July and August this year, 53% of investors regard climate change as the most important factor affecting their investment decisions, up from 47% last year. Other environmental issues were less important to investors such as land degradation (21%), ocean pollution (15%) and biodiversity loss (7%).

The report also found that 78% of private and business clients surveyed are concerned about the negative impact climate change has on the global economy, up from 74% in 2021.

“What is most interesting about this year’s findings is that client expectations of ESG are growing, not diminishing, even as the ESG universe reorientates through debate and development and while volatility persists in capital markets,” said Markus Muller, Deutsche Bank’s private bank ESG chief investment officer and head of the chief investment office.

Exactly half of investors surveyed regard environmental issues as the most important pillar of ESG investment, up from 46% last year, while 28% of them believe governance issues are the most important.

Meanwhile, social issues were seen as most important by 23% of investors, down from 27% in 2021.

The percentage of respondents who think ESG can be used to sufficiently manage risk in a portfolio has decreased to 44% this year, compared with 48% in 2021.

Another four in 10 respondents said they do not know or are neutral on the topic, while 16% strongly or slightly disagree that ESG can be used for portfolio risk management.

The survey also found that investors are looking to financial institutions to help manage the transition journey.

Almost 70% of surveyed investors expect their financial institution to accurately measure and manage nature-related risks, while 75% expect appropriate protection of portfolios.

“But financial institutions can only be one driver, alongside individual investors, corporates and governments, of necessary economic change,” said Deutsche in its report.

“Among others, greater investors’ knowledge is necessary to achieve this goal.”