Study: Employees want social investments – despite cost

Feb 15, 2018
Forty-four percent remain interested in social investments even if returns are lower

New research finds a strong appetite among UK workers for the pension funds they pay into to invest in environmental projects, at a time when major institutional investors are pressing companies to pursue ESG goals. 

Sixty-one percent of workers with a pension say they are interested in their money being invested in environmental projects, according to a study by the Chartered Institute for Securities & Investment (CISI). This interest remains high even when respondents are told the returns on investment in an environmental project may be lower. Forty-four percent of workers say they are still interested in these types of projects.

The study, carried out with YouGov and polling 1,141 adults in full or part-time work, also looks at attitudes to different areas of investment with some form of social impact. Investment in arms manufacturing companies or countries with dubious human rights records raise concerns among 70 percent of respondents. Other areas attracting high levels of concern are investments in tobacco (56 percent of respondents), gambling (55 percent) and alcohol (44 percent).

CISI notes differences both between men and women – with women more likely to voice concerns about both tobacco and alcohol investments – and by age. ‘Younger people are more concerned about investments in the alcohol industry,’ the report’s authors note, with 43 percent of those aged 25-34 voicing concerns, compared with 30 percent of those aged 35-44.

Communicating with the retail base

Andrea Wentscher, IR manager for retail investors at BASF, tells IR Magazine that among the retail investors buying the chemical company’s stock, ‘interest in ESG topics is steadily increasing as investors want to manage risk in their portfolio and support sustainable development.’ BASF retail investors’ top concerns in this area are ‘climate-related aspects such as energy efficiency [and] carbon footprint, and our products with a strong contribution to sustainability,’ she says.

Given that the German company has more than 500,000 retail investors, the best way to communicate with this constituency is via the firm’s website and social media, using platforms such as Facebook and Twitter, Wentscher says. Using these channels also means that ‘ultimately, more than just our shareholders benefit from easy-to-find, interesting and relevant online information.’ 

When it comes to talking ESG specifically, ‘it is important to show concrete KPIs, the corresponding goals and the status quo,’ Wentscher explains. ‘In addition, [at BASF] examples of sustainable products in their everyday applications are helpful to illustrate the positive impact of chemistry.’

But BASF has a large IR team – with 12 staffers in total – and having an IRO dedicated to the retail base is a luxury not all firms can afford. ‘With limited resources available, our recommendation is to focus on an up-to-date website, online services like a newsletter and in-person presentations to retail investors,’ Wentscher advises. ‘In Germany, such retail investor events are usually organized by banks or retail investor associations, which limits the company’s preparation time and offers direct access to the target group.’ 

Despite the IR resources at BASF, this is something the company continues to do, presenting to retail investors on average once a month. ‘During these events, several companies are invited to present their business activities and answer questions from the hundreds of attendees,’ Wentscher says. ‘This is a valuable opportunity to get direct feedback from retail investors. She adds that daily interaction with this element of the shareholder base also includes a ‘good amount’ of phone calls – and even a few faxes.

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