Covid-19 magnified awareness surrounding the ‘S’ in ESG, exacerbating many existing societal issues in areas such as healthcare, education and employee working conditions. Recent social justice demonstrations – primarily driven by the younger generations – have also shone a spotlight on the importance of the ”S”.
Governments, businesses and investors recognise the relevance of environmental issues and this is being reflected in policy and practice. The “S” (social element of ESG), however, has been somewhat overlooked, with the majority of inflows aligned with the United Nations’ Sustainable Development Goals (SDGs) finding their way to environmentally focused funds. But this is changing, particularly in light of the Covid-19 pandemic.
The investable megatrend over the next 5 years for Gen Zs.
Climate change
34%
Technological Innova�on
This social dimension is clearly a priority for younger investors; Generation Z respondents view “S” investing as the next megatrend. More investors in this group consider human rights to be the most significant investment opportunity (45%). They also show a stronger interest in diversity and inclusion (29%).
34%
Green Infrastructure
29%
Biodiversity
33%
Human and social rights
45%
Diversity and inclusion
29%
Genera�on Z
Millennials
Genera�on X
Baby Boomers
Q18. In which megatrend would you consider investing (more) in the next 5 years? Select up to 3 answers.
Knowledge level on the ESG three components
Genera�on Z
Genera�on X
Baby Boomers
Overall
Millennials
We have observed that investors who have tended to focus on the ‘E’ aspect of responsible investment are now shifting their attention to the ’S’. This observation is supported by the finding that investors feel they understand these two issues more than they comprehend the ‘G’ factor. 43% rate themselves as knowledgeable when it comes to the environmental and social dimensions of investing. This compares to 35% who feel the same way about governance concerns.
Environment
43%
35%
53%
46%
30%
Social
43%
50%
56%
42%
30%
Governance
35%
29%
44%
35%
24%
% Knowledgeable (4 +5)
Q5. Please rate your knowledge of the three ESG components in terms of how they relate to investing. Rate on a scale of 1-5 where 1 = No knowledge at all and 5 = Expert knowledge
16
2021 Nordea ESG Survey
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