Interest in Sustainable Investing Withstands Market Disruption

WASHINGTON, D.C. -- The latest Wells Fargo/Gallup poll of U.S. investors, conducted May 11-17, indicates that consumer interest in sustainable investing was not wiped out in the U.S. stock market crash that occurred at the start of the COVID-19 pandemic in March.

Even as investor optimism was down sharply from the first quarter, close to half (46%) of U.S. investors polled in May described themselves as very or somewhat interested in sustainable investing funds. This was little changed from 52% saying the same in mid-February as the leading market indexes were approaching record highs.

	Very interested	Somewhat interested	Not too interested	Not interested	Very/Somewhat interested
	%	%	%	%	%
2020 May 11-17	10	36	30	23	46
2020 Feb 10-16	12	40	29	18	52
Wells Fargo/Gallup

The Wells Fargo/Gallup surveys of investors are based on U.S. adults with $10,000 or more invested in stocks, bonds or mutual funds, either within or outside a retirement savings account. Roughly four in 10 U.S. adults meet these criteria.

One in Nine Report Investing in Sustainable Funds

Sustainable investing, also known as socially responsible or social impact investing, refers to investing in companies or funds that are aligned with one's social or political values. Within this area, so-called ESG funds are typically focused on companies that promote environmental sustainability, support certain social positions or meet certain standards for corporate governance.

While some investors may view sustainable investing as secondary to the main task of maximizing investment returns, the February poll found about three in four investors believing that sustainable investing funds generally outperform (7%) or match (69%) the market average. One in four (24%) thought they perform worse.

At the same time, relatively few investors -- 13% in May -- report having money invested in sustainable investing funds. Another 52% aren't sure, while 35% say they don't have them. One reason for the low reported investment in such funds could be a lack of awareness that they exist. While one in four investors say they have heard a lot (5%) or a fair amount (21%) about sustainable investing, most have heard only a little (32%) or nothing (42%).

Interest Highest Among Younger Investors, Women and Democrats

Interest in sustainable investing varies widely, depending on investors' political affiliation, retirement status and gender.

• Whereas two-thirds of investors who are Democrats and half who are independents say they are very or somewhat interested, less than one-quarter of Republican investors are.

• The slight majority of nonretired investors versus barely a third of retirees are interested.

• There is a 13-percentage-point gender gap in interest in sustainable investing, with 52% of women versus 39% of men very or somewhat interested.

Notably, interest is as high among those with less than $100,000 invested as it is for those with $100,000 or more.

	Very/Somewhat interested	Not too interested	Not interested at all
	%	%	%
Total	46	30	23
Work status
Not retired	52	27	21
Retired	35	38	27
Gender
Men	39	39	22
Women	52	24	24
Party ID
Republican	23	37	39
Independent	50	31	19
Democrat	67	24	9
Total investments
Less than $100,000	47	28	24
$100,000+	46	32	22
Wells Fargo/Gallup, May 11-17, 2020

Implications

Even though the market has partially recovered, its sharp decline earlier this year could conceivably have weakened investors' interest in sustainable investing, forcing them to focus more on their investments' risk level and potential for growth than on societal goals. That does not seem to have happened. Investors showed nearly as much interest in May in the concept of sustainable investing as they did in February, when the market was soaring.

This stability suggests that other insights about sustainable investing in the February survey remain valid today. For instance, two-thirds of investors said they would definitely (28%) or probably (41%) include sustainable funds as part of their 401(k) if their employer offered them.

In February, investors indicated they were most likely to invest in funds focused on reducing pollution (81% very or somewhat likely), followed by promoting responsible corporate governance (78%), promoting worker rights (74%) and promoting racial equality (72%).

It's possible that the greater national focus on racial injustice since May has further increased investors' general interest in socially responsible investing, as well as their specific interest in funds focused on racial justice.

Learn more about how the Wells Fargo/Gallup Investor and Retirement Optimism Index works.