Pollution and Working Conditions Top ESG Investor Concerns

Nearly half would accept a 10% loss for a company that aligns with their values.

Investors who say they incorporate environmental, social and governance (ESG) criteria in their portfolios are growing, but the ESG label can apply to a wide range of issues, from carbon emissions to privacy and animal rights. And some are more important to investors than others, according to Investopedia and Treehugger research.

In a recent survey of Investopedia and Treehugger readers, pollution and waste management garnered the most support from ESG investors, with 80% of respondents selecting it as an important consideration. Fair and safe working conditions came in second at 71%, and carbon emission reduction came third with 69%.

In addition to which causes mattered most to ESG investors, price still came ahead of ESG impact overall, with 74% of respondents reporting price as very or extremely important, compared with roughly half or 51% who claimed ESG is very important. Confidence in a company's management team and historical performance also edged out ESG impact.

ESG Investors Have Eyes On The Long Run

An even larger number of respondents or 89%, say long term returns are very important, compared to only 27% who said short-term returns are very important. Most or 66% of ESG investors said they're looking to generate income for retirement.

However, returns aren't always the most important to ESG investors, with nearly half admitting they’d accept up to a 10% loss in a five-year period for a company that aligns exceptionally against ESG standards. On average, ESG investors say about 40% of their portfolio aligns with ESG criteria.

Aside from faith-based and data-privacy issues, Treehugger readers were more likely than Investopedia readers to cite ESG issues as important to them.

Data by Amanda Morelli/Adrian Nesta.

Research and analysis by
Amanda Morelli
Amanda Morelli, Sr. Director of Data Journalism at Dotdash
Amanda is the Senior Director of Data Journalism at Dotdash Meredith (Investopedia's parent company) and she oversees development of data journalism projects for brands across the company.
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