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.