Our findings show that there is a negative correlation between age and client’s score on our sustainability questionnaire; younger clients tend to score more highly, however this relationship is weak.
Figure 2: Proportions of clients within each sustainability profile based on generation (May 2021-December 2022)
When we classify clients based on their generation then we find that a lower percentage of millennials view sustainability as of “some” importance while a higher percentage view sustainability as of “high” or “very high” importance compared to all other generations (see figure 2).
However, the weak correlation becomes apparent when we observe that fewer boomers (II) have a “low” importance sustainability profile while more are within a “medium” profile, in comparison to all generations. Overall, there are consistent patterns across generations that shows around 30 per cent of clients view sustainability as of low importance.
Gender and sustainability preferences
Regarding gender differences, our results are in line with findings that show women are more interested in sustainable investing than men, but importantly we consider the perceived degree of importance.
We observe that of those who view sustainability as of “medium”, “high”, or “very high” importance, a significantly higher proportion of clients are women. In contrast, of those who view sustainability as of “low” or “some” importance when considering their investments, a significantly higher proportion are men (see figure 3).
Figure 3: Proportion of males and females within each sustainability profile (May 2021-December 2022)
Although there are differences in clients' views due to certain demographic characteristics, it is not ideal to make conclusions solely based on a client’s age, gender, or other stereotypes.
Conclusions
Using a psychometric sustainability preference questionnaire enables greater understanding of clients' views on sustainability and the importance of considering this when investing. Priorities can be discussed and established based on psychological factors that are essential for understanding motivations behind sustainable investing preferences.
Importantly, a psychometric approach involves creating a psychological and statistical model that can be tested and monitored over time.
Our findings demonstrate that the majority of advised clients view sustainability as at least of some importance when considering their investments and would particularly enjoy knowing they are having a positive impact on society and the environment.
Our results provide greater insight into advised clients' sustainability preferences and demonstrate the importance of using a variety of items to ascertain views on sustainable investing.
Relying on one question or a client’s background can lead to misjudging investor’s views, whereas multiple items reflecting a variety of dimensions using a psychometric questionnaire provides a reliable and valid measure.
Despite a significant increase in engagement with our investment sustainability questionnaire, advisers remain cautious when it comes to recommending sustainable funds, particularly given the lack of transparency and potential greenwashing.
