PRI survey shows higher awareness of ESG issues in emerging markets
LONDON, 10 September 2015
A new survey commissioned by the Principles for Responsible Investment (PRI) and conducted by YouGov, shows that retail investors in some emerging markets appear to be more engaged on ESG issues than their counterparts in the developed world.
The survey, which covered pension fund holders in seven markets (UK, US, France, Japan, Australia, South Africa and Brazil) was undertaken to identify retail investors’ awareness of, and attitudes towards the companies in which their pension funds are invested as well as their views on environmental, social and governance (ESG) issues. The survey also looked at the communication that investors have with their fund manager in terms of the information they receive.
For example, on the question of whether they felt that how a company manages ESG issues provides insight into how the company is run, 67% of respondents in Brazil and 58% of respondents in South Africa said they strongly agreed with this statement. This was in sharp contrast to the US, UK, France and Japan, where less than 25 % of respondents strongly agreed with this statement.
Which ESG issues matter to retail investors?
Respondents were asked about specific ESG issues—burning of fossil fuels that contributes to climate change; using child labour; CEOs being paid too high a salary and companies exploiting tax loopholes. On these questions, respondents in emerging market countries often had the highest levels of concern:
- Eighty-three percent of respondents in Brazil and 77% of respondents in South Africa felt it was very or fairly important that the companies in their pension scheme were not seen to be burning fossil fuels which link to climate change.
- Respondents in Brazil, Australia and South Africa also placed the most importance on companies not exploiting tax loopholes—76%, 76% and 78% respectively.
- Around three quarters of respondents in Brazil, South Africa and Australia also said that it was very/fairly important that CEOs not be paid too high a salary (73%, 77% and 77% respectively).
- Finally, child labour was the number one issue of concern to investors in terms of companies in the portfolio that might be involved in this practice. This issue ranked highest in Brazil, South Africa and Australia, with the overwhelming majority of respondents (86%, 88% and 88% respectively).
“Studies have shown that Brazil and South Africa are among the most vocal in calling for greater ESG disclosure,” said Fiona Reynolds, managing director of the Principles for Responsible Investment (PRI). “And the results of this survey show that it’s not just institutional investors who are concerned about and engaged on ESG considerations but retail investors as well.”
Communication with fund managers presents mixed view
Respondents were also asked about the level of communication they had with their fund managers and also how much they felt that managers listened to their concerns.
Only 7% of UK respondents and 3% of Japan respondents said that their fund manager responds to queries in a timely fashion compared with 30% in Brazil and 28% in Australia and South Africa.
Similarly, when asked “I feel like my fund manager listens to my concerns and acts upon them,” only 3% of respondents in the UK and 8% of Japan said this was the case, compared with 21% in Brazil and Australia and 19% in South Africa.
In terms of information that respondents would like to see from their fund managers, concerns other than financial ones came into play in emerging markets, with 52% of respondents in Brazil and 43% in South Africa saying it would be helpful if their fund manager sent them information on how the companies in their funds deal with ESG issues such as climate change.
And at least half of respondents in Brazil (53%) and South Africa (50%) said they would like to receive alerts from their fund manager when a company has been accused of wrongdoing.
Finally, in all the countries, except the UK, at least 25% of respondents said they would like more consultation with their fund manager about issues that are meaningful to investors.
For an executive summary of the survey, please click on the link here.
Notes to Editors
All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 8,287 adults aged 18+ in the UK (n=2,121), the US (n=1,119), France (n=1,025), Japan (n=1,001), Brazil (n=1,010), Australia (n=1,010) and South Africa (n=1,001). Fieldwork was undertaken between 17th – 25th June 2015. The survey was carried out online. The figures have been weighted and are representative of all adults in each market (aged 18+).