ZEW Financial Market Survey – Experts Estimate Increasing Shares, but Average Return on Sustainable and Responsible Investments
ResearchThe vast majority of above 90 per cent of the 297 financial market experts who were interviewed in the context of the ZEW Financial Market Survey, think that the consideration of environmental and social objectives in business management are important or even very important. Correspondingly, they are very optimistic about the market potential of these so-called sustainable and responsible investments (SRI). More than 70 per cent of those interviewed by the Centre for European Economic Research (ZEW) assume a growing or at least constant market share of SRI.
However, compared to conventional financial investment, financial market experts expect a weaker return and risk development for SRI. More than 80 per cent of the experts forecast at best average return opportunities along with the same or even higher investment risk. This is also why 37 per cent would not add SRI products to their portfolio. Only 14 per cent would choose SRI for half of their financial investment portfolio. Hence, there is a discrepancy between the statement that environmental and social criteria should play an important role in business management, and the rather pessimistic assessment of SRI performance.
In another question, the experts made clear that the criteria applied to so-called sustainable investments are inadequate. Just 21 per cent of the experts state that SRI strongly address social and environmental concerns. With 37 per cent, almost twice as many experts consider SRI to be barely sustainable.
For many years the market for SRI has been growing. SRI comprise investment products like funds aiming not only towards economic criteria but towards social and ecological aspects as well. Whether SRI are able to record comparably higher revenues apart from their ethical consideration is a disputed matter. Supporters of sustainable investments highlight the value of responsible management, critics argue that the restriction to just one market segment – namely to environmental and social investments – bears higher risks and less return potential.
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E-mail: oberndorfer@zew.de