Singapore investors are less willing to give up profits to make a positive environmental and social impact, but investing responsibly can earn competitive returns in the long term. A new survey shows that they still believe that.
Research from American Century Investments, which manages US$240 billion in assets worldwide, reveals that interest in impact investing is declining globally.
In Singapore, 47% of respondents said they were willing to sacrifice returns to create a positive impact in 2023, down from 54% in 2022.
The survey was conducted in December 2023 and measured how attitudes towards impact investing have changed over time. The findings date back to 2016 in the US, 2019 in the UK, 2020 in Germany, 2021 in Australia and 2022 in Singapore.
In Singapore, the attractiveness of impact investing declined by 5% from 2022 to 2023, similar to the UK. During the same period, sales fell by 6% in Australia, 4% in Germany, and the smallest decline was 1% in the United States.
rational choice
While appetite for sustainable investing is declining, research shows 58% of impact investors in Singapore are willing to sacrifice returns of up to 10% to make a positive impact in their chosen sector It was found that 85% of them do not intend to give up any further. than 15%.
“The willingness to give up as much as 10% of expected returns indicates that impact investors expect to earn competitive returns and are making rational choices that seek not only impact but also economic returns. ” said Sarah Bratton-Hughes, Senior Vice President. She is the Director of Sustainable Investing at American Century Investments.
“Previously, impact investors often thought they needed to accept lower returns to make a bigger impact, but our impact investing strategy is designed to help companies stay competitive over the long term. “It helps you identify impact-related factors that can improve your ability to sustain and potentially increase returns,” she says.
Respondents in Singapore said market conditions had a positive impact on their willingness to allocate to impact investing (37%), followed by Australia (13%), Germany (15%), the UK (16%) and the US (22%). %). ). Market conditions had a negative impact on the willingness of approximately 3 in 10 investors in each of the five countries to allocate to impact investing.
medical vs. environment
Healthcare is the top concern for investors across the five countries, with the environment falling to second place after holding the top spot in 2020.
However, in Singapore, the environment and healthcare are similarly top impact investors for investors, with 24% of impact investors concerned, and racial equality is a concern for 11% of impact investors, out of the five countries surveyed. It was the highest.
“From this report, we can conclude that interest in impact investing does not exist in a vacuum. Investors rationally look at the big picture, so if the market goes down, There also seems to be a decrease in the desire to influence,” says Bratton-Hughes.
“Continued market volatility and persistent inflation have focused investors’ attention on returns rather than the effectiveness of their investments. Investors are facing an increasingly difficult geopolitical landscape, and impact investing The decision to allocate to is made as part of a variety of considerations.
“Nevertheless, there is still a strong overall willingness to sacrifice some of the profits for the benefit of investing in impact funds,” she added.
American Century itself has a unique perspective on sustainable investing, with more than 40% of the asset manager’s dividends coming from Stowers Medicine, a world-class biomedical research institution that invests in American Century. It will be donated to the research institute. American Century Investments has generated over $2 billion in dividends for Stowers Institute since 2000.
