Most DIY investors don't weigh ESG criterion while picking a stock: Survey

The widespread popularity of environmental, social and governance (ESG) criterion among fund managers is apparently failing to influence do-it-yourself (DIY) traders and investors to prioritise ESG when making trading and investment decisions, revealed a global survey.

“The findings of our survey show a lack of awareness and information around sustainable investing.

This information gap has clearly impacted the adoption of ESG among DIY investors, which is compounded further by a perception that sustainable investments come at a premium,” said Kypros Zoumidou, Chief Commercial Officer, Capital.com.

The London-based global investment trading platform conducted the survey and found that 52% traders and investors had never selected a stock or done trading based on ESG criteria.

On why this bias against ESG , 46% respondents said they did not know how to do so while 12% thought ESG investments were too expensive.

The survey also revealed that more than half (53%) of DIY traders and investors make decisions based on profitability rather than social or environmental impact. Only 7% cited social and environmental reasons as their criteria when making a decision while 40% said they gave due weightages to profit-making and ensuring a positive social and environmental impact while adopting investment selection strategies.

“ESG factors can be useful additional analysis when making a decision to buy a certain stock. How a company manages its exposure to climate change or human rights, for example, could have a significant impact on its stock’s performance. A company well-equipped to face ESG issues is more likely to be resilient over the long term and therefore more sustainable,” added Zoumidou.

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