Towards Sustainable Investing: How retail investors can create an impact

Setting the scene

Deloitte and KBC carried out a market study on how sustainability translates into the retail customer’s investment journey. Through a survey of 1,000 investors in Belgium, as well as discussion panels, questions were asked about retail investors’ perception on sustainable investing. Do they care about sustainable investing? Were they already doing it? What did they think of the information they received? What are their feelings towards performance?

Investors want to see their sustainability values reflected in their investments

Among the surveyed investors 78% find sustainability important in their daily lives, but what sustainability means varies widely. Approximately 62% have some sustainable investments, yet the allocations to this investment class are relatively low.

To make investment decisions, investors mainly rely on their financial institutions for information, but communication needs to be improved, both in terms of making information available and ensuring clients understand it. Hence, putting the topic on the table is crucial to activate investors.

Our research shows that the regulatory framework indeed helps to put sustainable investment on the table. However investors use their own values to define sustainability, not necessarily those set forth in the regulations.

Next to reflecting their personal values, investors also want to know more about the impact they created with their investment.

Sustainability labels: trust but still work ahead

What about sustainability labels, such as ‘Towards Sustainability’ introduced by Febelfin in 2019? Investors are inclined to trust them and report a preference for investment products with a label, but worry about unsubstantiated marketing and greenwashing. This creates a need to provide additional assurance on label objectivity and independence. 

The keys to unlocking more sustainable investing: communication and information

In its conclusions the report offers practical advice for investors who want their investments to reflect their sustainability values. Communication is key, whether in person, online, or via other channels. When discussing sustainability preferences, explain how they reflect the client’s personal values and what ESG impacts the investments should make.

When considering the way investors want to receive further information, the preferred channels vary according to age category. As expected, we see a higher preference for digital channels amongst the younger generations. Although overall personal contact is highly valued in all age categories.