Investing in socially responsible companies is not donating; a return on investment is expected.
But do affluent investors that make investments in socially responsible businesses expect the same return on investment they would receive from other, less directed, investments?
The answer for most investors is “yes”.
Spectrem’s new Perspective, titled Investor Perceptions of Socially Responsible and Impact Investing, shows that 51 percent expect an investment in a socially responsible company to yield a return on investment similar to the rest of the stock market.
While 49 percent of investors believe an investment in a socially responsible company would NOT return the same rate as the rest of the stock market, most of those believe the return would be less than the rest of the stock market offers. Only 6 percent of investors would expect a greater return from a socially responsible investment than what they get from the rest of the stock market.
(What types of socially responsible investments do affluent investors like? See the full report here).
Younger investors are far more optimistic about the rate of return on a socially responsible investment. While 63 percent of investors under the age of 36 believe the rate of return would be the same as the overall stock market, 16 percent would expect to see a greater return. That percentage drops as age increases, to where only 4 percent of investors over the age of 64 would expect a greater return.
Less wealthy investors and females are also more optimistic about their return on a socially responsible investment.
In terms of what one would pay to make an investment in an impact investment, 75 percent of investors believe the fees would be the same. However, 22 percent said they would pay less to invest in a socially responsible company, while 3 percent said they would be willing to pay more to benefit a company with good intentions.
Older investors and the wealthiest investors reported they would only invest in a socially responsible company if they would be asked to pay less than they would for other investments.