‘Greenwashing’- false or exaggerated claims about the environmental and social benefits of ESG investments - is a top concern for 44% of investors.

A survey for Quilter found that “investments not being what they claim” was cited by more than 4 in 10 investors, the highest of the concerns raised.

After ‘greenwashing’, ESG investments having higher fees and costs was cited by 42% of investors as a concern followed by a lack of confidence they would outperform traditional portfolios (38%).

Quilter says investors have become increasingly sensitive towards the effects of greenwashing and it remains a barrier to supporting these funds. 

Quilter’s research found investors fitted into four categories in terms of attitudes to ESG:

• 33% of investors were ‘ESG aware’
• 42% were ‘ESG focussed’ 
• 11% were ‘ESG dedicated’ 
• 14% were currently not interested in ESG 

More than half of investors (56%) said they were likely to consider responsible investing either now or at some point in the future.

Eimear Toomey, head of responsible investment at Quilter Investors, said: “The explosion in popularity of ESG investments has been well documented, but it is encouraging to see investors are not simply seeing it as a fad and want to make a real difference. These investors want companies to act in a more responsible way and it is clear that words will not be enough to placate them.

“Greenwashing threatens to undo all the good work and progress that has been made so far in responsible investing. It is crucial that fund groups invest in the way that they say they will, so it is important investors hold them to account on this.

“Research is showing increasing demand for responsible investments and investors are clearly adapting their investment philosophies to get the most out of their portfolio, both for themselves and others. Demand is not going away anytime soon, and we are going to continue to see a proliferation in ESG investments, and as such it is vital investors do their homework and understand what it is they are investing in.”

• The survey was carried out between 24 March and 2 April with 1504 adults aged over 35 with at least £60,000 in investable assets.