71% of investors consider the ESG indicator before buying stocks

Broker eToro informed todaythat it is introducing an ESG indicator for over 2700 stocks on its platform. Thus, it enabled its users to take environmental, social and governance factors into account when building their portfolio. 

In a nutshell:

• Thanks to the cooperation with ESG Book, the new rating system will provide information on the world's largest corporations through a user-friendly system.
• The system is introduced as a result of studies which have shown that 71 percent. Polish investors take ESG into account before buying shares, and 16 percent. tries to avoid companies with poor ESG results.
• As much as 42 percent individual investors in Poland perceive environmental protection as the most important element of ESG, followed by corporate governance (33%) and social issues (25%).

READ: ESG Rating - Is Sustainable Investing Profitable?

ESG indicator more and more important

By working with ESG Book - a global leader in ESG data and technology, eToro will provide insight into the world's largest corporations through a user-friendly system. According to this system, assets are marked based on their overall ESG rating: na green, yellow and/ or red. 

Additionally, "Business commitment flags" will show whether more than 5 percent. The company's revenue is related to one of 13 different areas that may turn out to be ethically problematic for some investors. For example, investments in adult entertainment, fossil fuels, weapon or tobacco.

“We believe that knowledge is power when it comes to making investment decisions. Delivering ESG results gives our users access to additional information about the company that is usually not included in traditional financial analysis. While ESG performance should not be the only factor in making an investment decision, it can play a valuable role in this process. Insight into the additional information that individual results for "E", "S" and "G" provide can help guide investors to companies whose sustainable practices make them better positioned and thus allow them to perform in the long run. Equally, scoring can help them avoid companies that are involved in business practices but are not sustainable over the long term or conflict with their individual values ​​or beliefs. " - He said Gil Shapira, eToro Investment Director. 

A recent study carried out among 10 individual investors showed that 71 percent sometimes or always takes ESG factors into account before making an investment. At the same time, less than half (42%) consider environmental indicators to be the most important, and a smaller proportion of people prioritize corporate governance (33%) and social issues (25%). When asked why they take into account the credibility of ESG, almost one in four people (23%) see their direct correlation with financial results, while 16% in this way it is trying to screen out companies with poor results. 

Retail investors were also asked about the biggest obstacle to adopting an ESG focused investment strategy. The most common answer was the lack of standardization in the ESG ratings (21%). Every fifth survey participant claimed that ESG is too expensive. Nearly 18 percent of respondents in difficult times prefer to put profits above the rules. 

Dr Daniel Klier, CEO at ESG Book, commented:

“Retail investors are increasingly looking for greater transparency about the sustainability impact of their investments. They are driven by the growing awareness that positive ESG results they can realistically improve profits. Our new partnership with eToro will open up a larger group of investors to high-quality ESG indicators for better decision-making, thus helping to adjust capital to more sustainable performance. ”

Calculated by ESG Book ESG Index combines the most up-to-date market news, NGO signals and company-reported information. Using state-of-the-art technology and research, the results are updated daily to reflect any changes in the company's sustainability performance. Each score update is immediately available on the eToro platform.