ECONOMY AND POLITICS AFFECT IMPACT INVESTORS

American Century Investments' impact investing study shows appeal declines although impact investors are still willing to give up some returns

KANSAS CITY, Mo., March 27, 2024 /PRNewswire/ -- In the seventh impact investing survey by the $240 billion* global asset manager American Century Investments, U.S. investors buck international trends as the only surveyed country where a growing number of respondents are willing to sacrifice returns to create a positive impact. Yet, the appeal of impact investing has declined in each country surveyed, including the U.S. The survey results offer multiple reasons for this decline in appeal, including market conditions, concerns about greenwashing and the sustainability backlash. Survey results go back to 2016 in the United States, 2019 in the U.K., 2020 in Germany, 2021 in Australia and 2022 in Singapore.

U.S. investors more willing than ever to make rational and balanced sacrifices

40% of U.S. respondents are willing to sacrifice returns in order to create a positive impact, up 4% from the previous survey and the highest share among U.S. respondents since the question was first asked in the 2020 survey. This is a larger share of respondents who are willing to sacrifice returns than in the UK (33%), Germany (31%) and Australia (29%). Only Singapore (47%) has a larger share of respondents who are willing to sacrifice returns, although that number has declined 7% since last year. Overall, 67% of interested investors would sacrifice up to 10% of returns to create a positive impact, with 6-10% the most common range. A willingness to sacrifice 16% or more was by far the smallest share of respondents who knew how much they would forgo for a positive impact on society.

"In its earliest forms, impact investing often accepted lower expected returns to have a bigger impact, but our impact investment strategies emphasize sustainability-related attributes or outcomes in addition to delivering a financial return. Identifying impact-related factors that could affect a company's ability to stay competitive over the long term has the potential to add to returns," said Sarah Bratton Hughes, senior vice president and head of sustainable investing for American Century Investments. "A willingness to give up as much as 10% of an expected return shows that impact investors expect to earn competitive returns and are making rational choices to realize an impact emphasis in addition to a financial return."

Appeal of impact investing has declined in every country since last survey

Since the previous survey, the appeal of impact investing has declined in Australia (-6%), Singapore (-5%), the UK (-5%), Germany (-4%) and the U.S. (-1%). This decline is also seen across generations, where appeal among Baby Boomers (-8%) has seen the greatest decline, followed by Gen Z (-7%), Gen X (-5%) and Millennials (-1%).

"In the seven years of impact investing studies we've done, it's unique to see such uniform results across nations and ages in a single question, like we see this year with the decline of the appeal of impact investing. Even though the decline holds for all groups, the reasons are more varied," said Bratton Hughes.

Economy and geopolitics among reasons for the decline in appeal

Market conditions have a negative impact on the willingness to allocate to impact investing for roughly 3 in 10 investors in each of the five countries, although in Singapore, respondents were more likely to say market conditions positively impacted their willingness to make these investments. In the U.S., greenwashing and the sustainability backlash both influenced interest in impact investing at higher levels than the prior year, but not for respondents in the other countries.

Health care surpasses the environment to become the top cause overall

For the first time since 2020, health care is the top concern overall. The environment fell to second place after holding a lead over health care in 2020 (4%), 2021 (5%) and 2022 (1%).

As an asset manager with an impact on global health, American Century Investments has a unique perspective on sustainable investing. More than 40% of American Century dividends go to the Stowers Institute for Medical Research, a world-class biomedical research organization with an equity stake in American Century. American Century Investments has generated more than $2 billion in dividends for the Stowers Institute since 2000.

"Through our unique relationship with the Stowers Institute, we generate an impact on global health while helping clients achieve financial success. As a foundational research organization, the Stowers Institute takes a long-term view and commitment to research and innovation, which has helped to shape our culture and naturally aligns with integrating sustainability into our investment practices to help us deliver better long-term, risk-adjusted returns for our clients," said Bratton Hughes.

Survey methodology

The 2023 survey was conducted with representative samples of adults 18 years of age and older. There were 1,007 participants in the U.S. survey, 1,004 in the U.K. survey, 1,003 in Germany, 1,005 in Australia and 1,002 in Singapore. The study was fielded using Big Village's Online CARAVAN Omnibus Survey, with the results weighted by age, sex, geographic region, race and education to ensure reliable and accurate representations of the adult populations in each country. For the purposes of this survey, millennials were defined as those aged 25 to 40, Gen Xers were defined as those aged 41 to 56, and baby boomers were defined as those aged 57 to 75.

About American Century Investments

American Century Investments is a leading global asset manager focused on delivering investment results and building long-term client relationships while supporting breakthrough medical research. Founded in 1958, American Century Investments' 1,400 employees serve financial professionals, institutions, corporations and individual investors from offices in Kansas City, Missouri; New York; Los Angeles; Santa Clara, California; Portland, Oregon; London; Frankfurt, Germany; Hong Kong; and Sydney. Jonathan S. Thomas is president and chief executive officer, and Victor Zhang serves as chief investment officer. Delivering investment results to clients enables American Century Investments to distribute over 40% of its dividends to the Stowers Institute for Medical Research, a 500-person, nonprofit basic biomedical research organization. The Institute owns more than 40% of American Century Investments and has received dividend payments of more than $2 billion since 2000. For more information about American Century Investments, visit www.americancentury.com. 

*Assets under supervision as of 3/8/2024.
©2024 American Century Proprietary Holdings, Inc. All rights reserved

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SOURCE American Century Investments