A survey carried out by Active Chartered Financial Planners among 1000 of its clients, suggests that global instability is prompting many investors to place less weight on environmental, social and governance (ESG) considerations, as concerns around security, energy resilience and market volatility move further up the agenda.
The findings come from Active Chartered Financial Planners’ latest client survey, which explored how recent events such as President Trump’s incursion into Iran and the ongoing war in Ukraine, are affecting confidence and investment. While the results do not point to a wholesale rejection of ESG, they suggest a growing number of investors no longer view it in isolation from wider questions of geopolitical risk, defence and energy security.
When asked whether shifting international priorities, particularly around defence and energy, are affecting how much weight they place on ESG considerations in investment decisions, 55% of respondents said they were neutral. More respondents said they were less likely to prioritise ESG, at 16%, than said they were more likely to do so, at 9%. Comments from respondents pointed to the importance of energy security, the continuing relevance of traditional energy sources and a belief that defence-related investment may now deserve greater attention than it once did.
The survey also found deterioration in confidence compared with Active Chartered Financial Planners’ previous poll. While 53% of respondents said their confidence in their financial future had stayed the same since last quarter, 43% said they felt less confident and just 4% said they felt more confident. That compares with the previous survey, in which 66% said their confidence had stayed the same and 17% said they felt less confident. Respondents repeatedly linked that change to conflict in the Middle East, pressure on oil prices and unease about the wider global outlook.
Views were also divided on whether the current period of volatility will pass quickly. Just 28% said they were confident it is temporary, while 31% said they were not confident and 35% said they were unsure, suggesting many investors are preparing for a period of prolonged uncertainty rather than a short-lived market wobble.
Karl Pemberton, managing director at Active Chartered Financial Planners, said: “Recent events have clearly affected the way many people are thinking about risk. What comes through in this survey is not a sudden collapse in support for ESG, but a more hard-headed assessment of priorities.
“In calmer conditions, investors may feel more able to place greater weight on ESG considerations but in a more uncertain environment, energy security, geopolitical instability and market exposure inevitably come more sharply into focus.
“It is also in periods like this that client confidence can come under pressure. While no one can predict every external event, clear communication, regular financial education and a well-understood long-term plan can help people feel more informed, more confident and better equipped to respond calmly when markets become more unsettled.”
