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Who Cares About ESG Investing?

A broad swath of investors, apparently.

Sustainable investing--the use of environmental, social, and governance factors to assess investing alternatives--is often discussed in the industry, including on Although most investors are aware of this development, it isn’t always clear how widely sustainable investing is being applied or what groups of investors are particularly interested in it.

A common belief, promoted by some prior work in the field, is that millennials and women are the primary drivers of the new interest. At Morningstar, we wanted to better understand the profile of ESG investors and found that interest in sustainable investing is much more diverse. Three of our behavioral researchers, Ray Sin, Ryan Murphy, and Sam Lamas have just released a research paper with their findings, titled The True Faces of Sustainable Investing. Here's a quick summary of their results.

A New Way to Identify ESG Investors Most industry surveys measure interest in sustainable investing with questions like, "On a scale of one to five, how interested are you in sustainable investing?" These types of questions, however, are subject to behavioral biases that can distort the results.

As part of our research, we developed a tool called My Sustainability Profile, which works to mitigate these biases and objectively measure a person’s interest in sustainable investing. As shown below, the tool prompts users to choose one of two stocks in which to invest--a decision that requires carefully constructed trade-offs--and then calculates a sustainability-preference score based on their answers.

The scores range from zero to 100, with zero indicating no interest in sustainability, 50 indicating an aim to balance returns and sustainability, and 100 indicating that the investor is guided entirely by sustainability. According to the score, each person is then slotted into one of five different profiles:

1. Returns-driven (score of 0-19): low interest in sustainability

2. Returns-minded (score of 20-39): medium-low interest in sustainability

3. Balanced (score of 40-59): medium interest in both sustainability and returns

4. Sustainability-minded (score of 60-79): medium-high interest in sustainability

5. Sustainability-driven (score of 80-100): high interest in sustainability

Which Demographics Include the Most ESG Investors? We used the My Sustainability Profile tool to measure the sustainability-preferences of a nationally representative sample of 948 Americans over age 18. Overall, our results showed that respondents representing 72% of the adult population in the United States expressed at least a moderate interest in sustainable investing, qualifying as "balanced," "sustainability-minded," or "sustainability-driven."

We also examined how this sustainability-preference score varied across different demographic groups, such as among genders and generations.

Although we did find that women had a slightly stronger preference for sustainable investing than men, the difference between their weighted averages was small (59.08 versus 53.53) and disappeared when we accounted for other sociodemographic variables like income and age.

The same was true when we compared the average sustainability-preference scores of different generations: millennials, generation X, and baby boomers. The average preference scores for millennials and generation X were statistically equivalent (60.21 versus 57.26). And while millennials, on average, showed a slightly stronger preference for sustainable investing when compared with baby boomers (51.96), the statistical significance between the two was not there after factoring in sociodemographic variables.

Moving Past Prior Stereotypes In the past, women and millennials may have been the most interested in sustainable investing (or, because of how prior surveys were conducted, they may have simply been more comfortable discussing the issues). That doesn't appear to be the case anymore. Interest in it is generally unrelated to age or gender. Some men are especially interested in sustainable investing, and some women couldn't care less. And that's probably how it should be: a personal choice for each investor, based on one's understanding of what drives investment returns and social outcomes, and not the domain of a single demographic group.

To learn more about the study, and the implications for investors and financial professionals, see the full paper. This study is part of Morningstar's Investor Success Project.

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About the Authors

Steve Wendel

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Steve Wendel is head of behavioral science for Morningstar, where he leads a team of behavioral scientists and practitioners who conduct original research to help people invest and manage their money more effectively. Before assuming his current role in 2015, he was principal scientist for HelloWallet, a company that specializes in web and mobile financial wellness programs, where he studied savings behavior and coordinated the research efforts of HelloWallet’s advisory board. Morningstar owned HelloWallet from 2014 to 2017.

His latest book, Improving Employee Benefits, shows HR practitioners how they can use behavioral economics to help employees to take action on their benefits. In 2013, he published Designing for Behavior Change, which describes HelloWallet’s step-by-step approach to applying behavioral economics and psychology to product design.

Wendel holds a bachelor’s degree from the University of California, Berkeley, a master’s degree from The Johns Hopkins University School of Advanced International Studies, and a doctorate from the University of Maryland, where he analyzed the dynamics of behavioral change over time.

Wendel is also the founder of the Action Design Network, a nonprofit organization that teaches members how use behavioral economics and psychology in product design. The network hosts more than 5,000 behavioral practitioners at events around the country, including the annual Design for Action Conference. Follow Steve on Twitter: @sawendel

Samantha Lamas

Senior Behavioral Researcher
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Samantha Lamas is a behavioral researcher at Morningstar. She is a recipient of the Montgomery-Warschauer Award for her research in financial planning.

Lamas' research focuses on investor engagement and the factors that drive people's decision-making about investing and money. Her work delves into how people think about their financial goals, what they look for when seeking financial advice, and what kinds of mental shortcuts people use when making decisions about their personal finances.

Lamas joined Morningstar in 2016 as a product consultant working directly with the individual investor and advisor audience segments before moving into a research role.

Lamas holds a bachelor's degree in business with a concentration in finance from Dominican University. Follow Lamas on Twitter at @SamanthaLamas4 and on LinkedIn.

Email Samantha at

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