UK investors say that sustainable investing has become more important to them over the last give years with over 50% increasing their allocation compared to five years ago.

According to the Schroders’ Annual Global Investor Study, which surveyed 22,000 investors globally including over 1,000 in the UK, 54% of UK investors have increased their allocation to sustainable investment funds compared to five years ago.

This is slightly behind the rest of the world, where 58% of investors in Europe and 64% globally, have increased their allocation.

The importance of sustainable investing is also increasing, says investors, with 67% of UK investors stating that sustainable investing was more important to them now than it was five years ago. This is compared to 75% of investors in Europe and 78% globally. Only 2% of UK investors said that sustainable investing was less important to them.

Despite an increase in allocation and importance, the survey also highlighted that while UK investors exhibit some sustainable behaviours, sustainable investing lags behind other associated actions, such as recycling, buying locally and considering their carbon footprint:

The survey also showed that UK investors’ views of sustainable investing are maturing beyond just considering ethical issues. Slightly more investors are interested in the potential long-term returns/profit available from an investment than those who focus on identifying responsible businesses.

The focus on profit continued when investors were asked to choose a phrase which they associate with sustainable investment - half (50%) selected a phrase linked to profitability, the survey found.

Jessica Ground, global head of stewardship at Schroders, said: “The challenges posed by climate change, inequality and demographics are sizeable. Capital markets have a vital role to play in finding and funding solutions to these problems, and it is encouraging that investors see sustainability as an increasingly important consideration.

“While profitability remains the central investment consideration, interest in sustainability is on the rise. But investors also see sustainability and profits as intertwined. They are looking to allocate to companies that are successfully navigating social and environmental change.

“It is interesting to note that investors don’t necessarily understand that investing sustainably can be a more effective way to make an impact rather than their other individual behaviours such as recycling or where they buy their food from.”