- Partnering with ESG Book, the new scoring system will provide ESG insights into the world’s largest corporations through a user-friendly traffic light system.
- Launch comes as research finds 62% of investors consider ESG before buying a stock, with one in five (22%) looking to screen out firms with poor ESG scores.
- Majority (55%) of retail investors see environmental as the most important element of ESG, followed by governance (29%) and social (17%).
21 September 2022: eToro, the social investing network, announced today the introduction of ESG scores for over 2,700 stocks on its platform enabling its users to consider environmental, social, and governance factors when building their portfolios.
Partnering with ESG Book, a global leader in ESG data and technology, eToro will provide insights into the world’s largest corporations through a user-friendly traffic light system, with assets labelled as green, amber or red based on their overall ESG rating.
In addition, ‘business involvement flags’(1) will show if more than 5% of a company’s revenues are associated with one of 13 different areas that may be considered ethically problematic by some investors, such as investment in adult entertainment, fossil fuels, guns or tobacco.
“We believe that knowledge is power when it comes to making investment decisions. Providing ESG scores gives our users access to additional information about a company which is not usually accounted for in traditional financial analysis,” said Gil Shapira, Chief Investment Officer at eToro.
“Although ESG scores should not be relied on as the sole factor for making an investment decision, they can play a valuable role as part of the investment decision-making process. The scores can help guide investors towards companies whose sustainable practices make them better positioned to outperform over the long term, and can also help them to avoid companies involved in business practices that are not sustainable over the long term or do not align with their individual values or beliefs.”
The launch comes as a recent survey (2) of 10,000 retail investors revealed that three in five (62%) sometimes or always consider ESG factors before investing, with the majority (55%) viewing environmental performance as most important, and fewer prioritising governance (29%) and social (17%). When asked why they assess ESG credentials, one in four (23%) see a direct correlation with financial performance, whilst 22% look to screen out companies with poor scores.
Retail investors were also asked about the biggest obstacle to adopting an ESG-focused investment strategy. The most common response was that the cost of living crisis is forcing them to focus on the most profitable companies regardless of ESG performance, with one in five (20%) citing this. Slightly fewer (18%) say concerns over greenwashing are a barrier, while 18% worry about the lack of standardisation in ESG scores.
The research revealed a discrepancy in attitudes to ESG amongst different age groups, with the youngest investors (18-34) twice as likely (30% vs 15%) to ‘always’ consider ESG when investing compared to the oldest group (over-55s). Attitudes to ‘E’, ‘S’ or ‘G’ also vary by age, with the youngest cohort more likely than the oldest to prioritise social (19% vs 13%) and governance (33% vs 26%). The trend is reversed when it comes to environmental, with 61% of over-55s prioritising it versus 48% of 18-34s.
Dr Daniel Klier, CEO at ESG Book, said: “Retail investors are increasingly looking for greater transparency on the sustainability impacts of their investments, driven by growing awareness that positive ESG performance can improve returns. Our new partnership with eToro will enable more investors to access high-quality ESG scores for better decision-making, helping to align capital to more sustainable outcomes.”
Calculated by ESG Book, the ESG scores combine the most up-to-date market news, NGO signals and company-reported information. Using cutting-edge technology and research, the scores are rebalanced daily to reflect any changes in the sustainability performance of a company, with any update in the score being immediately available on the eToro platform.
**ENDS**
Notes to editors:
Further information on ESG scores can be found here.
- The business involvement flags cover: adult entertainment, alcohol, controversial weapons, defence, firearms, fossil fuels, gambling, nuclear, pork, stem cells, thermal coal, tobacco, GMO, and recreational drugs.
- eToro’s Q2 Retail Investor Beat: Survey research conducted by Appinio from 7 to 17 June 2022. In total, 10,000 retail investors sampled across 14 countries, 1,000 in each: UK, US, Germany, France, Australia and Spain. 500 in the following: Italy, Netherlands, Denmark, Norway, Sweden, Poland, Romania, and the Czech Republic. Retail investors were defined as self-directed or advised and had to hold at least one investment product including shares, bonds, funds, investment ISAs or equivalent. They did not need to be eToro users.
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About ESG Book
ESG Book is a global leader in sustainability data and technology. Founded in 2018, ESG Book combines cutting-edge technology and proprietary research to provide ESG insights on over 25,000 companies worldwide. Its wide range of cloud-based sustainability products and solutions are used by many of the world’s leading financial organisations. The company serves clients worldwide from offices in Europe, North America, and Asia.
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