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Fundamental shifts in how investors view ESG

  • 1.  Fundamental shifts in how investors view ESG

    Posted 2 hours ago
    Hello Community!

    The article "Research Reveals a Fundamental Shift in How Investors View ESG" (HBR, Feb 18, 2026) explains that ESG investing has not vanished but has fundamentally shifted from values‑driven enthusiasm to a pragmatic, risk‑first mindset. Using longitudinal survey data (2022–2025) from U.S. retail investors and large institutional asset managers, the authors show that earlier generational divides, especially younger investors' willingness to sacrifice returns for ESG outcomes, have largely converged toward more cautious, economically grounded expectations.

    ESG enthusiasm has shifted-not disappeared

    • Early momentum, driven by younger investors, has cooled and moved toward a more practical, risk‑centric approach.

    Generational gaps in ESG attitudes have largely closed

    • Younger investors were once far more concerned about environmental and social issues (70% vs 35% among older investors in 2022).
    • By 2025, those gaps narrowed significantly, aligning younger views much more closely with older, institution‑like risk perspectives.

    Willingness to sacrifice returns for ESG has declined

    • In 2022, younger investors were willing to give up 6–10% of their wealth for ESG impact; wealthy young investors even more.
    • That willingness has since dropped sharply, weakening the case for ESG products premised on investor altruism

    Retail investors now resemble institutional investors

    • Both groups increasingly treat ESG factors like any other financial risk or opportunity, rather than moral imperatives.
    • Institutional "risk‑first" thinking now dominates ESG decision‑making.

    ESG still matters-when risks are concrete

    • ESG remains influential when linked to clear risks, tangible time horizons, and financial materiality.
    • But strategies relying on emotion, mission alignment, or activism are growing fragile.

    Sooner or later all emotions fade. My hope is that this stage will lead us to strong sustainability (survival) focused strategies where we have accepted the risks and where we were able to come up with models that make commercial sense.

    Do these takeaways resonate with you?



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    Aya Pariy
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