Wrong Direction: Drop in Irish public confidence in financial service organisations and ESG

Specialist

One in four lay the responsibility for climate change at the door of big business

More than half the Irish public believe in ‘People Power’ when it comes to protecting our planet, with 51pc stating small changes made on an individual level, or in the home, can make a big difference.

The Irish public’s confidence in financial services organisations in this country has dipped and waned in the last six months, when it comes to progress towards being more socially responsible and their commitment to socially responsible behaviour, according to the second instalment of bi-annual Royal London Ireland ESGi Sentiment Index.

Highlights include (based on the answers of a nationwide survey of 1000 adults):

• Almost one in five (20pc) of people have little or no trust in financial services organisations to deliver on ESG promises.
• Just over one in three (36pc) of the younger generation (18 – 24) have low or no trust in financial services firms to deliver on ESG promises
• Men are more likely to have a very low level of trust, if at all, in financial services companies – 37pc of men held such a view versus 25pc of women.
• More than four in ten (43pc) feel individual action is futile without meaningful change from either industry and big business (22pc) or Government (21pc).
• One in ten men (10pc) don’t believe in climate change. Only 3pc of women feel the same way.
• Far more women think there is huge merit in individual actions and their impact on tackling climate change (57pc vs 45pc of men).
• Men are more likely to lay the responsibility for climate change at the door of big business (24pc of men versus 20pc of women).

Commenting on the findings and the Index movement over a six-month period, Joe Charles, Proposition Director at Royal London Ireland, said:

“While the Index itself gives a strong indication of how important ESG is to the general population, with an Index score of 76.5 (where 0 is zero importance and 100 is extremely important), by tracking the statistics, we can see a fall in the Index weighting, not only in this area but also in people’s level of trust of financial organisations in this area, and their optimism for future behaviour.

“It’s up to the industry to change the pervading discontent by taking actions in support of achieving net zero and through clearer communication around the progress it is making.”

The Royal London Ireland ESG Index is based on responses to four survey questions (see below) rolled out to 1,000 adults nationwide[1] - the first three of which are repeated (Table 1), while the fourth question changes with each Index instalment (Table 2).

Mr. Charles continued: “The variation in people’s perceptions of the impact individual actions can have on tackling climate change is insightful. One of the most positive takeaways from the results is that over half (51pc) of adults in Ireland believe that individuals can make a big difference if everyone takes action. Many of the major societal changes have been driven by people power, as we have seen in our own country many times. Though, ultimately Government action will be the most impactful driver in this area.
“On the other hand, however, the Index found that 43pc feel individual action is futile without meaningful change from either industry and big business (22pc) or Government (21pc). In addition, 6pc don’t believe in climate change at all – with one in ten men likely to feel this way – despite all the evidence."

Further highlights from the Royal London Ireland ESG Sentiment Index include:

• When asked how important it is that financial service companies act in a responsible manner when it comes to ESG issues, those over 55 are more likely to say this is extremely important, with 38pc of this age cohort believing this versus 16pc of those in the 35 to 44 age category, or 20pc of those aged between 18 and 24.
• When it comes to trust in Irish financial services companies to deliver on their ESG promises:

Very low numbers displayed a lot of trust in financial services companies to deliver on ESG promises and this trend was apparent across all age groups, with the exception of those in the 18 to 24 category, where 15pc said they ‘extremely’ trusted companies in this regard.
Men are more likely to have a very low level of trust, if at all, in financial services companies – 37pc of men held such a view versus 25pc of women.

Just over one in three (36pc) of the younger generation (18 – 24) have low or no trust in financial services firms to deliver on ESG promises – though encouragingly this is less than the 46pc in this age cohort who felt this way six months ago. The second most likely age group to have little, if any, trust in financial services firms was those aged between 25 and 34 (34pc) followed by those aged between 35 and 44 (28pc).

In relation to public optimism that the financial services sector will make real progress towards being more socially responsible:

• Overall, only a small percentage (6pc) are very optimistic.
• 33pc are not optimistic - to varying degrees.
• More men than women are not optimistic – with 37pc of men expressing this sentiment versus 29pc of women.
• Those aged between 25 and 34 were most pessimistic with 41pc of this age cohort not optimistic to varying degrees, followed by 34pc of those aged between 45 and 54; 33pc of those aged between 35 and 44; 30pc of those aged 55 and over, and 27pc of those aged between 18 and 24. This was a marked reversal on last year when the youngest age category (18 to 24) were the most pessimistic.

When asked if individual action can make a real difference in tackling climate change

• Over half (51pc) of adults think, as individuals, they can make a big difference if everyone takes action.
• Those aged between 25 and 34 are more likely, than other age groups, to be disillusioned or underwhelmed at the impact individual change can make on climate change.

Mr. Charles concluded, “Trust and optimism in financial services organisations in this country is subdued, but not absent, when it comes to ESG. And there is still a very strong public desire for these companies to act in a socially responsible manner.

"Greater education and provision of information is needed from the financial services industry so that the public can be better informed when it comes to choosing product and service providers that reflect more sustainable values.

"It’s clear that financial services companies need to improve in this area by demonstrating their commitment and ability to be a force for good through their actions, and then evidencing this by communicating the actions taken and outcomes delivered. It will be interesting to see how the public’s response to the Royal London Ireland ESG index evolves over the coming years.”