Education Will Unleash Interest in Social Investing: BNY's Newton

Of those who didn't know what SRI was, only 6% were extremely interested in it. Whereas of those who did know SRI, 35% said they were extremely interested.

• The study also looked at groups divided by interest level, noting that "a one-size-fits-all approach" won't work given the different motivations by investors [labeled optimizers, altruists and motivated pragmatists]. Some will trade off liquidity for SRI, others will trade off return or risk for "social outcomes," and then there are those who won't do either, who typically were newly retired investors who were settled in their ways, the study found.

Of those who have never invested in SRI, 29% were not likely to  lock up a portion of their wealth for long periods in socially responsible strategies. However, the same percentage said they would take a greater financial risk with social investment than with a traditional investment, and 30% of those who haven't invested said they would accept lower return with SRI.

• Investors don't generally perceive differences between "types" of social investing — and some just aren't interested. "Time spent on these subtleties may be wasted," according to the study. The problem was a blurring of lines between ESG, ethical and sustainable focused investing.

"Education affects both investors and advisors," the study states. "Because social investment is an area that requires specialist knowledge, both investors and advisors could be less likely to raise the topic where that knowledge is lacking. Where advisor knowledge is lacking, burgeoning investor interest could be cut off."

Getting Into the Dirt

• "Tailored messaging should focus on 'expressing values like transparency and evidence of impact.'"

When it comes to evidence, "people do not distinguish much between types of evidence; they tend to take satisfaction from all evidence or none." In fact, the study notes that the need for evidence in impact investing "is a symptom, not a cause, of lack of investment."

The study found 78% of those who didn't invest in SRI said they would need quantitative evidence to convince them to invest. Also, 75% said they needed real-life examples, and 73% stated they would only consider a socially responsible investment if the social good could be measured. Some 70% noted they would require verification by an independent third party to convince them to invest. Of course, these also could be reasons why someone might not invest in other types of strategies.

One conclusion was that "for a specialist area like social investment, where knowledge is low, perceived barriers are high, and there is a lack of clarity about the aims of different approaches, these factors are arguably especially important. There is less benefit in prioritizing specific causes in messaging, and more in focusing on values with which the investor wants to be aligned, such as transparency, certainty and universality. These values forge a clear link between investment and impact, and provide evidence that yes, you can make a difference."

— Related on ThinkAdvisor:

• How Elyse Cherry Became an Impact Investing Pioneer
• 5 Things All Investors Can Learn from Sustainable Investing
• Global Sustainable Investing Assets Grew by a Third in 2 Years: Report