Demand soars for ethical funds
Mark Robertson, head of communications at EIRIS, reflects on the successes of National Ethical Investment Week 2012, and the growing popularity of investments with a sustainable focus.
By Mark Robertson , Head of communications at EIRIS
Tuesday October 23, 2012
The diversity of organisations and individuals participating in the UK’s fifth National Ethical Investment Week (NEIW) demonstrates how far green and ethical investment and finance has evolved, with events run across the country.
Speaking at the parliamentary reception last week, MP Laura Sandys highlighted the unique role which green and ethical investment is playing in driving more responsible behavior amongst financial institutions, and spoke of the need for long-term, sustainable business values to become the new normal.
Evidence suggests that a large chunk of UK investors would agree. A recent YouGov poll found that 55 per cent of investors want their bank or financial adviser to tell them more about ‘impact investments’ – i.e. investments that produce both a financial and a social or environmental benefit. In 2011, an EIRIS consumer poll found that 82 per cent of the British public think that it is important for financial product providers to pay more attention to environmental, social and governance risks when deciding which companies to invest in or lend money to, as part of ensuring good financial return.
The good news is that momentum is shifting things in the right direction. Latest stats from EIRIS show that there’s currently £11bn invested in close to 100 green and ethical funds, up from £4bn 10 years ago. This summer, ‘ethical’ banks attracted more than 100,000 new customers at a time when many high street banks were hit by a series of scandals including Libor fixing at Barclays, and HSBC and Standard Chartered falling foul of American regulators.
Mainstreaming green and ethical investment is about ensuring a good range of green and ethical financial products are available to all consumers across all aspects of ethical finance. However, it’s also about ensuring that retail fund managers embed sustainable investment principles across all funds under management, not just in the green and ethical funds they offer.
This might mean engaging with investee companies to improve their performance on key issues like climate change, environment, biodiversity and human rights. Or integrating environmental, social and governance factors into investment decisions to reduce risk and identify investment opportunities. It can also mean making a commitment to join relevant sustainable initiatives such as the Principles for Responsible Investment (PRI).
Given the credit crunch and financial crisis, plus unethical behavior at scandal-hit banks, it’s not surprising that consumers in the UK and elsewhere are interested in financial product providers that offer a more ethical, sustainable and long-term approach to finance. Looking ahead, we need a greater range of financial products that enable investors to invest in line with their ethics and to provide access to the many new types of sustainable investment themes and opportunities which exist.
For green and ethical investment to be really effective we also need mainstream fund managers to report back to their customers on how they are adopting longer-term sustainable investment principles across all their investments
Mark Robertson is head of communications at EIRIS. The views expressed here are his own.