Features
The growing appetite for green and ethical investment
The fifth annual National Ethical Investment Week was, by all accounts, a roaring success. As was France’s version of the event – La Semaine de l’Investissement Socialement Responsable. Mark Robertson, head of communications at EIRIS, reflects on both.
The diversity of organisations and individuals participating in recent National Ethical Investment Weeks in the UK and France demonstrates how far green and ethical investment and finance has evolved.
Speaking at the parliamentary reception to celebrate the fifth UK National Ethical Investment Week (NEIW) last week, Laura Sandys MP highlighted the unique role which green and ethical investment is playing in driving more responsible behaviour 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 YouGov poll for NEIW 2012 found that 55% of adults in Great Britain with investments 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, EIRIS’ Ipsos MORI consumer poll found that 82% 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 around £11 billion invested in around 100 green and ethical funds, up from £4 billion 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.
The third French Socially Responsible Investment Week which ran earlier this month had over 60 events organised throughout the country, each with the aim of promoting socially responsible investment (SRI) to retail investors. Students were particularly engaged in the week with over a dozen graduate business schools and universities hosting conferences around SRI.
A 2012 Ipsos MORI national consumer survey run for EIRIS and the French Social Investment Forum (FIR) found that 52% of French retail investors attach importance to environmental, social and ethical criteria in their savings decision. The survey also suggested that SRI may hold the key to helping to rebuild public trust in financial institutions with 53% of respondents saying that confidence in their financial institution would increase if it adopted an SRI approach.
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. But 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 Equator Principles or the Principles for Responsible Investment.
Applying an overarching approach to sustainable investment offers multiple marketing and branding benefits, many of which we discussed at our recent webinar, called Beyond the ethical fund – How to apply top-level sustainable investment approach to enhance brand value across your institution. You can listen again to a recording of the webinar here.
Given the credit crunch and financial crisis, plus unethical behaviour at scandal-hit banks, it’s not surprising that consumers in the UK, France 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 exciting 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.
The scale and scope of activity around this year’s ethical investment weeks in the UK and France underlines the appetite for green and ethical finance. Both weeks have done a great job in helping more investors to understand about how their savings and investments have an impact on the world and in engaging a broad range of stakeholders in promoting ethical finance. We urge churches, charities, students, social investment forums and the media in other markets around the world to follow their example.
Mark Robertson is head of communications at EIRIS and editor of YourEthicalMoney.org.
Further reading:
A fond farewell to National Ethical Investment Week for another year
National Ethical Investment Week 2012: the best articles from elsewhere
Understanding how your savings and investments are used is integral to sustainability
Ethical investors are not tree huggers, but air breathers (and responsible global citizens)