More than one-fifth (22%) of UK-based investors are planning to invest in dedicated ethical funds in the near future, with the proportion rising to more than one-third (35%) among those aged 35 and under.
That is according to Triodos Bank’s latest annual impact investing survey, which polled 2,000 adults across the UK to garner their opinions and financial plans for the next 12 months.
The bank attributes this trend, in part, to the pandemic, which has forced investors to consider new dimensions of risk and highlighted interconnected social, environmental and economic challenges. Indeed, JP Morgan’s recent poll of investors from 50 global institutions, representing a total of $12.9 trillion in assets under management, saw 71% saying Covid-19 has heightened awareness and accelerated action in the ESG investing space.
Of the respondents to Triodos’ survey, only 14% were not aware they could choose to invest their money in funds which are dedicated to improving social and environmental impacts. This proves an uptick in awareness since it first began conducting the annual survey four years ago – in 2016, more than half (55%) of respondents had not heard of impact funds. In 2020, half of the respondents said they’d like their money invested in alignment with the UN’s Sustainable Development Goals (SDGs).
Respondents were also acutely aware of the unsustainable activities which the financial sector has funded over the years. More than half said that selecting where they invest money is one of the largest contributions they can make to creating a sustainable future.
Triodos believes there is a growing public demand for government bodies and private investors to follow the lead of the public. It is urging these organisations to increase funding to projects and companies seeking to have a positive impact and to ensure more robust criteria for impact investment. The survey concludes with a calculation that £22bn could be raised annually for businesses that are actively tackling the world’s biggest challenges if all Brits with Stocks and Shares ISA accounts switched to an impact investment fund.
“It’s clear that many people want a green and fair recovery and are prepared to invest in making it a reality,” Triodos’ head of retail banking for the UK Gareth Griffiths said. “The COVID-19 crisis has encouraged us to re-evaluate our consumer choices and appreciate the power behind where we invest or save, highlighting that impact investments make environmental, social and financial sense.”
Pre-lockdown, a YouGov survey of 4,000 UK-based adults with savings or pensions found that 72% do not know whether their money is invested in line with their environmental and social values.
Triodos isn’t the only organisation which believes the trend towards sustainable investment has been amplified amid the pandemic. Recent research from Barclays, Campden Wealth and GIST found that global high-net-worth investors are planning to increase their impact investing allocation sharply over the next five years. At present, this cohort has collectively allocated 20% of its capital in this way. This proportion could rise to 35% by 2025.
In the UK specifically, the pressure from individuals is being felt acutely by pension funds, as MPs will soon be voting on the Pension Schemes Bill. July saw Comic Relief co-founder Richard Curtis launching Make My Money Matter – a new campaign pressuring UK pension funds to halve the emissions of their portfolios by 2030 and bring them to net-zero by 2050. The UK’s largest corporate pension fund – from BT – and largest government-backed pension fund – from Nest – have both set net-zero frameworks.
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