Investors care about much more than financial returns these days. They want their money to do something decent in the world: 54% of investors want their investments to have a positive impact. One third want a “fossil free” pension option – a number growing all the time as awareness of stranded assets and carbon risk in investment portfolios gains greater attention.
Meanwhile, bribery and corruption, tax and data protection are creeping up the list of personal priorities of those choosing where to keep their cash, according to research for Good Money Week.
The proportion of people wanting their investment to do good as well as generate a return is a record high, since the UK Sustainable Investment Forum that runs Good Money Week began the annual research in 2009.
The findings come as the Environment Agency Pension Fund announced that it would reduce exposure to coal by 90 per cent and to oil and gas by half, in response to concerns of the financial risk to a high proportion of carbon-based investment, as well as UN guidelines on how to keep the world within two degrees of warming.
Last week, it was disclosed that $1 billion had been wiped off the value of coal investments via UK public sector pension funds, as the industry has suffered structural decline.
UKSIF said the high profile of corporate governance issues for investors was a sign that sustainable investment was “no longer a niche market”.
The research also showed that:
- 47% of those with investments would be interested in annual updates from their investors on their environmental/social impact, rising to 58% of under-35s
- 39% think large pension funds should be required to measure and if necessary, reduce the carbon footprint of their investments.
Simon Howard, chief executive of UKSIF, the body coordinating Good Money Week said:
“The clear message from the public to the finance sector is: Make our money count. This rising demand for sustainable investment lays down a real challenge to the industry. So far it has responded well with a diverse range of sustainable options from energy efficiency and blue bonds to sustainable investment funds and community crowdfunding – but more needs to be done. In particular the idea of ‘carbon footprints’ seems to have caught the British public’s imagination and one action any fund manager or pension provider can take this Good Money Week is to open discussions with beneficiaries on how best they want environmental and social impacts to be reported.”
Amanda Young, head of responsible investment at Standard Life Investments, said:
“As global investors representing a wide range of different clients, we are seeing a growing demand for understanding how environmental, human rights, labour and business ethics issues are considered within our investment strategies. Our research into what is driving the younger generation of investors, the Millennials, has demonstrated a direct link between youth and values. The younger the investor, the higher the demand for the companies we invest in to be delivering positive benefits for society. These young digital natives affinity to technology is disrupting traditional business models and attitudes towards investing.”
Generation gap – the millennials have it
The YouGov survey showed significant regional differences when it comes to attitudes to responsible investment. The number of people with investments wanting to make a positive difference with their pensions and savings were highest in London (60%) and East of England (67%); and lowest in Wales (45%) and Scotland (48%).
It also showed a generation gap opening up in Britain:
- 52% of millennials (18-24yrs) want the option of investing fossil free, double the 26% of over 45s.
- 43% of millennials think the UK government doesn’t support investment in renewable energy, only 29% of over 45s think this.
The research also found that 42% of the public believe that if an employer has a ‘default’ pension option which employees are automatically enrolled into (as part of the auto-enrolment policy), then that default option should be an ethical or sustainable pension plan.