While two thirds of Brits try to live ethically by recycling and cutting home energy use, only one in five makes ethical choices about their money.
The majority of adults in the UK (71 per cent) try to live their lives ‘ethically’, according to a new YouGov poll. This includes reducing home energy and water use, changing methods of travel to reduce carbon emissions, or choosing ‘socially responsible’ companies for utilities, food and clothing. However, just one in five (20 per cent) said they make similar ethical choices with their finances.
While most Brits have caught on to the positive environmental impact of recycling and reducing energy at home, only 54 per cent said “making socially responsible choices for their finances” is important. Even fewer go on to act on this belief as they find it difficult to implement in their daily lives, according to the report commissioned by online wealth manager Nutmeg.
“When it comes to their finances, it’s often impossible for people to see how socially responsible their choices are and what impact they have.”
Nutmeg’s chief investment officer Shaun Port said: “People are used to understanding what impact the decisions they make in their lives can have, whether it’s always recycling, walking or cycling to work and choosing more eco-friendly household appliances.
“But when it comes to their finances, it’s often impossible for people to see how socially responsible their choices are and what impact they have.”
Brits are also unwilling to compromise returns by investing in a socially responsible provider, according to research by Foresters Friendly Society.
The report found that money still trumps ethics for 73 per cent of investors, who said they would not use a provider that invests in line with their personal values if it meant accepting lower profits.
This compares to 49 per cent who said social values such as consistency, reliability, trustworthiness and treating customer fairly, were equally as important as potential returns.
A number of studies have shown, however, that investing sustainably in-fact helps rather than hinders returns.
However, the appetite for ethical investing is growing among savers. Research by ethical bank Triodos reveals the rise of a new generation of socially-conscious investors. It found that a fifth of UK investors are planning to invest in a socially responsible investment fund in the coming years, rising to 47 per cent amongst younger investors aged 18-34.
The report showed that although demand among investors is strong, the finance industry needs to catch up. More than half of savers said they would like their money to support companies that contribute to making a more positive society and sustainable environment. But 73 per cent have never been offered ethical investment opportunities and 61 per cent would not know where to go for more information.
Five ways you can be more ethical with your money:
1. Green your home
While recycling, not using the car, or perhaps eating less meat are all great ways to help the environment, there is so much more we can do to make a positive impact – and it all starts with where we put our money. From more ethical car insurers, mortgage providers and crowdfunding sites to savings accounts and loans, check out our #greenleaves series where we round up the top ethical providers.
2. Invest in an ethical stocks and shares ISA
If you want your money to be a force for good – while making more of it – investing is the way to go. For little as £25 a month, you can open a stocks and shares ISA with a low-cost platform provider that offers an ethical fund. Our Good Investment Review has a list of the best performing funds in the sector.
3. Choose an ethical bank
You could change your current and/or savings accounts to an ethical provider. While The Co-operative Bank is currently the only mainstream provider in the UK, competition among challenger banks is hotting up. Triodos, which supports social and environmental impact projects, offers a current account and savings products, including a cash ISA. Monzo, Ecology Building Society, and Charity Bank are also good choices.
4. Try crowdfunding with ethical projects.
For a more innovative way to get involved in ethical investing, try crowdfunding for renewable energy or investing directly in a social impact project. Trillion is a leader in the former, offering investment in clean energy projects from Lancashire to India. Minimum subsciptions are just £50 and annual rates of return are around 5 per cent*. Abundance and Trine are other providers to check out.
5. Look into an Innovative Finance ISA.
For social impact investing, Triodos is a good place to start. It has a range of impact bonds open for investment through its Innovative Finance ISA. Resonance also offers a range of direct investment opportunities, particularly in community housing and land development with minimum subscriptions starting at £100.
*Return not guaranteed. All investment involves risk and past performance is not necessarily a guide to future performance.
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