“We must urgently raise awareness of ethical investment”, say money managers

Written by Lori Campbell on 13th Mar 2019

Wealth managers are calling for greater awareness over ethical investing, as it’s revealed that more than three quarters of us would invest ethically if we had access to more information and resources.

Financial planners Efficient Portfolio says individuals must act to help save the planet from climate change by aligning their investments with their ethical values.

It comes after charities requested a legal judgement on whether ‘unethical’ investments such as fossil fuels, junk food and payday loans should be excluded from their portfolios.

Last week a coalition of charities, including the Joseph Rowntree Charitable Trust, RSPB and the Quakers, requested a legal ruling on whether they should be allowed to invest in companies that contribute to climate change or have a negative impact on society.

“Aligning investments with values applies not only to big business and the charitable sector, but the individual too”

The National Trust has faced heavy criticism for investing in a fund with holdings in fossil fuel companies, while the Church of England was shown to have ploughed funds into payday lender Wonga after having publicly criticised the firm.

Efficient Portfolio founder Charlie Reading said: “This call from many charities brings up the issue of investments that align with your own values. We argue that this applies not only to big business and the charitable sector but the individual too.

“The question that needs to be asked is: should you invest in something that doesn’t align with your values, even if it stands to make you significant amounts of return?”


No performance trade-off

Ben Faulkner of Good Egg company EQ Investors agrees with the initiative to ensure that charities only invest in line with their ethical values. He said: “It’s common sense that charity trustees should be obliged to ensure their investments support their charitable values and goals. Furthermore, this should include the need for a responsible investment policy that generates a positive social and environmental impact.”

“The evidence of recent years suggests there is no need to sacrifice return by taking this approach”

He added that ethical investments can be good for your pocket as well as the environment. He said: “The evidence of recent years suggests there is no need to sacrifice return by taking this approach.”


Only lack of knowledge holding investors back

Echoing the calls from wealth managers, research by ethical investment platform Ethex and Energise Africa revealed an urgent need for greater awareness of ethical investing.

A poll of more than 2,000 adults uncovered that nearly four in five (78 per cent) said more education and information would motivate them to become more involved in investing in ethical products, while 86 per cent said easily accessible financial products are important.

78 per cent of us say more education would motivate us to become ethical investors

Meanwhile, a new report has revealed that while three in five people take ethics into account when shopping for financial services, less than a fifth (17 per cent) actually have ethical investments.

The research also revealed that millennials are driving the change towards ethical investments. Of those that said ethical considerations were “absolutely critical” to their choice of financial services, 41 per cent were 18 to 34 years old – nearly double those aged 55 plus.

Lisa Ashford, CEO of Ethex and Energise Africa, said: “The sector needs to better serve the growing interest by providing more education and information to give people the confidence to invest in ethical products. Empowering people in this way will help to protect people and the planet as well as generate potential financial returns.”


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