Amid growing interest in protecting our planet – mainly thanks to Greta, Attenborough and Biden – a new poll reveals that three quarters of UK investors now say sustainability is important.
The figures from sustainable investment manager Liontrust also show that almost half (43 per cent) of investors are planning to put more of their money into the sustainable or environmental, social and governance (ESG) sectors.
Of those who are already investing sustainably, 54 per cent say they do so to avoid companies and industries doing harm, 52 per cent cite wanting to achieve a positive impact and 52 per cent say they’ve been prompted to by recent news and events surrounding climate change and climate risk.
Financial returns of sustainable funds
Around a third (31 per cent) of those polled say they choose sustainable funds because they think they perform better financially. Indeed, Good With Money’s latest Good Investment Review, issued in partnership with Square Mile Research, found that sustainable funds have outperformed the sector average over the last five years.
The ethical UK equity funds monitored in the review brought average returns of 48.44 per cent compared with 37.07 per cent for all funds in the sector over the five years to April 2021. Meanwhile, the ethical global equity funds monitored returned an average of 98.99 per cent compared with 90.67 per cent for the sector.
The new poll also shows that Independent Financial Advisors (IFAs) are seeing rising interest in sustainable investing. The majority (69 per cent) say they have seen an increased desire in this area, with almost three quarters (74 per cent) expecting this appetite to increase further over the coming year.
Minding the greenwash
However, 63 per cent of intermediaries are concerned about greenwashing, where companies or organisations make inflated claims about how environmentally-friendly they are.
Simon Hildrey, Chief Marketing Officer at Liontrust, said “These new figures reflect the continued growth in demand for sustainable investment funds, which we have seen at Liontrust. We now have just under £12 billion in assets under management and advice in our Sustainable Future funds (as at 30 June 2021).
“With the proliferation of sustainable investment funds, concern about greenwashing has also increased. Asset managers have a responsibility for transparency and clear and regular reporting.
“This includes disclosing full holdings, explaining why stocks are held by funds and the impact of these companies. Impact should cover the exposure of funds to sustainable themes, carbon intensity against the market they are in and how themes relate to the United Nations Sustainable Development Goals.”
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This article is in association with Liontrust.