It’s fifty shades of green as ethical investment takes root

An increasing number of us want to know more about how our money is used by financial institutions and would be interested in investing ethically if we knew more about it, according to research commissioned by Emerald Knight, the ethical investment specialist.

The findings reveal that nearly nine out of ten (86 per cent) people in the UK have no idea about how financial institutions invest their money. And three fifths (59 per cent) don’t know what an ethical investment is, although this is an improvement on last year’s figure of 63 per cent, so it appears that awareness is growing.
Around two thirds (65 per cent) of people would like to know more about what happens to their money and what their bank or building society does with it. And almost half (47 per cent) say that they’d be likely now, or at some point in the future, to choose ethical investment over the more traditional vehicles such as the property and stock markets.

The research, conducted for Emerald Knight by Atomik, also highlights a lack of confidence in the banking sector, with 80 per cent of respondents saying they have less trust and faith in financial institutions since the UK banking crisis. At the same time, however, people are becoming more conscious of the environmental and social impact their financial choices could make, with more than three quarters (76 per cent) concerned about issues such as climate change, human rights, and deforestation.

Perhaps that’s why 60 per cent of people surveyed say they’d be interested in investing ethically if they simply knew more about it, and almost three quarters (74 per cent) say that if they had the money they’d be likely to opt for investments which benefit society and the environment.

James Howard, Director at Emerald Knight, says: “Ethical investment, through positive results and changing attitudes, is breaking into the mainstream. Since the global banking crisis, there’s been increasing concern over the stability of traditional investments, and there’s also much better awareness of how financial institutions use their customers’ money. Alongside this, awareness of environmental issues has increased, the world’s population has continued to grow at a rapid pace and people are becoming more concerned about human rights. As a result, the nation is becoming increasingly aware of the impact of its choices.

“There’s also evidence to suggest that recent misdemeanours in the banking sector, such as the Libor rate-rigging scandal, have led to more people than ever reviewing ethical options. But they’re by no means prepared to sacrifice good investment sense to buy into such products. No investor wants to settle for a serious compromise on returns, and they should never think that it’s a choice between ethics or growth.”

And this is clearly a message which is getting through - almost half (48 per cent) of those questioned in Emerald Knight’s research say they don’t think they’d have to sacrifice profits for principles by going down the ethical investment route, and 61 per cent believe that it’s possible to achieve both, with such investments capable of doing well as well as doing good.

Since people have lost trust and confidence in the more traditional investment models, the returns demonstrated by SRI products combined with their social, environmental and ethical benefits make for a very compelling investment case. So much so that three in five of us (60 per cent) think that ethical investment will become a key part of the future strategy of financial institutions.

Emerald Knight says that ethical investment is no longer being seen as a passing fad – it’s now a key part of the investment landscape.

For more information, visit emeraldknightconsultants.com.