City is only scratching the surface of meeting 'ethical' demand

New survey research published today suggests that despite an upsurge in ethical and green investment in recent years, the public has an appetite for 'responsible' investment that is still far from being saturated.

F&C presented the research findings today at a conference for financial advisers interested in ethical and green investment. The research was undertaken on behalf of F&C by OnePoll during the first half of May across some 2,000 members of the UK public.

In particular some 88% of respondents felt that it was either "fairly" or "very" important for companies to take environmental, social and governance issues seriously. 86% believe that "companies can act responsibility" with strong policies / effective management systems and the requirement to report publicly on their progress cited as two key factors underpinning this.

The most cited area of ethical concern for potential investors was avoiding companies operating in countries with poor human rights records (25%) followed by avoiding companies whose activities damage the environment (21%). In contrast certain traditional ethical exclusions were relatively low down the list of concerns such as tobacco (10%), gambling (3%) and nuclear power (4%).

Significantly for financial advisers and fund companies, 58% of respondents stated that they were prepared to invest their own money ethically despite the fact that 55% assumed it might result in lower returns. Of those prepared to invest ethically some 44% said they would stick by the investment if it delivered 2% lower returns than a conventional investment and 26% indicated they would remain loyal even if returns were 5% lower.

Jason Hollands, Director, F&C Investments, commented: "The public are increasingly demonstrating that they are inclined to take ethical and an environmental factors into consideration in their spending decisions. This research confirms that they are also well disposed to doing so when it comes to their investments. The research also suggests that ethical investors are inclined to have high degrees of loyalty to their investment strategies once invested. The good news is that the long term track records of established ethical funds such as Stewardship Growth and Stewardship Income, have demonstrated that irrespective of short term blips, over the long term these funds have delivered attractive returns that stand-up well against those on conventional funds."

"Many advisers are already aware of the strong latent demand for ethical and green investments. Yet often such funds are discussed only at the active request of the client. Our research shows that some 45% of respondents believe advisers should proactively raise this as an investment option with them."