We’re proud partners of Good Money Week 2021 , and the aim this year is to explore and overcome some of the barriers people might experience when it comes to investing in positive change. Here are some common ones, and what we’re doing to make investing more accessible.
1. Being unaware of the power of investments in having a positive impact
Recent research carried out by Make My Money Matter found that choosing to invest your pension in a sustainable fund can cut your carbon impact by 21x more than stopping flying, going veggie and changing energy supplier. And not only that, choosing investments that prioritise people’s health, prosperity and wellbeing is good for society and helps address inequality.
We believe impact investing is a powerful lever for change and where you invest and what you invest in has an incredible impact on the world. The Triodos Impact Investment Funds only include companies that align with seven sustainable transition themes, which are inspired by the UNs Sustainable Development Goals - so choosing Triodos Impact Investment Funds can be a hugely powerful act to protect the planet.
2. Concern about financial returns
It is a commonly held belief that to choose investments that support your values you need to forget competitive returns. In fact, over the past two years, sustainable investments have been observed to either match or exceed the returns you’d expect from traditional investments. Although, with investing returns are never guaranteed, and past performance isn’t an indicator of what might happen in the future. We’re also transparent about the performance of our funds the economic and global factors we consider in order to manage that performance and navigate any challenges in the marketplace.
3. Too much jargon
Investing is an industry, and some people choose it as a full-time career. Like many industries, a distinct set of vocabulary has evolved to describe the way things work – words like bonds, funds and indices can seem intimidating to begin with. But just like photography or baking, not everyone needs to progress to a completely professional level. Simply understanding the key things you need to know, and the risks involved, is what you need to start investing - and seeking professional financial advice is always wise. We’re tackling jargon head-on by developing an A-Z of impact investing which gives people an explanation of key phrases and what they mean in plain English to help them build confidence.
4.Greenwash is everywhere
Unfortunately, greenwashing is growing and more investments branded as ‘sustainable’, ‘ethical’ or ‘green’ enter the marketplace. Luckily, there are a wealth of independent certification bodies and awards that can help you recognise which investment options are truly working for positive change. Look out for the Good with Money ‘Good Egg’ logo, accreditations from Square Mile 3D Investing, and awards by Environmental Finance or Investment Week. As a leading global impact investor, we’ve been calling for more clarity in the industry to help get rid of greenwash. We’re also involved in many industry bodies around the world championing the voice of the investor.
5. A belief that money earns more in savings
Investing is different than saving. The value of your investments can go down as well as up and should be considered for the long term (5+ years). However, as inflation is currently higher than it has been in recent years and interest rates are at record lows, it is influencing the value of savings over time. Some people are now addressing this by considering investing if they have a suitable lump sum set aside for emergencies and are debt-free. Choosing to invest for impact as well means that you are also creating positive change with your investments at the same time. We’re always looking for ways to provide informative and helpful information on impact investing so that it continues to be a powerful movement for change and possibly someday it might even become the norm in investing.
If you’d like to find out more, we recently partnered with Good with Money on The Good Guide to First Time Investing, which covers some some common questions for early investors including how to get started and how to understand risk.
Discover our Impact Funds
Our award-winning Triodos Impact Investment Funds invest in a range of stock market listed companies and bonds that have a positive impact on society and the environment.
Remember that investments are designed for the long-term, because their value can go down as well as up.