Socially responsible investments
Over 60% of UK investors would like their money to make a positive contribution to society and the environment
31-10-2016 | However, a new survey from Triodos Bank for Good Money Week reveals that many people struggle to find options for socially responsible investments.
- 62% say they would like their money to support companies which are both profitable and make a positive contribution to society and the environment.
- More than half (58%) think that people should invest their money where it can support companies that make a positive contribution to society, to people and the environment.
- 47% believe that companies trying to make a positive contribution to society and the environment are likely to succeed in the long term.
- But 51% have never been offered the option of investing in Socially Responsible Investment (SRI) funds.
The majority of investors want their money to make a positive change to society and the environment but many have never been offered opportunities to invest in SRI funds, according to research released by Triodos Bank today, at the beginning of Good Money Week.
Six out of ten (58%) in the survey thought that people should invest their money where it can support companies that make a positive contribution to society, to people and the environment. When talking about their own investments, 62% of investors said they would like their money to support companies which are profitable and make a positive contribution to society and the environment.
The survey marks Good Money Week (30 October to 5 November 2016), the national campaign to raise awareness of sustainable, responsible and ethical finance. It found that UK investors are looking for new ways to use their money for good. More than half (53%) like the idea of investing in pioneering investment funds and supporting companies that contribute to creating a positive society and sustainable environment. This supports the view that money is a powerful form of democracy in today’s society, as where people spend, save and invest their money is a vote for their values and increasingly has an impact on the shape of society.
The survey findings also challenge a perception that ethical funds are less profitable than mainstream investments, as survey respondents see investing in sustainable and ethical funds as ‘smart investment’ and nearly half (47%) believe that companies trying to make a positive contribution to society and the environment are more likely to succeed in the long term.
Indeed, over the last three and five years the FTSE All World (ex-fossil fuel)*has outperformed the FTSE All World index, and this year the MSCI SRI index has outperformed the MSCI World index (YTD)**.
The Socially Responsible Investment (SRI) market is now worth over £15 billion in the UK, up from £12.2 billion over the last three years. The total assets under management in the UK amount to £5.7 trillion***.
The demand for more responsible and impactful investments is clearly there, and it is needed to help address global social and environmental challenges we all face, however, 51% of investors surveyed have not been offered sustainable and ethical investment opportunities, and 46% would not know where to go to find out more about them.
Huw Davies, Head of Retail Banking at Triodos Bank UK said, "Many investors now believe that good long-term returns can go hand-in-hand with sustainable and ethical investments. Our research reveals that a majority of investors now want sustainable and ethical investment options, and the industry must respond to this demand. Recent growth in the SRI market is positive and we want to see that growth accelerate to have greater impact in addressing social and environmental issues. The Triodos Sustainable Pioneer Fund invests in leading innovative and pioneering companies, delivering an average of 11.6%**** return on investment over the last three years. At Triodos Bank we’re providing opportunities to invest in the most progressive companies in sustainable energy, medical technology, environmental tech and corporate social responsibility."
The Triodos Sustainable Pioneer fund is a global equities fund investing in small and medium-sized listed companies - for example, leading wind turbine manufacturer, Vestas, medical equipment manufacturer Smith and Nephew, and bicycle manufacturer Shimano – focused on the sustainable themes of climate protection, healthy living, clean planet or are pioneers in corporate social responsibility.
Top things investors want to invest in for positive impact
Given the choice, they want to invest in healthcare, energy efficiency and renewable energy, themes that are reflected in the Triodos Sustainable Pioneer Fund.
Investors are in the dark on where their money is invested – and they call for greater transparency
Many investors are in the dark about where their money is invested, with nearly half (47%) saying they do not know which companies or industries are supported by their investments.
Investors want banks and financial industry to be more transparent, and also offer more SRI options
Investors call on banks and other financial providers to be more transparent when it comes to disclosing where their money is being invested and also offer more SRI options. 53% of investors think that it should be standard that customers are made clearly and fully aware where their money is being invested. More than half (60%) think everyone should be offered socially responsible, or ethical and sustainable options as standard in auto-enrolment workplace pensions.
Huw Davies continued: "We see a growing awareness amongst investors that their money has an impact on the world in which we live through how it is used by banks and funds. We want to call on all banks and financial providers to be more transparent and open about where they invest people’s money, so that investors can make informed choices. As a values based sustainable bank, Triodos Bank enables money to be used for positive social and environmental change.
"We’re committed to transparency: our investors and savers know where their money goes. Our customers can find out where their money is invested and lent via our website, they can see where their money goes and the benefits it brings to society and the environment at first hand."
With SRI funds, capital is at risk and the value of an investment can fall as well as rise, income is variable and not guaranteed, and individuals may get back less than invested.
Investing in the funds on offer from the UK branch of Triodos Bank NV is available only to UK residents aged 18 years of age or over. This press release aims to provide individuals with information to help them make an informed investment decision and is not personal financial advice. If individuals are unsure of how suitable an investment is for them, they are recommended to seek independent financial advice. Regulations, including tax rules are subject to change and the value of any benefits depend on an individual’s financial circumstance.
Both the Triodos Sustainable Equity Fund and the Triodos Sustainable Pioneer Fund are denominated in GBP however the Investment Manager invests based on Euro amounts, and any dividends paid are converted back from Euros to sterling. As such an individual’s total return is subject to the euro-sterling exchange rate at the point of transaction. Individuals are also exposed to exchange rate fluctuations in the regions in which the funds invest.
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John Ditchfield, Partner, Financial Advisor, Castlefield Advisory Partners said: "With the growing appetite for sustainable and responsible investment, we welcome the Triodos Sustainable Pioneer Fund to the market, where a specialist team has carefully selected some of the world’s most pioneering businesses. Investing in SRI delivers benefits to society and the environment while providing the potential for a good financial return."
Lisa Hardman, Director, Advisor at Investing Ethically said: "The Sustainable Pioneer fund ticks the right boxes for anyone wanting to invest ethically. It specifically invests in four themes: climate protection, healthy people, clean planet, corporate social responsibility. Equally important is the fact that the fund is completely transparent about its holdings so that investors can see exactly what they are investing in."
About the research
2,003 people (aged 18+) were interviewed online on behalf of Triodos Bank by Opinium Research between 8 October and 10 October 2016. Weighted to nationally representative criteria. Of those 1,096 have some sort of investment product.
About Triodos SRI Funds
As an experienced global impact investor, Triodos Investment Management (TIM) is active in a range of impact investment strategies, such as Energy & Climate, Inclusive Finance, Sustainable Food & Agriculture, Arts & Culture, and Sustainable Real Estate. In addition to these strategies in non-listed private equity and private debt, Triodos Investment Management also invests in listed companies with an above-average environmental, social and governance (ESG) performance through Triodos Socially Responsible Investment (SRI) funds. Total assets under management as per 30 June 2016 amounted to EUR 3.1 billion, of which EUR 1.3 billion was from the Triodos SRI funds.
About Triodos Bank
Triodos Bank is a global pioneer in sustainable banking using the power of finance to invest in projects that are good for people and the planet. Triodos uses its € 12 billion in assets to create social, environmental and cultural value in a transparent and sustainable way.
With UK operations based in Bristol, Triodos Bank has branches in the Netherlands, Belgium, Spain, Germany and an agency in France. Globally, Triodos Bank has microfinance projects in Central Asia and Eastern Europe, and is a founding member of the Global Alliance for Banking on Values (GABV), a worldwide network of 36 banks seeking to transform finance into a vehicle of positive influence.
Triodos Bank N.V. has a full banking license and is registered with The Nederlandsche Bank N.V. (the Dutch central bank) and The Netherlands Authority for the Financial Markets
*Source: Financial Times Stock Exchange (FTSE) All World as per 30 September 2016: http://www.ftse.com/Analytics/FactSheets/Home/DownloadSingleIssue?issueName=DXFF
** Source: Morgan Stanley Capital International (MSCI) World expressed in USD as per Sep 2016 - https://www.msci.com/documents/10199/641712d5-6435-4b2d-9abb-84a53f6c00e4
***Source: Ethical Investment Research Services (ERIS) as per July 2015: http://www.eiris.org/media/statistics/
Source: The Investment Association December 2015: http://www.theinvestmentassociation.org/assets/files/research/2016/20160929-amssummaryreport.pdf
**** Source: Triodos Investment Management: 3 year annualised return as per 31-5-2016