- 8 in 10 investors now want or expect a fund manager to upskill in sustainability issues to avoid greenwashing claims from financial providers
- 9 in 10 new investors expect fund managers to divest from harmful industries and challenge companies directly on sustainability
- 6 in 10 new investors think banks should only offer investment ISA products that are sustainable
- 6 in 10 new investors would settle for lower returns to invest in industries they believe in
Investors now expect their fund managers to do much more than assessing risk and return, also looking for them to help navigate sustainability issues in much greater depth, reveals Triodos Bank UK.
New research, which polled UK investors, shows that 83% would expect or want to see their fund manager upskilling in sustainability and environmental issues, while 85% would like or expect their fund manager to help avoid “greenwashing” claims from financial providers. For new investors, this is even more important, rising to 91% of those that have begun investing in the past 12 months for both responses.
New investors are also demanding much more detailed analysis of the funds they invest in, with 90% wanting their fund manager to conduct in-depth research into each company in a fund to make sure every single investment aligns with their values and personal ESG criteria.
Investors expect fund managers to act on sustainability
As well as having greater expertise in ethical and sustainable investments, investors want to see their fund managers taking direct action in line with the values of their investors.
8 in 10 existing investors (81%) would expect or want to see their fund manager divest their investments from those that cause harm, which rises to 91% of new investors.
Meanwhile, 82% (rising to 92% of new investors) want their fund manager to engage with the companies they invest in directly on issues such as social impact and sustainability.
Bevis Watts, CEO of Triodos Bank UK, commented:“Our research demonstrates that the majority of investors are looking for active stewardship from their investment managers, with the peace of mind and expertise that passive funds just can’t provide.
“A generational shift in expectations is clearly happening, which has the potential to disrupt the investment management industry.”
New investors prioritise impact over returns
In the past year, a new generation of purpose-led investors have come to financial providers with a greater expectation of sustainable and impact investing. Almost half (48%) of these new investors are under 35 years of age, and three-quarters (75%) are under 45, indicating that positive social and environmental impact is a much greater priority for younger consumers starting their investment journey.
In fact, 60% of those that began investing in the last 12 months think that financial providers should only offer investment ISAs that are sustainable, while 78% believe that financial providers need to do more to help to combat the climate crisis.
As testament to their passion for investing with positive impact, 6 in 10 new investors (63%) would be happy to settle for lower returns to invest in industries they believe in.
World events and ongoing coverage of the climate crisis is likely leading many new investors to consider their impact, as 56% reported that COP26 made them give greater thought to how their investments impact the planet.
Michael Kind, senior campaigns manager at ShareAction, said: “ShareAction is not surprised to see increasing numbers of retail investors understand the impact of their money on the world, and to recognise that impact on people and planet is just as important as returns. In our view, a responsible approach to investment should be the main consideration for the global money managers who invest money on behalf of retail investors. A true responsible investor sees negative impacts as just as important as financial return, and takes steps to mitigate or avoid these impacts.”
Sustainability concerns driving choice of provider and management
Across the board, sustainability concerns are shaping how investors are considering how, and with who, they choose to invest their money. A quarter (25%) of investors with actively managed funds chose this specifically to ensure that their investments are continually checked to avoid practices that are not aligned to their values. One in five (19%), meanwhile, chose active management to have a fund manager help sift through “greenwashing” claims to choose investments that are truly sustainable.
Looking ahead at future investments, a fifth (21%) of investors say they would choose a future financial provider based on how much they trust it to invest in line with their values, rising from 14% already having chosen their provider based on this – showing that this is an issue that is of increasing interest and importance to investors. Active management will also be a greater focus for many, with a quarter (26%) of investors planning to take out or increase actively managed funds.
Hadewych Kuiper, managing director of Triodos Investment Management, said: “A new generation of investors are demanding more from fund managers and financial providers in terms of sustainability – and rightly so. With an increasingly complex sustainable investment landscape, fund managers can play a vital role in helping to separate dubious greenwashing claims from those that truly benefit the planet.
“To meet this consumer demand for impact and transparency, investment managers need to ensure they are staying up to date with the latest products, research and policy developments in sustainability. Only then will investors be able to trust that their money is really being invested in line with their values.”
Triodos Bank’s Stocks & Shares ISA is recognised as a ‘Best Buy’ by Ethical Consumer magazine. Three award-winning impact investment funds are available through the Stocks & Shares ISA – the Triodos Pioneer Impact Fund, the Triodos Global Equities Impact Fund and the Triodos Sterling Bond Impact Fund. The funds are managed by Triodos Investment Management, part of Triodos Bank.
Triodos Investment Management publishes a list of all companies in each fund's investment portfolio, for total transparency. All the investments in the funds have been hand-picked by impact investing experts using a themed approach, which ensures they have a positive impact on society and the environment.
Long term performance of the funds shows a five-year average return of 8.72% for the Triodos Global Equities Impact Fund and 9.61% return with the Triodos Pioneer Impact Fund*. Note that past performance is not a guide to future returns.
Capital in any investment product is at risk. The value of an investment may go down as well as up and investors could lose some or all of their money. Currency fluctuations may also affect the value of a Triodos Stocks & Shares ISA. As with all ISAs, the tax benefits depend on individual circumstances, and tax rules may change. The total annual ISA allowance is £20,000, which can be split across different types of ISAs.
None of the information in this press release constitutes financial advice. If potential investors are unsure if these investments are right for them, they should contact an Independent Financial Adviser.
Notes to editors
For interview requests, case studies and photography, please contact Julia Bush, Greenhouse PR at [email protected] or 07458 112 484
About the research
Research was conducted by Opinium Research on behalf of Triodos Bank. The sample polled 1,004 UK investors. Polling took place between 23 February and 2 March 2022.
About Triodos Impact Investment Funds
Stocks & Shares ISAs - A choice of 3 impact investment funds:
- Triodos Global Equities Impact Fund
- Invests in large listed sustainable companies
- Portfolio includes: Adidas, Central Japan Railway, Danone, Vestas Wind Systems
- 5-year average return as of 31/01/22: 8.72%
- Triodos Pioneer Impact Fund
- Invests in small and medium sized innovative companies
- Portfolio includes: DS Smith, Shimano, Teladoc Health, Yamaha
- 5-year average return as of 31/01/22: 9.61%
- Triodos Sterling Bond Impact Fund
- Invests in corporate, green and social bonds alongside UK government gilts
- Portfolio includes: United Utilities Water, East Japan Railway
- Launched in 2020, so 5-year figures unavailable
*As of 31 January 2022.Note that past performance is not a guide to future returns.
About Triodos Investment Management
Triodos Investment Management (Triodos IM) connects a broad range of investors who want to make their money work for lasting, positive change with innovative entrepreneurs and sustainable businesses doing just that. In doing so, it serves as a catalyst in sectors that are key in the transition to a world that is fairer, more sustainable and humane.
Triodos IM has built up in-depth knowledge throughout its 25 years of impact investing in sectors such as Energy & Climate, Inclusive Finance and Sustainable Food & Agriculture. It also invests in listed companies that materially contribute to the transition toward a sustainable society. Assets under management as per end of June 2021: EUR 6.1 billion.
Triodos IM is a globally active impact investor and a wholly owned subsidiary of Triodos Bank NV.
About Triodos Bank
Founded in 1980, Triodos Bank has become a frontrunner in sustainable banking globally. As an independent bank that promotes responsible and transparent banking, it does not see any conflict between a focus on people and the planet and a good financial return. Instead, it believes that they reinforce each other in the long-term.
Triodos Bank has banking activities in the Netherlands, Belgium, the UK, Spain and Germany as well as Investment Management activities based in the Netherlands but active globally. Triodos Bank co-founded the Global Alliance for Banking on Values (GABV), a network of 63 sustainable banks. Together these banks want to grow sustainable banking and its impact on the real economy substantially.
Triodos Bank UK Ltd is a wholly owned subsidiary of Triodos Bank NV. Registered Office: Deanery Road, Bristol, BS1 5AS. Registered in England and Wales Company No. 11379025. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 817008. VAT reg no 793493383.
This financial promotion has been issued and approved by Triodos Bank UK Limited for the purposes of section 21 of the Financial Services and Markets Act 2000. Triodos Bank UK Ltd. Registered Office: Deanery Road, Bristol, BS1 5AS. Registered in England and Wales with registered number 11379025. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under registration number 817008. Details about the extent of our regulation by the Financial Conduct Authority and Prudential Regulation Authority are available from us on request.