The UK market for socially responsible investing (SRI) is expected to grow by 173% to reach £48bn by 2027. Triodos Bank’s latest Annual Impact Investing survey reveals that a fifth (19%) of UK investors are planning to invest in an SRI fund in the coming years, rising to almost half (47%) of investors aged 18-34. As this new generation of socially conscious millennial investors see increases in their incomes, the research predicts a ‘tipping point’ of accelerated growth from 2023.
Appetite for impact investment opportunities and greater transparency is high – particularly among female investors, though there remains uncertainty when it comes to the options available. The survey reveals that:
- More than half (55%) of investors would like their money to support companies that contribute to making a more positive society and sustainable environment. This figure rises to 58% among female investors.
- 61% of investors believe that for the economy to succeed in the long-term, investors need to support progressive business tackling the big issues we face.
- But 73% of UK investors have never been offered ethical investment opportunities and 61% would not know where to go for more information on SRI.
- More than two thirds (69%) of investors would like to have more knowledge and transparency about where their money goes when investing. This is significantly higher among women (74%) than men (65%).
The survey points to a trend of ‘resist investing’, particularly among younger investors. A third (30%) of investors are motivated to invest in an ethical fund because of events in the news, rising to 56% of investors aged 18-34. This age group cites natural / climate change-related disasters (14%); the 2008 financial crisis (14%); and the fossil fuel divestment movement (13%) as their biggest stimuli.
Bevis Watts, managing director of Triodos Bank UK, said: “Demographic changes, social media and awareness of the challenges facing our planet mean that investors are waking up to the fact that there really is no such thing as a neutral investment. Every investment has an impact on individuals, society and the economy.”
The survey highlights a concern among investors that the ‘mainstreaming’ of impact investing is leading to it being watered down by some fund managers. Almost half (45%) of investors are worried that some investment funds labelled as SRI are in fact still investing in companies which have a negative impact on society or the environment. Over a third (39%) think SRI funds need to have a tighter criteria.
Bevis Watts adds: “The Socially Responsible Investing (SRI) market is growing quickly but we must be careful that it isn’t just labelled as sustainable investment on the surface. Otherwise it might come down to just doing things slightly less badly. A best-in-class investment in the tobacco or arms sector is not going to help make our society more sustainable. We encourage all investors to seek out funds that are not only best-in-class, but that apply strict sustainability criteria.”
Triodos is currently supporting a government taskforce examining issues like product standards and transparent reporting.
In the survey, investors are clear about which industries they would not consider investing in, citing the following top five issues and sectors:
- Manufacturing or selling of arms and weapons (38%)
- Worker / supply chain exploitation (37%)
- Environmental negligence (36%)
- Tobacco (30%)
- Gambling (29%)
Natasha Hurley, campaign manager at a London-based NGO, commented: “When choosing to invest through Triodos, my primary concern was to find a bank that was working for positive social and environmental change. That said, more evidence is pointing to the fact that responsible investing also gives higher returns. I like the idea that I can invest in new technologies that are helping to solve some of society’s biggest problems. For me it’s a win-win that my money is being used in a way that benefits both society and me financially.”
Triodos Bank offers two award-winning Socially Responsible Investment (SRI) funds in the UK – the Triodos Sustainable Pioneer fund and the Triodos Sustainable Equity fund. The Triodos Sustainable Pioneer fund is a global equities fund investing in small and medium-sized listed companies that are focused on the sustainable themes of climate protection, healthy living and clean planet, or are pioneers in corporate social responsibility. Examples include wind turbine manufacturer Vestas, First Solar, Shimano, Wessanen (Kallo/ Clipper Tea), packaging company DS Smith, sustainable building products company Kingspan and Bridgestone tyres.
Long term performance of the funds show an average annual return of 10.5% for the Triodos Sustainable Equity fund and 11.4% return with the Triodos Sustainable Pioneer fund over a 5 year period.
Important information: 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.