Ethical investing is becoming increasingly popular in the UK, with an estimated £19 billion held in ethical funds in the UK alone, according to Eiris Foundation and up £3 billion since 20171. Our recent UK-wide survey of 2,004 people aged over 18, shows that ethically-minded Brits are increasingly demanding ways to save and invest their money that are in line with their principles.
Brits are environmentally and socially conscious
Aware of the many environmental and societal challenges we face, many UK adults have already adapted their daily routine in order to do their bit to help protect the environment and make society a better place. Four fifths (82%) of those self-confessed environmentally and socially conscious respondents recycle and 69% try to reduce their energy consumption at home. Almost half of those who see themselves as being ethical (47%) avoid single use plastics and ‘upcycle’ (reuse and improve) furniture (45%) and ‘make do and mend’ (43%) rather than buying new every time.
When asked their main motivations for living in an environmentally-conscious way, two-thirds of ethically-minded respondents said they aim to reduce waste (66%), with another 41% believing it is their responsibility to do so. Another two fifths (39%) of respondents claim to be adopting eco-friendly habits to save money. Others said they wanted to leave a lasting legacy for future generations (31%); support companies that have a positive impact on society and the environment (22%); and set a good example to others (21%).
Brits are willing to make a difference with their money
Brits’ growing environmental and social conscience also extends to their purchasing decisions. Two fifths (42%) of UK adults look for energy efficient appliances and 21% forgo convenience to make sure their buy local and seasonal food all of the time. Nearly three quarters (72%) say that they’d be more likely to favour a brand at least some of the time, if it supported social equality issues.
Brits are also tempted by an ethical route when it comes to choosing financial products and services. More than half (54%) of adults say they might look for ethical credentials in things like current and savings accounts, insurance and investment products at least some of the time, rising to 60% of 18-34-year olds. Interestingly the response was even higher (66%) amongst those and who already hold investments.
When it comes to paying a premium for an ethical version of a financial service or product, our research revealed that people are most likely to pay extra for everyday current accounts (25%) and savings accounts (23%). The younger audience (18-34 year olds) are the group most willing to pay a premium for ethical versions of financial products and services, with two thirds (64%) saying they would accept to pay a higher price for them.
Brits would consider investing ethically
A third (32%) of non-investors said they might consider investing if they could do it ethically – significant considering around 62%2 of the UK currently doesn’t invest at all. Ethical investments also seem to appeal to groups that are typically underrepresented in the UK investing market: our research showed that 33% of female non-investors would consider investing if they could do so ethically, compared to just 29% of male non-investors. Young respondents were also more susceptible: nearly half (45%) of 18-34-year olds said they would consider investing for the first time in an ethical portfolio, compared to less than a third (31%) of those aged 35-54, and just 22% of those age over 55.
2: Wealthify ISA survey - Research conducted by Opinium Research between 9– 12 March 2018 amongst 2,010 consumers
Amongst those who are currently investing, two thirds (66%) revealed they would consider holding an ethical portfolio, rising to three quarters (74%) amongst those aged 18-34. 25% of participants currently investing say they would pay a premium for an ethical portfolio.
When asked what activities they would most like to see excluded from an ethical portfolio, most people identified arms & weapons (42%), followed by animal testing (39%). Meanwhile, women respondents showed a higher aversion to companies accelerating climate change (42%) and deforestation (41%).
Again, we asked respondents to state their main motivation for wanting to invest ethically. Over half (51%) of those (non-investors and currently investors) who said they’re more likely to invest ethically believe it is ‘important to support companies that behave ethically and have a positive impact on society and the environment’ – this was found to be considerably more important for women (58%) than men (45%). A further two fifths (42%) said it is their ‘responsibility to invest ethically and conscientiously’ and 28% believe it would allow them to ‘secure their financial future and give something back at the same time’.
Amongst female respondents (non-investors and currently investors) who said they might consider investing if they could do it ethically, 51% said it was important to support companies actively lowering their impact on the environment, and other green credentials. is consistent with many people’s general shift towards more environmental and social consciousness in recent years.
Wealthify’s CIO and co-founder, Michelle Pearce-Burke, explains the growing popularity of ethical investing:
“As our research has found, Brits are increasingly ‘walking the walk’ when it comes to living their lives in line with their principles – both in their day to day activities and how they manage their money.
It’s really encouraging to see that so many people are not only being ethically responsible in the way they live, by recycling and reducing their energy consumption, but they are now applying this approach to the way that they manage their finances, too. Our ethical plans enable customers to ‘do their bit’ – having a more positive impact on society and the environment, whilst giving their money an opportunity to grow over the long term.
“The positive response from new and existing customers has been heartening, particularly having seen a stronger uptake from women (28% compared to 22% for original plans) and younger investors (average age 34, compared to 39 for original Plans) *.
“Prior to launching Wealthify’s ethical investment plans in August 2018 we asked our customers if investing ethically is important to them and their answer was very clear – 43% said it was extremely important or very important*”.
* Wealthify SurveyMonkey sent to existing and prospective customers in January and August 2018
Research conducted by Opinium Research among an online panel of 2,004 nationally representative UK adults (aged 18+), between 14th to 17th September 2018. Results have been weighted to nationally representative criteria.
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The comments and opinions expressed in this article are the author's own and should not be taken as financial advice from Wealthify.