Only 20% of investors are ethically aware – Triodos Bank
Almost 17 million investors potentially hold assets which would not meet their personal ethical preferences, Triodos Bank reveals.
Failure by investors to look under the bonnet of the funds they hold assets in is resulting in potentially 70% of investors seeing growth and returns from companies and sectors which, when prompted, they are ethically opposed to, according to new research from ethical investment provider Triodos Bank.
The data, released for National Ethical Investment Week (13-19 October), shows that on average, only a fifth of investors (20%) say they are aware of the true extent to which the activities that their funds / pensions or companies invest in are ethical or not. And when breaking the responses down by investment type, Triodos Bank found that two thirds of those investing in personal pensions (68%) and stocks and shares ISAs (67%), plus just over half (53%) of those invested in a SIPP said they have little or no awareness. By contrast, those investing in offshore and onshore bonds were the most aware (46%).
Triodos Bank asked investors which activities would prevent them from investing in a particular company, fund or pension. The sustainable banking experts then analysed FTSE 350 companies and found that more than half (54%) of FTSE 100 companies are potentially active in these areas, including 12 mining companies and seven oil and gas companies. Within the FTSE 250 there are six arms and defence companies and seven companies involved in fracking.
Huw Davies, head of personal banking at Triodos Bank commented: ‘Many of us will have a pension or some stock market investment and not realise that a proportion of our portfolio may be invested in those sectors we find personally distasteful.
‘And if we are put off by investments in certain sectors, it’s down to us all to look underneath the bonnet of our investments to ensure we are happy with how they are invested.’
Women are more ethical but less aware when it comes to investment
Triodos Bank also found that women tend to have more ethical investment principles than men. While forced / child labour would stop just over two thirds (67%) of men from investing in a particular company, fund or pension, for women the number is just over three quarters (79%).
The gap becomes even wider with regards to investing in a more divisive industry such as pornography. Well under half of men (43 per cent) would have a problem investing in pornography, whereas 72% of women would object.
However, whereas 67% of men admit to being unaware of the activities of their investments, this rises to 73% of women. In fact only 18% of women say that they are aware of the activities their investments are linked to. This means that a staggering 82% of women may be investing in funds that they morally object to.
With only 17% of investors believing in investment return at all costs and saying that achieving the highest possible return is more important than being ethical, there is clearly an appetite among people to see that their money is being put to good use as well as making profits for them. However, only 12% of people are aware that it is possible to invest ethically in mainstream businesses.
Triodos’ investment research team updates its universe of investible stocks on a quarterly basis and, in contrast to other investment providers, aligned with its mission of 100% transparency, it publishes these quarterly changes. Investors may be surprised to learn some of the London Stock Exchange-listed companies that have been screened within the last three months and subsequently selected or not for Triodos’ Socially Responsible Investment (SRI) funds.
Triodos Bank has two SRI funds (the Triodos Sustainable Equity Fund and the Triodos Sustainable Pioneer Fund) and an ethical Stocks and Shares ISA offering which enables investors to benefit from potentially attractive financial returns, as well as being safe in the knowledge that their investments are more aligned with their personal ethical concerns. Every investment decision for the funds is only made following a rigorous research and selection process which ensures investors know that their money is invested in companies which Triodos Bank considers the best sustainability performance.