Majority of investors unaware of ethical standards

63% of investors do not know whether they are investing ethically, a European Commission Green Paper has revealed.

The paper, which is based on research from Triodos Bank, also showed that only a quarter (25%) of people say they know if their investments are ethical.

The research also highlighted that investments made through pension funds and stocks and shares ISAs can lead consumers to inadvertently finance activities they ethically or morally object to.

Moreover, 71% of investors said they would like more of their pensions and investments to go into environmental and social sectors. Almost half (46%) said they would like more of their pension or investment products to be invested in renewable energy, while 43% would like to invest in healthcare and 37% in sustainable businesses

85% of interviewees also told Triodos Bank that they would act if they felt their investments conflicted with their personal ethical preferences, pointing to human trafficking and forced child labour as the most hated practices.

Huw Davies, head of personal banking at Triodos Bank, comments: “The results show that people do care about the activities their pensions and investments are financing, and would be willing to act if these clashed with their principles.

“But with almost two-thirds oblivious to where their money is being invested, millions run the risk of inadvertently investing in areas which contradict their personal ethical preferences.

“At the same time investors are willing to support more sustainable activity, but are likely to be missing out unless they’ve taken active steps to do so such as investing in SRI funds.

“A big part of the problem is the lack of transparency in financial products – it should be much easier for the average investor to find out which companies and activities their money is financing so they can make informed decisions.

“Individual investors can make a difference by taking a look under the bonnet of their pensions and investments, and doing something about it if they’re not happy with what they discover.”

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