Julian MarrMarr’s Markets
Did you do your bit for National Ethical Investment Week? Me? I marked Monday last week with an appropriate piece for Marketing-hub.co.uk, from which I imagine I may repeat a few chunks now – not least because, unlike proper columnists, I don’t change my opinions every five minutes. Also, what could be more environmentally aware than a spot of recycling?
Which brings me neatly and, by my standards, quite snappily to the big question that hangs over socially resp-onsible investment. In fact, since apparently every financial article must nowadays by law include a suitably enclosed pachyderm, I would even call it the elephant in the room – if it did not feel so downright unethical to coop up any large animal in such a way. So – deep breath – just what is wrong with SRI? More precisely, why aren’t more investors interested in it? According to the latest figures from the Investment Management Association, 1.2 per cent of total funds under management were in ethical portfolios – the same proportion as in 2008, 2006, 2005, 2004 and 2003. Only in 2007 did the figure edge up to 1.3 per cent.
Such reticence is thrown into sharp relief – not wholly intentionally, I presume – by a survey carried out for National Ethical Investment Week which reveals that 49 per cent of investors would like to make money as well as a difference.
Obviously, the organisers see this as a jolly green giant positive – after all, on this evidence half the country seems inclined to invest ethically – but I am not so sure. Bearing in mind the natural instinct to come across to market researchers as better people than we are, how is it possible that the number answering this question in the affirmative is anything less than about 95 per cent?
For if only 49 per cent of investors would like to make money and make a difference, then the other 51 per cent are either greedy misanthropes (want to make money but not make a difference), altruistic masochists (want to lose money yet make a difference) or full-on nihilists (want to lose money and not make a difference). Maybe the 51 per cent comprise that category so beloved of market researchers, the don’t-knows, but that hardly buoys the SRI case.
I mention this neither to have a pop at National Ethical Investment Week nor to seek to deflate the general optimism that accompanies the organisers’ assertion that there is more than £7bn invested in green and ethical funds in the UK – up from £1.5bn 10 years ago – while quarterly net sales of ethical funds has increased threefold year-on-year to £59m, the highest level since 2007.
I merely fear that if half those surveyed can’t be bothered to lie about how much they care about investing ethically, then the chances of building significantly on that £7bn figure – or, ahem, that 1.2 per cent – are not as rosy as the investment week’s organisers and sponsors like to think.
Still, helpful soul that I am, I am happy to assist in spreading the SRI gospel by highlighting how the week’s research also revealed a demand for financial advice in this area.
Some 12 per cent of British investors said they would look at green and ethical investments if their adviser raised it with them while 13 per cent reckoned the availability of more advisers who understood the area would be an incentive.
Oh – and 27 per cent would go further still, believing the Government should introduce rules to ensure advisers ask investors if they are interested in ethical investments. That is just what the advice industry needs – yet more regulation.
Nevertheless, as Mike Fox, a fund manager at The Cooperative Asset Management, one of the week’s sponsors, says: “Research confirms that investors are significantly more interested in ethical and sustainable investments once they under-stand the remits and investment opportunities. Addressing this need to increase investor understanding – and not just with those of an ethical persuasion – is a good opportunity for intermediaries.”
In that spirit of assistance I mentioned, a free online training course can be found at the official website, www.neiw.org, which I trust will be sustaining its development beyond the end of National Ethical Investment Week.
Julian Marr is editorial director of marketing-hub.co.uk