City's only 'scratching the surface' of ethical investment

26 May 2008 / by Rachael Stiles
F&C has found that British investors are not having their appetite for ethical investment satisfied by the City, which is failing to take advantage of the demand.

Research from F&C has shown that, despite a growing demand in the UK for green and ethical investments, the City is only "scratching the surface" of a potentially huge sector that is "far from being saturated."

The survey found that approximately 88 per cent of respondents thought that it was either "very" or "fairly" important for companies to act responsibly in terms of social, environmental and ethical issues.

Effective ways of enforcing this would be if companies were to enforce strong policies and effective management, and report publicly on their progress, according to 86 per cent of respondents.

Human rights and the environment were top of the priority list for Brits, with 25 per cent and 21 per cent respectively, citing them as the most important funds for companies to avoid.

Other exclusions were not as high on the list, with just 10 per cent saying that tobacco was the worst thing to invest in, four per cent said nuclear power, and gambling got three per cent of the vote.

The survey also revealed that 55 per cent of people think that investing in ethical funds would result in lower returns on their money, but 58 per cent still said that they would invest their own money ethically.

If an investment fund delivered as much as two per cent lower returns than an unethical policy, 44 per cent showed that their convictions were stronger than their desire for money by choosing it anyway, and 26 per cent said that they would stick by a fund even if it delivered a rate that was five per cent lower.

Jason Hollands, director of F&C Investments, commented: "The public are increasingly demonstrating that they are inclined to take ethical and an environmental factors into consideration in their spending decisions. This research confirms that they are also well disposed to doing so when it comes to their investments.

"The research also suggests that ethical investors are inclined to have high degrees of loyalty to their investment strategies once invested. The good news is that the long term track records of established ethical funds such as Stewardship Growth and Stewardship Income, have demonstrated that irrespective of short term blips, over the long term these funds have delivered attractive returns that stand-up well against those on conventional funds."

© Fair Investment Company Ltd