Ethical investments: a lack of awareness means investors are supporting industries they oppose.
Huw Davies, head of personal banking at Triodos Bank, says: ”
- there’s strong demand from investors to support more sustainable sectors, and also to divest from sectors like non-renewable energy – especially from the younger generations.
- more than one in 10 investors say they plan to remove any investments involving fossil fuels over the next 12 months, according to the research, conducted for Triodos.
- among younger people the trend is even more marked, with the number almost quadrupling to 40 per cent for 18 to 34-year-olds.
- the majority of investors say they would be concerned or even take action if their money was being used to support unethical activities, more than a third of savers admit they don’t actually know what their financial providers are doing with their money.
- a record 1.7 million UK people are saving or investing £3.25bn directly in businesses that have a positive social or environmental impact.
- ethical investment fans say going green with your finances will ensure a better world for us all in the future
Although sustainable investment options are becoming more important to investors, many are convinced that sustainability and financial returns imply a tradeoff. A study released Tuesday by the Morgan Stanley Institute for Sustainable Investing addressed this notion head-on—with some positive findings.
For its new report, Morgan Stanley reviewed 10,228 open-end mutual funds and 2,874 separately managed accounts over the last seven years. The review found that sustainable equity mutual funds met or exceeded the median return of traditional equity funds for 64% of the time periods examined.
In addition, those funds also had equal or lower median volatility for nearly two-thirds of the time periods examined.
“Sustainable investing presents the opportunity for individuals and institutions to align their investments with their values, but there are clearly many investors who have reservations over whether sustainable investing will require them to sacrifice investment performance,” Audrey Choi, chief executive of the Morgan Stanley Institute for Sustainable Investing, said in the statement.
“Ultimately, we believe that sustainable investing is simply a smart way to invest, and our review shows preconceptions regarding subpar performance are out of step with reality.”