Ethical investing increasing in popularity
Will UK robo-advisers join the ‘green revolution’?
Investing in sustainable companies is becoming more popular in the UK.
Over half of investors have increased their socially responsible investing over the last few years, according to the annual Schroders Global Investor Study.
“Capital markets have a vital role to play in finding and funding solutions to [climate change], and it is encouraging that investors see sustainability as an increasingly important consideration,” said Jessica Ground, global head of stewardship at Schroders.
The findings show a growing trend of ethical investing across the world, which has also expand to some robo-advice platforms. The practice, called environmental, social and corporate governance in the UK, has not yet caught on among many European robo-advisers, despite its popularity among asset managers and clients.
US robo giants Betterment and Wealthfront started offering socially responsible investing options to customers in July. The two approach ethical investing slightly differently. Betterment is investing in ETFs that track socially responsible indexes, while Wealthfront will allow users to screen out companies that might not match their socially conscious criteria.
The lack of UK robo-advisers offering ethical investing could be explained by the fact that the country is slightly behind the rest of the world when it comes to socially responsible investing.
While 54 per cent of UK residents have increased their “green” investing, 58 per cent of investors in Europe and 64 per cent worldwide have increased their allocation.
Sustainable investing is also increasing in importance. Around 67 per cent of UK investors say it’s more important to them then it was five years ago, compared to 75 per cent in Europe and 78 per cent globally.
However the survey of 22,000 investors worldwide, including 1,000 UK investors, found that investors thought recycling and buying local is more important than ethical investing.
Ground says that isn’t the case and investing in sustainable companies can have an impact on climate change.
“How companies make money is as important as how much money they make,” she said. “In an age of rapid social and environment change, it is vital to understand companies’ abilities to adapt and thrive as those forces reshape industries, competition and growth. Investors should remember that one way to change the word could be via their investment decisions.”