Ethical investing – time to talk to investors in language they can understand
24 October 2019
Brits are on board with investing sustainably to make the world a better place, but impenetrable jargon and complicated processes are preventing them from doing so. We need to try harder to speak their language, says Rathbone Global Sustainability Fund manager David Harrison.
Back when I was young, before Al Gore was on the case, Captain Planet was on the TV. He was a bit ahead of his time: long on environmental concern, heavy on diversity and preaching global co-operation to solve the world’s ills. It was punchy stuff! Jeff Goldblum even got involved to help teach kids about recycling, fighting the good fight and helping others.
Unfortunately, his show was cancelled during the mid-90s economic boom which helped drag hundreds of millions of people out of poverty while simultaneously intensifying our damaging overuse of the earth’s resources. How things have changed though. More than perhaps ever before, people understand the perils of our current path and the need to change. Back in the 90s, Captain Planet’s enemies were virtually all evil businesspeople. Today, businesses are seen as part of the solution.
We need to wean ourselves from carbon-intensive industries and drastically reduce the waste we create and the water we use. Commerce has to be one of the most important levers here. Businesses are the conduit for everything from our food to our electronics, from keeping the lights on to how we get to work in the morning. If they can bend toward sustainable solutions, the effects would be huge and rapid.
The opportunities are huge for companies that can find sustainable solutions to our environmental conundrums, to those businesses that can offer sustainable products to customers that vote with their wallets. Because people are already starting to think about sustainability when buying small things like coffee all the way through to the energy efficiency of their homes and cars. They are starting to take notice when buying investments too.
A Government report released late last month drilled down into the British appetite for investing in line with the UN Sustainable Development Goals (UNSDGs). About 6,000 people were surveyed in total, using census data to ensure the results should be an accurate representation of the UK. About 1,000 of these respondents were those with more than £25,000 to invest, to ensure that assumptions could be made about those with serious cash to invest, too.
Essentially, it took the temperature of the demand for sustainable, Environmental Social Governance (ESG) and impact investments. Some of the results may surprise you. Some of them will be old hat for anyone who has more than a passing connection with the investment world. The report found that most people – both those with thousands to invest and those who are only saving through their pensions (or not at all) – want to make investments in assets that aim to help hit the UNSDGs. Half of the UK would want to invest more if they knew their money was making the world a better place while also making them a return. If this can be achieved it would create a fantastic flywheel effect. As more money flows into sustainable companies, it would help them make more of a difference and excel, which could in turn be spotted by new investors who would then be happy to invest more.
But most people don’t know investing sustainably is a thing, let alone where to find options, what to make of the terminology or who to trust. About 45% of people said they wouldn’t invest because they don’t trust that financiers will actually do the ‘good’ they claim with investments.
More information, better options and greater trust in sustainable funds and assets are needed to entice people to invest. Helping people make sense of the avalanche of jargon is definitely needed. Only one person in 10 can explain responsible investing in some form. It’s hard for experts to know the difference between their UNSDGs and ESGs or their SRIs and PRIs, let alone the differences between impact investing and sustainable investing.
That’s why we try to be as transparent as possible with our funds: to help people know exactly what we’re trying to do and how we go about it. We’re trying to talk to everyday people in language they understand. This report shows people already understand the need to take action, all we have to do is explain ourselves better.
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