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HNWs hold stocks that go against their values

10 October 2019

The majority of high net worth individuals knowingly hold stocks that are in conflict with their values, despite expressing an interest in investing their money ethically, research from Rathbone Greenbank Investments has shown. 

The research among over 500 investors with more than £250,000 in investable assets found that 81% were interested in investing their money ethically. Yet, despite this, 74% hold stocks that go against their own values. The proportion was highest amongst those aged between 35-44 (77%), with half this group admitting they had several investments in their portfolio that they did not support ethically.

Climate change and plastic waste reduction were cited as the most important areas of concern by respondents, but 38% continued to invest in fossil fuels and 34% in mining companies. The research also found that alcohol and tobacco were popular investments amongst high net worth individuals – 35% and 33% respectively.

Investors blamed a lack of companies and funds to invest in (45%) and the need to spread risk across a number of different markets/ sectors (41%) as their reasons for doing so.

Over a third (35%) expressed concern about losing money if they were to sell their existing investments and buy new ones, while a quarter (25%) said they didn’t believe they would get as good returns from investing in companies that aligned with their values.

John David, head of Rathbone Greenbank Investments, said: “In a short space of time, ethical concerns from the environment to social injustice have gone from the fringe to part of the zeitgeist. It has become normal for people to make conscious decisions about their impact on the planet, with awareness growing every day. The fact that 81% of HNWIs care about their money being invested for good, aligned to their ethical beliefs, suggests we are on the right track.  However, there is still work to be done.”

According to David, the research suggests that even the “shrewdest” investors believed there was no credible alternative to investing in stocks and funds that go against their values.

He added: “The truth is there is a huge choice of ethical stocks and funds offering good diversity to spread risk across a portfolio, even in an uncertain economic environment. And most importantly, this money makes a huge difference to companies’ attitudes, and the way companies conduct their business. There is a huge need for education. It is possible to have profit with principals. Our experience of over 20 years at Greenbank, as well as numerous studies, have demonstrated that applying ethical values does not mean sacrificing returns.”