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What’s needed to mainstream green and

ethical finance?

17 November 2009

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• Introduction• Discuss key findings of EIRIS survey into

consumer attitudes towards ethical finance• Explore some of the implications this may have

for the investment community• www.yourethicalmoney.org

Contents

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• Non-profit, charitably-owned research organisation dedicated to promoting responsible investment

• Our mission is to empower responsible investors with independent assessments of companies and advice on integrating them with investment decisions.

• Provides responsible investment services to more than 100 asset owners, asset managers, banks, stock brokers and governments around the world - as well as major index providers.

• Our research covers over 100 ESG criteria on approximately 3,000 companies around the world

• Over 25 years experience of delivering unbiased, expert advice on ethical finance products to the consumers, financial advisers, charities, journalists and the wider investment community

Introduction to EIRIS

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• Fund managers use our research to manage risk, maximise investment opportunities and to create screened portfolios

• Pension funds use our research to assess their portfolios, voting and engagement, and to monitor integration of ESG issues by their fund managers

• Financial advisers use our research to shortlist ethical funds for their clients

• Charities/NGOs use our research to ensure their corporate donors / investments match their charitable aims

• Private client investors use our services to create an ‘acceptable universe’ of stocks in accordance with their ethical concerns

• Consumers - we also provide free information to consumers on issues surrounding green and finance

Introduction to EIRIS

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The Survey

Aims:• Gauge current interest in green and ethical finance

among British consumers• Identify key ethical issues of concern• Identify current barriers to investing

Sample:• 1037 people, over 18-64 years old, across Great Britain• Sample weighted to reflect demographic trends• 96% currently held a financial product or service

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KEY FINDINGS

Interest?

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Are people interested to find out the ethical credentials of their financial products and services?

Significant proportion of survey respondents interested

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How likely are those interested in the ethical credentials of a financial product or service likely to act on this in practice?

Very likely to consider in practice

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Awareness

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Current awareness of ethical financial products and services

Very low levels of awareness of current ethical products and services.

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Which ethical issues should banks and financial

institutions prioritise?

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Which issues do consumers want financial institutions (FIs) and banks to prioritise?

Clear preference for banks and FIs to give high priority to current ethical concerns rather than traditional ‘sin’ based issues.

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37

38

51

59

61

61

65

67

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23

25

15

18

18

11

17

14

39

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11

10

14

6

6

12

12

12

13

12

12

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11

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0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%

Avoiding companies involved inthe manufacture of alcohol

Avoiding companies involved inthe manufacture of tobacco

Avoiding investment in thegambling industry

Avoiding companies involved inthe manufacture of pornography

Tackling climate change

Protecting the environment

Avoiding arms manufacturers

Investing in fair-trade

Protecting Human Rights 

High priority

Neither high nor low priority

Low priority

Don't know

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Key Barriers

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What are the barriers preventing consumers purchasing ethical financial products?

Key barriers: Lack of transparency, lack of info, lack of trust

4644 44

3532 31 30

28 27

19 1816 16 15

0

5

10

15

20

25

30

35

40

45

50

Not enoughinfo on howthey make adifference

Don't knowwhere to getinformationon products

Don't havetime to

investigate

Don't trustclaims ofproviders

Confusedby info

available

Don't wantto leavecurrent

provider -good

relationship

Didnt knowexisted till

today

Not enoughchoice

available

No externalverificationof ethical

claims

Want tobank locally

- branchdoes notprovide

Adviserdoesntsuggestthese

products

Dont focuson issues

important tome

Notprovided by

financialservicesprovider

Less likelyto performas well asstandardproducts

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Key survey findings

• Significant proportion of respondents interested in the ethical credentials of their financial products and services.

• Large majority of those expressing interested said they would put this interest into practice when next buying

• Lack of awareness of current products and services – including among key groups

• Consumers feel banks should give high priority to issues that reflect current ethical concerns rather than the ‘sin’ issues that have traditionally been the focus of ethical investors.

• Key barriers: Lack of knowledge and mistrust of products.

• Fears around poor financial performance of ethical products was a barrier for only a very low number of respondents.

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Implications for Industry

Evolving interests and expectations• Consumer expectations around ethical finance have

evolved – industry needs to respond • Less focus on traditional ‘sin’ issues and greater focus on

‘contemporary’ ethical concerns, the environment, human rights and promoting fair trade.

• Compelling consumer demand for thematic funds that invest in companies providing solutions to the environmental and social issues that the world faces

• A genuine new market – or will key market remain faith, mission investors?

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Implications for Industry

The right products, greater choice• Products focussed on trends such as water scarcity, urban

regeneration and, of course, climate change• Innovative climate change funds which ‘reform the old’ and

‘build with the new’

• Recent popular examples including International Finance Facility for Immunisation issued a “vaccine bond” this year, while the sustainable property investment area ranges from pioneering eco-buildings to healthy low-energy offices and

social housing.

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Implications for Industry

Increase visibility• High levels of interest, but ethical providers must place a

greater focus on marketing to increase visibility• Advisers should ask the ethical question • Independent information source on ethical consumer

finance options• Increase visibility in mainstream distribution channels (e.g.

price comparison websites, etc)

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Implications for Industry

Build trust & confidence • Greater transparency around how and where ethical

products lend and invest money• Clear examples of how ethical finance can and does make a

positive difference (e.g. engagement, solutions companies) • Independent verification- time for ethical badge or ‘mark’? • Alliances with strategic stakeholders, e.g charities/NGOs, to

increase confidence • Offering ethical products and services can help restore

consumer confidence in FIs

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www.YourEthicalMoney.org

- the UK’s first one-stop-shop consumer website dedicated to green and ethical finance

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www.YourEthicalMoney.org

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• www.YourEthicalMoney.org – Empower consumers to make green and ethical product choices that will help build a more sustainable financial future

• Free, independent and unbiased information on all aspects of ethical finance

• Includes sections on ethical funds and ISAs, sustainable banking, green mortgages, ethical child trust funds and student finance

• Searchable database of Financial Advisers with expertise in ethical finance

• Dedicated sections on ethical pensions, credit cards, student finance and child trust funds

• Guides on financial exclusion and avoiding greenwash to help consumers understand ethical and green marketing claims

• Letter templates which consumers can download to tell their bank or Financial institution why they are switching accounts or products

• ‘Next steps’ guides on how to different areas of your finances an ethical makeover

www.YourEthicalMoney.org

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Conclusion• True demand for green and ethical investments is only just

starting to be seen?• The green and ethical investment market is still at the early

stages of its potential?• National Ethical Investment week and

www.YourEthicalMoney.org will encourage many more people to consider ethical options as part of their financial planning

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Questions & further information:

Mark Robertsonmark.robertson@eiris.org

 +44 (0)20 7840 5741       EIRIS, 80 - 84 Bondway, London, SW8 1SF

www.eiris.org, www.yourethicalmomey.org