However, with the rise of impact investing, conscious investors are now demanding a much greater knowledge from the firms that manage their investments – beyond the financial and into environmental and social concerns.
This is just one finding from our recent nationwide survey, which looked at what both new and experienced investors want from the management of their investments. We’ve rounded up some more of the key findings below.
Investors are looking for fund managers to upskill around sustainability
83% of those polled would expect or want to see their fund manager upskilling in sustainability and environmental issues, while 85% would like or expect their fund manager to help avoid “greenwashing” claims. For new investors, this is even more important, rising to 91% of those that have begun investing in the past 12 months for both responses.
New investors are also demanding much more detailed analysis of the funds they invest in, with 90% wanting their fund manager to conduct in-depth research into each company in a fund to make sure every single investment aligns with their values and personal ESG criteria.
“To meet this consumer demand for impact and transparency, investment managers need to ensure they are staying up to date with the latest products, research and policy developments in sustainability,” explains Hadewych Kuiper, the recently appointed managing director of Triodos Investment Management. “Only then will investors be able to trust that their money is really being invested in line with their values.”
New investors want engagement and divestment
As well as having greater expertise in ethical and sustainable investments, investors want to see their fund managers taking direct action in line with the values of their investors.
8 in 10 existing investors (81%) would expect or want to see their fund manager divest investments from those that cause harm, which rises to 91% of new investors. Meanwhile, 82% (rising to 92% of new investors) want their fund manager to engage with the companies they invest in directly on issues such as social impact and sustainability.
This active approach to investment, where fund managers select individual investments for a portfolio and engage with companies directly, contrasts to 'passive' investments or exchange traded funds (ETFs), which have increased in popularity in recent years.
“Our research demonstrates that the majority of investors with strong values are looking for active stewardship from their investment managers, with the peace of mind and expertise that passive funds just can’t provide,” comments Bevis Watts, CEO of Triodos Bank UK.
New investors prioritise impact over returns
In the past year, a new generation of purpose-led investors have come to financial providers with a greater expectation of sustainable and impact investing. Almost half (48%) of these new investors are under 35 years of age, and three-quarters (75%) are under 45, indicating that positive social and environmental impact is a much greater priority for younger consumers starting their investment journey.
As testament to their passion for investing with positive impact, 6 in 10 new investors (63%) would be happy to settle for lower returns to invest in industries they believe in.
“ShareAction is not surprised to see increasing numbers of retail investors understand the impact of their money on the world, and to recognise that impact on people and planet is just as important as returns,” comments Michael Kind, senior campaigns manager at the charity, which works to drive forward responsible investment.
“In our view, a responsible approach to investment should be the main consideration for the global money managers who invest money on behalf of retail investors. A true responsible investor sees negative impacts as just as important as financial return, and takes steps to mitigate or avoid these impacts.”
Research was conducted by Opinium Research on behalf of Triodos Bank UK. The sample polled 1,004 UK investors. Polling took place between 23 February and 2 March 2022.
Capital in any investment product is at risk. The value of an investment may go down as well as up and investors could lose some or all of their money. Currency fluctuations may also affect the value of a Triodos Stocks & Shares ISA. As with all ISAs, the tax benefits depend on individual circumstances, and tax rules may change. The total annual ISA allowance is £20,000, which can be split across different types of ISAs.
None of the information in this article constitutes financial advice. If potential investors are unsure if these investments are right for them, they should contact an Independent Financial Adviser.
About Triodos Impact Investments
Triodos Bank offers award-winning Impact Investment funds available through a Stocks & Shares ISA in the UK – the Triodos Pioneer Impact Fund, the Triodos Global Equities Impact Fund and the Triodos Sterling Bond Impact Fund.
For total transparency, Triodos Investment Management publishes a list of all companies in each fund's investment portfolio. All the investments in the funds have been hand-picked by impact investing experts using a themed approach, which ensures they have a positive impact on society and the environment.