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opinion

Knowledge gap

What are your investments really financing?

What are your investments really financing?

If we are to understand what our money is really financing, we are going to need a lot more information….

For most of us, our pension is by far and away our most significant investment. Collectively, the UK’s pension pot is worth a whopping £200 trillion. However, despite the relative significance of this pot of money, how many of us actually stop to think about what our pension providers are doing with it? What it is being used for? If you’re unsure about what your pension is investing in, you are not alone.

We recently did some polling for Good Money Week and found that almost two thirds of UK investors don’t know what their pensions and other investments are financing; if you’re one of them, the chances are you could be financing something that doesn’t match your personal ethical preferences.

However, despite the fact that onlyone in ten investors are ‘very aware’ about what they are investing in, 74 per cent say they would like their pensions and investments to be invested more in environmental and social sectors.

And here lies the issue; consumers are saying they want to invest ethically, but at the same time are admitting they have no idea if the financial products they have meet their ethical preferences or not.

“Just as you and I have a responsibility to ensure our financial investments meet our moral and ethical requirements, there is also a responsibility on providers to offer the transparency needed to make that possible.”

Rachel Mason, Triodos Bank

So what’s the problem? It is obviously not the willingness to invest ethically – 74 per cent of us want to, and only 19 per cent would put profits before ethics.

Maybe it is a problem with access? Buying ethical/fair trade food is easy. It’s labelled; it’s on the shelves at your local supermarket readily available for you to buy, and with around 4,500 Fairtrade certified products for throughout the UK, Fairtrade clothing, cards, toys and gifts are easy to get hold of too.

If you know a company is not acting as you would like, you wouldn’t buy their products. And it shouldn’t be any different with money. But if you don’t bother to find out, or the companies themselves are not transparent enough, your money could well be funding unethical activities.

The onus is on us to make sure we understand the financial products we are buying. Yes, some level of research is required, and if people are going to change their perceptions – only one in ten of us are even aware it’s possible to invest ethically in mainstream companies – we are going to need to dig a little deeper.

But, just as you and I have a responsibility to ensure our financial investments meet our moral and ethical requirements, there is also a responsibility on providers to offer the transparency needed to make that possible.

In order to meet the consumer demand for ethical investment, we need to make the process simple. It needs to come out of the niche and into the mainstream. Consumers want transparency, so providers should be offering it. There needs to be more information out there so people can make informed choices. Campaigns like Good Money Week are a great start; we just need to keep the momentum going past October 25th.

Rachel Mason, Triodos Bank

Good Money Week

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