Ethical investment comes of age

Ethical investment is becoming the chosen vehicle for investors who demand more than just financial growth from their money, says Emerald Knight


In the wake of the financial crisis, research suggests that both the demand for and understanding of ethical investment has grown over the last year. And an increasing number of people in the UK would be interested in investing ethically if they simply knew more about it.

The research, commissioned by Emerald Knight, the ethical investment specialist, shows that nearly two-thirds of people (65 per cent) would like to know more about what their bank or building society is doing with their finances. This comes after an overwhelming 86 per cent claimed they were unaware of how their money is invested.

The poll also highlights a general lack of confidence in the banking sector, with 80 per cent of respondents saying they have less trust and faith in financial institutions since the UK banking crisis. And almost half (47 per cent) say they’d be likely now, or at some point in the future, to choose ethical investment over the more traditional vehicles, such as the property and stock markets.

At the same time, however, people are becoming more conscious of the environmental and social impact their financial choices could make, with more than three quarters (76 per cent) concerned about issues such as climate change, human rights and deforestation.

Perhaps that’s why 60 per cent of those surveyed say they’d be interested in investing ethically if they simply knew more about it, and almost three quarters (74 per cent) say that, if they had the money, they’d be likely to opt for investments which benefit society and the environment.

James Howard, director at Emerald Knight, says: “Ethical investment, through positive results and changing attitudes, is breaking into the mainstream.

“Since the global banking crisis, there’s been increasing concern over the stability of traditional investments and there’s also much better awareness of how financial institutions use their customers’ money.

“Alongside this, awareness of environmental issues has increased, the world’s population has continued to grow at a rapid pace and people are becoming more concerned about human rights. As a result, the nation is becoming increasingly aware of the impact of its choices.”

Just how much is reflected in data from the UK Sustainable Investment and Finance Association (UKSIF) which shows that responsibly-managed assets in the UK recently passed €1 trillion for the first time, representing more than 18 per cent of the total responsible investment market in Europe.

“Investors are, however, by no means prepared to sacrifice good investment sense to buy into such products,” adds Mr Howard. “No one wants to settle for a serious compromise on returns and they should never think that it’s a choice between ethics or growth.”

Emerald Knight has had some very positive results over recent months, including double-digit returns on a teak forestry project after the first year of investment. It’s also recently delivered its first fixed annual return to investors in its exclusive asset-backed bamboo bond. This has an investment period of 15 years and provides an increasing fixed annual income return, culminating in a final-year return of up to 55 per cent and a total return of up to 503 per cent.

Mr Howard concludes: “Our clients are as demanding as any other investors, even if all-out profit isn’t their one and only goal in selecting their investment portfolio. We have to demonstrate proven returns and a defined exit as well as the socially responsible investing (SRI) benefits of the product to make sure we’re ticking all of the boxes for them. And, of course, to provide the reassurance they need in an uncertain market.”

Emerald Knight is looking forward to even more successes in 2013. To join in the journey visit www.emeraldknightconsultants.com or call 0207 122 0241.