WHEB Commentary

Clare Brook

Mind the Information Gap


As National Ethical Investment Week (NEIW) kicks off, it is encouraging to see a decent amount of coverage in the press.  Not just in terms of column inches, but with plenty of intelligent insight about what the press still largely refers to as ‘ethical’ investment.

The coverage (see seven examples below) focuses on the fact that there is around £12 billion invested in green and ethical retail funds in the UK, but that this is only about 1.5% of total retail money invested – still a tiny proportion, given that when people are asked if they are interested in an investment strategy that reflects their values, the majority of people say they are either interested or very interested.

This gap – between the number of people who would potentially invest in a green or ethical fund and the 1.5% of people who actually do – is partly explained in the articles by potential investors feeling that they do not have enough information.  The Express (see below) quotes information from UKSIF saying that three quarters of people do not know where to get advice.

The articles suggest investors look to YourEthicalMoney.org, run by EIRIS or EthicalInvestment.org run by the EIA.  They also suggested contacting a specialist green IFA, such as Barchester.  There was little mention, surprisingly, of the very comprehensive site run by Worldwise Investor, now part of Blue and Green Tomorrow: www.blueandgreeninvestor.com.  Paradoxically, although it is an UKSIF survey that points out that three quarters of people do not know where to get advice, UKSIF, the trade body for the industry does not provide a comprehensive list of funds available.

But further blame for confusion in the industry lies with the fund providers themselves.  Potential investors should be able to see at a glance from a fund’s website what that fund invests in.  Investors can’t be expected to buy a fund on a leap of faith that the managers will fulfil their stated criteria, especially as several funds have been revealed over the years to be investing in curious choices, such as Wonga or BP.  At WHEB, we publish our full list of holdings on our website and believe all our competitors should do the same.

If we are hoping to grow as an industry, we must be prepared to be fully transparent.  That involves provision of comprehensive information about funds and by the funds themselves.

Observer http://www.theguardian.com/money/2013/oct/13/first-time-investors-portfolio-royal-mail
Mail on Sunday http://www.thisismoney.co.uk/money/investing/article-2456286/Ethical-shares-reap-extra-5.html?ito=feeds-newsxml
Independent on Sunday http://www.independent.co.uk/money/spend-save/if-it-says-ethical-on-the-label-that-doesnt-mean-its-whiter-than-white-8876411.html
Express http://www.express.co.uk/finance/personalfinance/436398/Investing-in-a-green-and-pleasant-future
The Independent http://www.independent.co.uk/money/spend-save/how-to-save-money-while-saving-the-planet-8874818.html
The Guardian http://www.theguardian.com/money/2013/oct/12/ethical-investments-positive-investor-hotpots
The Times http://www.thetimes.co.uk/tto/money/investment/article3892759.ece

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