Consumer scepticism around ethical investment on the rise, study suggests

Scepticism surrounding greenwashing and the validity of ESG and ethical investments is on the rise among UK consumers, according to a new study by Triodos Bank UK.

Research showed that a quarter of consumers who would not currently invest in an ethical fund (26%) are questioning whether many investments claiming to consider environmental and social impact are truly ethical – a figure that has risen from 17% in 2020.

Triodos’ findings, which were based on a poll of 2,000 UK adults, suggested that many are cautious about a lack of clarity from banks and financial institutions about how their money is being used.

The study found that seven in 10 of those with investments (71%) want more knowledge and transparency about where their money is invested, a figure up from 65% in 2020, while eight in 10 (79%) think that all banks and financial providers should be more transparent about where people’s money goes.

Triodos Bank UK head of retail banking, Gareth Griffiths, commented: “Putting your money into impact investments is one of the most powerful choices you can make. Your money can help drive real, measurable positive social and environmental change, while also delivering on competitive returns.

“But with many different investments labelled as ‘ethical’ or ‘sustainable’, it can be difficult to sift through the greenwash to find funds that actually deliver the impact investors are hoping for. Looking at independent websites and digging into which companies a fund invests in can really help you to understand how sustainable the product actually is and what aligns with your values.”

The Triodos research also found that the majority (54%) of consumers now believe that providers aren’t helpful when it comes to revealing what their money is invested in, which is up from 49% in 2020.

To overcome consumer scepticism, Griffiths added that fund managers need to draw clear lines and boundaries on what is sustainable and what is not – for example on fossil fuels, arms or food and farming.

He continued: “In the absence of clear product labelling or guidelines, they must be transparent on their approach and align investment choices to the UN Sustainable Development Goals. Active engagement as part of fund management is also critical to actually show positive impact of the investment.”

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