Interactive Investor

COP26: ethical investing on the up among ii customers

26th October 2021 16:33

Jemma Jackson from interactive investor

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Renewable energy funds are proving the most popular.

COP26, set to convene in Glasgow on 31 October, will bring together governments to explore goals for a greener and more sustainable world.

Investors can play their part by putting their money where their morals are - and they are doing so in increasing numbers.

Assets in ethical investments held by customers of interactive investor have steadily increased in recent years, with SIPP accounts seeing the biggest increase in portfolio weighting to socially responsible investments - up to 3.29%, on average, by the end of September from 1.95% at the end of 2019.

ESG investments are not just a millennial fad – Baby Boomers are leading the charge among SIPP customers, but Generation Zers lead among ISA customers.

The latest findings from the interactive investor Great British Retirement Survey 2021 suggests interest in ethical investing continues to move more mainstream, with nearly half (46%) of respondents investing ethically at least some of the time. However, only 6% said they always invested ethically and a further 7% are not currently investing ethically but would like to do so.

In addition, more than a third (35%) of respondents said their pensions were invested in a way aligned with their moral values, but 41% said they did not know how they were invested.

When it comes to workplace pensions, 37% of respondents thought workplace schemes should offer ethical investments as a default option.

Bestselling ethical investments

Renewable energy-focused funds and investment trusts remain popular among customers of interactive investor, accounting for eight of the top 10 bestselling ESG-focused funds and investment trusts on the ii ethical investing long list* since October 2019 (when the long list was launched) to 25 September 2021.

Investment trusts dominate the top 10, and this could in part be due to their clear single strategies, featuring either infrastructure, wind, solar and clean energy options. Dividend yields could also be a factor.

The Renewables Infrastructure Group (LSE:TRIG) investment trust ranks highest in first position, ahead of Greencoat UK Wind (LSE:UKW) in second position and Gore Street Energy (LSE:GSF) in third.

Myron Jobson, Personal Finance Campaigner, interactive investor, says: “The recent UN report, which laid bare the extent of the climate emergency, shows that greater actions, not words, are needed to tackle climate change. The potential implications of global warming are already starting to sink in for many investors from a portfolio selection perspective. A recent interactive investor poll** found just under two-fifths (39%) of respondents said they were more likely to invest in ‘green’ investments because of the UN report.

“More broadly, interest in ethical investing is on the up – and it appears that the ‘E’ for environmental in ESG has captured the minds of many - with an increasing number of investors choosing to put their money in propositions aimed at building a more sustainable future.

“The rise to prominence of ethical investing is down to a combination of factors: more availability, increased awareness, and long-term performance that shows that an investor does not have to sacrifice performance to invest in a way that aligns to their moral values.”

“Despite a common perception that ethical funds are a ‘Millennial thing’, Baby Boomers are a little ahead of the game on ethical funds – but it is close run. This could suggest that older generations are concerned about not just passing on wealth but passing on a healthier planet.  There’s no age limit on investing with a conscience.”

Most-bought ethical funds/investment trusts on the ii ethical long list from 1 October 2019 to 25 October 2021

Notes to editors

*The ii ethical investing long list is a list of all ethical fund and investment trusts available on interactive investor.

**Poll of 1,617 interactive investor website visitors between 17 and 23 August 2021

These articles are provided for information purposes only.  Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties.  The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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