Make it part of Financial Planning
My feeling is that many more people will be interested in investing this way if they can be persuaded to make SRI part of their financial planning.
Whilst there is a valuable section of the investment community who will want to invest everything ethically there is a largely untapped part of the market who are still a little nervous and ill-informed about the potential of SRI. At the same time evidence suggests that many people wish to make a positive contribution with their money (54% according to the UKSIF survey of 2010).
Therefore if clients are encouraged to invest part of their money in SRI (say 10%) this will initially be far more palatable for them and, more importantly, would be a more sensible progression for IFA’s who are interested in entering this space.
As an IFA who is relatively new to this area this is an approach that I am taking, because I feel I can make more impact this way. I would also add that I invest around 10-15% of my own money in the green and ethical space, so I feel comfortable in preaching what I practice.
To add to this there is far more ammunition we can fire at these prospective clients. Other than just straight fund performance there is growing evidence to support more fundamental factors. The growing acceptance of ESG ratings as a way of further enhancing share value is one. For example FTSE are now adopting ESG ratings for all stocks in the ‘All Share Index’.
As advisers now we don’t have to discuss SRI in a traditional ethical way we can talk more in terms of sustainability and how this can have a direct effect on shareholder value. M&S increasing annual bottom line benefit by £105m because of their sustainability savings would be a great example (as described in Seb Beloe’s blog of the 20th June).
All of this can help to attract investment from the mainstream market, and as more investors become involved then the greater the impact this sector will have.
Imagine the numbers
Imagine if everyone invested 10% this way. As a crude estimate if we based this on 10% of the IMA figure above we would be looking at 5X increase in SRI investment.
Think what a difference that would make to our planet!