John Green, Investec

Investec takes investors' green pulse


Investec Asset Management has launched its inaugural Planetary Pulse survey, just in times for the COP25 meeting of global leaders in Madrid. The survey has found that the majority of British adults want to see their green intentions translated into environmentally focused investment action.

Investec Asset Management’s Planetary Pulse, surveyed over 2000 nationally representative British pension fund members (defined as adults who are in employment and contribute to a pension), and found that almost two thirds (63 per cent) of the working adult population would like to invest in businesses whose ethos and practices are in line with their personal views, with just 9 per cent stating the opposite.

The survey found that 85 per cent of respondents are concerned about the environment.  “British adults have implemented a myriad of behavioural changes to reflect this concern, with 94 per cent of respondents admitting they have made changes to their daily lives to benefit the planet.  A reduction in single-use plastic, recycling, a growing trend towards eating less or no meat, and people electing to change their travel habits have all contributed to these environmentally conscious decisions becoming normalised and mainstream” Investec says.
 
However, when it came to people’s investments, Investec identified a less matured trend – although, the firm says, ‘people’s intensions are encouraging’.  “Significantly, more than six in 10 people said they would be comfortable with a proportion of their workplace pension automatically defaulting into environmentally-focused investments, with the number increasing to 72 per cent for the younger generation (18-34 year olds)”.
 
Asked about their current pension allocations (in personal pensions, workplace pensions or a combination of the two), Investec’s Planetary Pulse survey found that three in 10 people (31 per cent) already have some allocation to environmentally-focused funds or companies and of these, 59 per cent plan to increase their allocation within the next three years.  The firm found that just a handful of people (4 per cent) said they had no intention to invest environmentally in the next two years.
 
People’s requirement for competitive returns is the major driving force behind their pension choices.  Investec’s Planetary Pulse identified that almost two thirds (64 per cent) of respondents considered performance and/or yield of their pension, the overriding concern guiding their investment decisions.  In fact, the vast majority of people, 82 per cent, said they were likely to invest in environmentally-focused funds, provided it was possible to make competitive returns from them.  Encouragingly 83 per cent believed that it is indeed possible to achieve competitive returns - thus investing for good and for financial gain are no longer considered mutually exclusive.
 
British adults hold the investment industry accountable when it comes to investing for good – 56 per cent believe that Asset Managers and Pension Fund Managers have an obligation to invest in ethical funds, with just 11 per cent disagreeing.
 
A tranche of British adults are reliant on intervention from the industry to spur them into taking environmental investment action: 16 per cent would be motivated by clear industry guidelines outlining the percentage of an investment portfolio which should be invested environmentally; 15 per cent would value consistent and continuous industry measurement to enable them to select the most appropriate environmental products; and 16 per cent would be prompted by guidance from their financial adviser.
 
John Green (pictured), co-CEO, Investec Asset Management, says: “It is time to act on climate change and it is time to act on pension allocations. Our survey shows the investment industry must do a much better job of explaining the growth potential of the sectors and companies that are helping the world tackle climate crisis, as well as the risks of failing to adapt portfolios to address climate change.
  
“We have witnessed people making substantial changes in their day to day behaviours for the good of the planet.  It also appears that wider support and guidance from the investment industry and greater evidence of the potential financial returns on offer could be just the catalysts needed to prompt people into investing their pensions in a more sustainable manner.  It is very encouraging that our Planetary Pulse survey has identified a real enthusiasm from UK adults to invest in an environmentally focused manner. Collectively we all have a part to play in making positive change; pension funds have a mandate from their members to be more active and the investment industry as a whole has a duty to be more responsive, thus enabling people to align their portfolios for a world requiring a dramatic reduction in carbon emissions.”
 
Investec writes that while the data shows no lack of willingness amongst British adults to invest in an environmentally conscious manner, Investec’s Planetary Pulse identifies a concerning general lack of knowledge about their workplace pension pots, with just two in five (42 per cent) claiming to have a good knowledge of where their money is invested and 56 per cent admitting they have little to no involvement in the investment decisions whatsoever.  Those with personal pensions were undeniably more clued up, with three-quarters involved in the decision-making.  Overall, 50 per cent of respondents claimed to want greater control over where their pension is invested which bodes well for people’s future financial control, the firm says.
 
Deirdre Cooper, co-manager, Investec Global Environment Strategy, says: “The decarbonisation structural growth story is arguably the single biggest investment that the world has had to make in peacetime.  It’s getting clearer day by day that the world’s response to climate change is reshaping the global economy, creating opportunities as well as risks for businesses across industries.
 
 
“Decarbonisation is being driven by regulation, changing consumer preferences and technological advances. Each of these factors could influence investment performance, but together they are a powerful cocktail with the potential to reshape entire industries. As efforts to tackle climate change accelerate, it’s getting ever more likely that the portfolio impacts on the average pension fund investor will be significant.”
 

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