Why do it?
There are opportunities for advisers and fund managers to meet the growing demand for Responsible Investment services. Providing such services to charities may enable you to attract new business and retain existing clients.
In this section:
Demand for Responsible Investment services
Benefits of providing Responsible Investment services
Addressing material SEE risks and opportunities
Why do charities invest responsibly?
Further information
Demand for Responsible Investment services
Responsible investment is growing. New ethical funds are being launched at an unprecedented rate.
In Europe, the socially responsible investment (SRI) market has grown considerably since 2003. The Broad SRI market across Europe is now valued at over €1 trillion.
Figures from IFA Promotion show that the number of people searching for an ethical IFA in January 2007 was three times what it was in January 2005.
Interest in Responsible Investment from the charity sector is also growing. A 2005 survey showed 55% of large charities had an ethical investment policy. This compares to a 2003 survey which found 40% of large charities had policies.
Anecdotal evidence suggests that the numbers of charities seeking advice and fund management services that address their ethical concerns is growing. Demand for Responsible Investment services has traditionally focused on negative screening, but investors are increasingly looking to use positive screens and engagement to. It is likely that charities will look for service providers that understand a range of ethical issues and Responsible Investment approaches.
With total estimated investments of £51.8 billion, the charity sector is a sizeable market.
There is a clear opportunity for advisers and fund managers to meet the growing demand for Responsible Investment services.
Benefits of providing Responsible Investment services
The key benefits of providing comprehensive Responsible Investment services could include:
- gain a competitive edge
- benefit from new market opportunities and win new business
- protect your client base
- enhance your professional profile
- improve your relationship with existing clients
- increase referrals
- gain new marketing opportunities
- improve product persistency rates
Addressing material SEE risks and opportunities
There is a growing view amongst investment professionals that environmental, social and corporate governance (ESG) issues can affect the performance of investment portfolios. Fund managers with a good understanding of responsible investment may be in a good position to consider how some ESG risks and opportunities could be financially relevant and significant. Incorporating them into the investment process may therefore lead to superior long-term performance.
The Principles for Responsible Investment, developed by the UN Environment Programme Finance Initiative and the UN Global Compact, provides a framework for the integration of such issues.
Why do charities invest responsibly?
You should understand why charity clients may be interested in Responsible Investment. The key reasons are:
- avoiding risks to their reputation
- using investments to further the work of the charity
- avoiding conflict with the charity’s aims
- using investments to influence company behaviour
- concern about alienating supporters, beneficiaries and staff
- addressing financially relevant social, environmental and ethical risks
You should be able to help charities achieve any of the above objectives.
Further information
UKSIF’s online training course sets out some of the reasons why IFAs should provide advice on green and ethical investments, many of which are relevant for all service providers.
