Green and Ethical Investment Has Hit the Mainstream, Now Innovation Must Drive it Forward

After a turbulent year in the financial markets,, which starts on Sunday 14 October, is set to be the biggest in its five-year history.

After a turbulent year in the financial markets, National Ethical Investment Week 2012, which starts on Sunday 14 October, is set to be the biggest in its five-year history.

This year saw the 'shareholder spring', where investors held an unprecedented number of companies to account for issues such as bosses' pay, rapidly followed by a summer of scandal for big banks. Tellingly, over half a million people in the UK have switched bank accounts away from the big banks this year according to the Move Your Money campaign and the Co-operative says it added around 100,000 new customers in June and July this year around the time of the LIBOR scandal.

Research conducted by YouGov for the fifth National Ethical Investment Week has revealed growing interest in green or ethical bank accounts and in 'impact investments' which produce both a financial and a social or environmental benefit, as well as in more traditional ethical investments. For example, YouGov found the proportion of British adults interested in knowing more about 'impact investments' had risen significantly from 36% in 2011 to 55% today.

Meanwhile, more and more UK pension funds are declaring their support for the UN-backed Principles for Responsible Investment (PRI), a global institutional investor initiative for green and ethical investment. The number signed up has jumped by over a quarter in the last two years. UK investment managers are also seeing the opportunity. Their support for PRI has increased even more rapidly - by nearly 50% in the same two year period.

It isn't surprising therefore that, according to data compiled by the UK Sustainable Investment and Finance Association (UKSIF) and published this month, responsibly-invested assets managed in the UK have now passed €1 trillion for the first time and represent over 18% of the total European responsible investment market. This includes assets that are invested in themes such as water, clean energy and forestry as well as funds that use stewardship and analysis of sustainability issues to ensure they are investing responsibly.

A historic shift

Although the growth of sustainable investment has been impressive in recent years, much more needs to be done.

A century ago, our world was transformed from a reliance on horses and steam power into a modern economy. Socially valuable financial innovations like the establishment of the state pension in the UK and creation of the Federal Reserve System in the US helped sweep away that old world.

Today the forces of technology, climate change and population growth are again transforming our world and we need innovative financial markets that provide support for businesses and individuals to thrive in the future.

Already, new players are entering the investment market offering different ways to back local energy, small business and profitable community services. The UK government is actively supporting 'impact investing', creating a new financial institution called Big Society Capital to develop and shape our impact investing market. It is also launching the world's first Green Investment Bank to support the green infrastructure needed for future success.

Although huge advances are being made, industry and government must both move further and faster if they are to turn the UK's sustainable finance expertise into an enduring strategic advantage and help both institutional and retail investors to respond to changing times. Protecting and growing our wealth will need a new awareness of both environmental limits and social change. The good news in this fifth National Ethical Investment Week is that so many of us want both to make money and make a difference with our savings and investments.

National Ethical Investment Week runs from 14-20 October. To find our more or to get involved visit:

Before You Go