Positive Investing report reveals growth in ethical money sector
Record 1.75 million people invest £3.25bn in social & environmental change
A record 1.7 million people across the UK are saving and investing £3.25 billion directly in businesses that create social and environmental impact, according to The Make Money Do Good report.
The Annual Report on Positive Investing, compiled by Ethex, reveals that £2.1 billion is saved in credit unions, £862 million in ethical banks and building societies and £249 million directly invested in community share offers, charities and positive businesses set up with the intention of solving social or environmental problems and delivering a financial return.
Savers and investors are increasingly supporting local community projects and businesses. Some 152 communities have invested £47 million of their personal wealth since early 2012 to fund renewable energy projects, shops, pubs and similar local projects.
Community-owned renewable energy projects are the most popular with investors, and 56 have raised £29 million, followed by projects involving community shops (34 raising £1.9 million), pubs and brewing (25 raising £4.7 million), community buildings (15 raising £2.5 million), food and farming (seven raising £1.4 million) and development and fair trade (three raising £5.4 million).
More investors are choosing to invest their money directly and the positive investment market has grown by a third since early 20121. In contrast, indirect investment in the traditional green and ethical retail funds market, the mainstay of ethical investing since the early 90s, has seen growth slow to under 4% a year over the last three years, with most of this attributable to growth in stock market values rather than growing numbers of investors.
Jamie Hartzell, founder of Ethex, said: “A growing number of people are taking control of their money and making it do good, choosing to save and invest directly in businesses that deliver not only a financial return but also demonstrable benefit to society."
He added, “Positive investing is emerging as a broad and unstoppable movement, a popular response to the financial crisis. People today want a more direct and immediate relationship with financial institutions that can be trusted, and that are transparent and accountable.”
Recommendations To Grow the Market
The report identifies great momentum behind positive investing but says it faces major barriers. It makes three recommendations to achieve a properly functioning marketplace:
1. Consumer education in finance and investment. Give people the tools they need to assess the risks and rewards of investment so they can make better decisions about their money.
2. Greater investment in financial infrastructure. Develop a secondary market for positive investments allowing investors to buy and sell shares easily.
3. Proportionate and consistent regulation. Work with the Financial Conduct Authority to ensure that regulations protect investors but are not excessively restrictive or complex.
Positive Investing report is available here (opens in new tab)