Investment in companies that perform poorly on some responsible or ethical finance concerns can be almost as strong a motivator in choosing to switch financial provider as poor customer service, or a better deal elsewhere, indicate the findings from an Ipsos MORI national consumer survey commissioned by leading global responsible investment research firm EIRIS. The importance of responsible or ethical concerns in finance is supported by EIRIS’ estimate that the amount of money invested in the UK’s green and ethical retail funds reached over £13.5bn in 2014.
EIRIS commissioned Ipsos MORI to undertake a national online poll of 2,010 adults aged 16-75 across Great Britain. Among the 1,837 of those who have ever personally bought or taken out a financial product or service around a half (51%) are likely to consider switching from their main financial provider if they have reason to believe their financial activities (e.g. lending, insuring) contribute to harmful social activities, such as human rights abuses, child labour or forced labour.[ii]
Similarly, if these same consumers have reason to believe their main financial provider has faced potential fines for activities that breached financial regulations (such as money laundering regulations, mis-selling products or manipulation of interest rates), 47% are likely to consider switching, against just 13% who are unlikely to consider doing so.
These concerns are almost as strong switch factors as another main financial provider offering better rates, fees or conditions for a similar product or account (55%) or dissatisfaction with the customer service provided (62%).
The poll also explores which investment strategies consumers would like to see their providers pursue on different issues as a first course of action, and any actions consumers are prepared to take themselves.
Likelihood of consumers taking action
56% of consumers that have ever taken out an investment product or pension (1,475 respondents in total) are prepared to take action (from one or more of six actions presented) if they wanted to influence financial institutions to invest in companies that behave ethically.
30% of all those questioned are prepared to take action by choosing financial institutions that avoid investing in or lending to companies that do not behave ethically.
Investment strategies sought by consumers
If their actual or imagined financial provider / investment manager providing an investment product, such as shares or an ISA, invested in:
a company where working conditions are poor for many of its employees (e.g. the company has a poor health and safety record or there are restrictions on forming a union) 63% of consumers would like to see their provider / investment manager take action with companies (14% to act as a shareholder to encourage the company to change its behaviour relating to this issue; 28% to stop investing until the issue has been addressed; 21% to stop investing money permanently)
a company with operations in a country where human rights are not safeguarded or are known to be violated 62% would like to see their provider take action (12% to act as a shareholder to encourage the company to change its behaviour relating to this issue; 25% to stop investing until addressed; 25% to stop investing money permanently)
a company with a poor record safeguarding the environment 59% would like to see their provider take action (18% to act as a shareholder to encourage the company to change its behaviour relating to this issue; 26% to stop investing until addressed; 15% to stop investing money permanently)
a company where there are a low number of women compared to men on its board of directors 36% would like to see their provider take action (20% to act as a shareholder to encourage the company to change its behaviour relating to this issue; 12% to stop investing until addressed; 4% to stop investing money permanently)
in a fossil fuel company 32% would like to see their provider take action (15% to act as a shareholder to encourage the company to change its behaviour relating to this issue; 10% to stop investing until addressed; 7% to stop investing money permanently)
How responsible investee companies are, can affect how consumers feel about a financial provider
Example of negative factor: 60% of consumers who have bought or taken out a financial product would feel negative about their provider if it invested in companies where working conditions are poor for many employees.
Examples of positive factors: 64% would feel positive about their financial provider if it invested in companies that have a good record on protecting workers’ rights; 63% if investee companies provide good job security for their employees; 62% if investee companies have good records on contributing positively to their local community; or 60% if investee companies have equal pay between men and women.
"We believe the findings from this year’s survey show that corporate performance on environmental, social, governance and ethical grounds can have a strong effect on how consumers feel about their bank or wealth manager. Leading financial product providers need to continue to develop responsible investment and lending policies, and to develop appropriate products for this growing market. This will enable providers to manage risks and make the most of opportunities from the links between reputation, responsible or ethical concerns and consumer attitudes," said Stephen Hine (Head of Responsible Investment Development, EIRIS).