Social and environmental impact now part of the investment decision-making status quo

by | May 9, 2022

Share this article

  • 7 out of 10 would be more likely to choose an investment in a fund or organisation if they knew it was having a positive social or environmental impact.
  • Younger investors more interested in prioritising social returns (over financial) than older investors.
  • Investors would like about a third of their portfolio invested in funds or organisations making a positive environmental impact plus another third in social impact.

The vast majority (70%) of UK adults with at least one investment outside of their pension, say they would be more likely to choose an investment in a fund or organisation if they knew it was having a positive social or environmental impact, according to research from Big Society Capital, the UK’s leading social impact investor. 

Investors, on average, would like about a third (35%) of their portfolio invested in funds or organisations making a positive environmental impact and around the same amount (34%) allocated to social impact.

The majority of investors surveyed are interested in or engaged with the impact of their investments. Over half (57%) know what proportion of their investments are making a beneficial environmental and social impact and around a fifth (22%) say it is a priority to find out. Only one in five (21%) don’t know and aren’t bothered about finding out. Of the investors who are aware of their asset allocation into environmental or social impact investments, an average of 33% of their investments are making a positive environmental impact and 32% are focused on social impact.

Stephen Muers, CEO of Big Society Capital, said:

“Social and environmental factors were not too long ago an afterthought to most people in regard to money, but this research shows people have now priced this into their financial decision-making process. This is a huge success story for society and the environment, and one reflected in the huge growth we’ve seen in the social impact sector with investments growing nearly eight-fold from £833 million in 2011 to £6.4 billion in 2020, and we expect the upward trajectory to continue.

“There are more social impact investment opportunities coming to market, which is great news for investors wanting to make a difference, along with a return. This is all really positive for the charities and social enterprises supporting our communities too, since social impact investment can provide lifeline funding support for them.”

The findings suggest that there is significant interest in impact investing, but competitive returns are the most influential factor when deciding on an impact investment, with 46% citing returns as a key consideration. Tax relief from the Government would be the second highest consideration for those considering impact investing, at 42.45%.

A better understanding of impact investing was also flagged as an influencing factor in impact investment decisions, with 42% citing this. Greater transparency on the impact of the investment or return delivered is also a key consideration for 40%, demonstrating the importance of communicating with investors how their money is making positive social and environmental change.

When considering impact investments, for younger age groups, local knowledge of the impact of the investment carries more weight versus financial returns than it does for older age groups. For example, just 30% of 18 – 24-year-olds cited competitive returns as a deciding factor, compared to over half (55%) of over 55s. Returns become more important with age, with an upward trajectory across age groups.

Share this article

Related articles

Winners of the Protection Guru Awards 2022 are announced

Winners of the Protection Guru Awards 2022 are announced

Protection Guru, has today announced the winners of Protection Guru Awards 2022. In this, their second year, the awards have been established to recognise the leading lights of the protection industry. The team at IFA Magazine extends our congratulations to all this...

Trending articles