Some 28% of UK retail investors believe over the next five years, they will increasingly switch money from funds where they are happy with their performance and charges, into other investment vehicles that are more climate-focused but may have a slightly less attractive performance track record.
This is according to new research* from Kana Earth Ltd, which has recently launched a unique UK nature carbon directory listing over 1,700 nature carbon offsetting projects.
As the issue of climate change becomes even more important and critical, nearly half (46%) believe their focus on the carbon footprint of their investments will increase over the next three years with 11% believing it will increase dramatically.
Between now and 2026, one in three retail investors (32%) said they plan to place a bigger focus on a fund’s carbon footprint than its charges. Indeed, 14% said it is very likely that if the funds they invest in don’t provide enough information on their carbon footprint or have a negative climate impact, they will switch to other funds that have more transparency, and a stronger focus on reducing carbon emissions. A further 34% said it is quite likely that they will do this.
Andy Creak, CEO, and co-founder, Kana Earth Ltd said: “Our research shows that for many investors, the carbon footprint of a fund is just as important as its performance, and they place a greater focus on this than the charges they pay. Fund managers need to invest a huge amount of time and resources into understanding the carbon footprint of their investments, and to find the best way to tackle this. This will include engaging more with the senior management of the companies they invest in, but also taking more advantage of UK nature carbon offsetting programmes.”
Kana Earth will soon launch an open ledger and investment platform for the UK’s carbon offsetting market, which addresses many of the major obstacles holding the sector back.
It will enable UK developers and landowners with carbon offsetting projects to list, manage and promote these on the platform, providing unprecedented levels of transparency in terms of overall goals and carbon reduction targets for the schemes, and how these will be achieved.
This will make it easier for fund managers, pension funds, other institutional investors, wealth managers, and all other organisations looking to reduce their carbon footprint or generate ethical returns through buying and investing in transparent UK offset projects.
The UK nature carbon offsetting challenge
Carbon offsetting is critical in meeting the UK’s target to reduce carbon emissions targets by 78% by 2035 from 1990 levels, and to be carbon neutral by 2050, but the domestic market is disjointed and underdeveloped.
Between now and 2035, the country will emit a sizable 3,340m tonnes of CO2 but the UK’s Nature based Carbon projects to date will absorb only 18m tonnes CO2.
The UK carbon offsetting market’s complexity and lack of scale means it is missing out to massive carbon growth in other countries.
The Kana solution in practice
The Kana Ledger introduces an open, auditable, and scalable foundation for UK carbon offset where schemes can be created, managed, and traded in a liquid marketplace.
Professional investors, businesses, and organisations in general will be able to search a single directory of carbon offset projects that operate under a Standard Legal Framework.
The Kana Marketplace provides distribution and scale to the carbon projects and provides a straightforward process for professional investors and UK corporates to buy carbon units across multiple projects, project types and time periods, including the ability to evidence their purchases on their own website.
The Kana Investment Platform brings in private money which allows developers to scale carbon offsetting projects. The platform will be critical in supporting asset managers’ new ‘Green’ thematic funds’ investment in future carbon units and provide avenues for insurers and other institutional investors to channel money to carbon offsetting projects.