Ballot papers, fundraisers and petitions are how we, as a society, have typically effected change, however new research from F&C Investment Trust indicates that the retail investment boom and rise in responsibly minded investing is disrupting how the population can drive societal change, now viewed as a more effective route to driving change than protesting, petitioning, or donating.
The research of 2,000 UK adults and a further 500 “seasoned investors” found over half (52%) of UK adults are more committed to tackling environmental and social issues following the events of the past two years.
The ongoing cost of living crisis has been the most significant event in motivating UK adults to drive change, while extreme weather events (43%), the fallout of Covid-19 (33%) and COP26 (18%) have also been powerful in encouraging UK adults to step up their action in fostering societal and environmental change.
Climate change is the issue UK adults are most concerned about, with two in five (42%) citing this as their top worry, followed by poverty (30%) and mental health issues (29%).
Investing increasingly acknowledged as a route to driving change
The rise in responsible investing has elevated recognition of the role investing can play in driving change, while also delivering returns.
Investing is now cited by one in five (21%) UK adults as the most effective means of driving change, viewing it as more effective than fundraising for causes or donating, signing petitions or protesting, and is only second to voting in elections (42%) and boycotting (28%).
Most effective means of driving environmental and social change according to UK adults
|Voting in elections
|Fundraising for causes / donating
One in three (32%) UK adults recognise investing money as a clear way in which to have a positive impact on environmental and social issues. This rises to 41% amongst seasoned investors, defined as those that have been investing for 10 years or more, suggesting a growing recognition of the power of investment amongst those that do already invest.
For the 38% of UK adults with reservations about the power of investing to drive change, a lack of understanding of how investing can drive positive change is cited as the top reason for why they have their doubts, cited by 37% of those with reservations. Others also believe that investing is about making returns, not changing society (26%) and 25% of those with reservations believe that investing on their own is not enough to make a difference.
Investment’s true potential to drive change untapped by majority of seasoned investors
While people are increasingly understanding the power of investing as a tool to foster change, the true power gained by being a shareholder remains untapped by many.
Three in five (62%) seasoned investors rarely or never vote at AGMs, while only one in ten (9%) vote often. Over a quarter (28%) of seasoned investors never or rarely vote at AGMs because they don’t think their vote would make enough difference, while 27% don’t feel informed enough to vote. Almost one in ten (9%) seasoned investors were not aware that retail investors could potentially vote at AGMs.
The research also highlights a disconnect between the issue retail investors care most about, and what they are choosing to vote on. Of the small proportion of investors who are using their vote at AGMs, the election of directors and executives are the issues most voted on (60%), followed by executive pay (44%) and dividends (42%). Despite the environment ranking as the most concerning issue amongst UK adults, just one in ten (10%) seasoned investors have voted on climate change at AGMs.
The impact of the pandemic could potentially herald a new era in retail investor engagement. Hosting AGMs online or in a hybrid format has increased accessibility, which may in turn improve participation. Over half (55%) of seasoned investors would prefer AGMs to be held virtually going forward, highlighting the potential evolution that we may see in retail engagement as companies adapt to our new ways of living and working.
Beatrice Hollond, Chairman of the Board for F&C Investment Trust, commented: “The events of the past two years have led to a growing awareness and concern across the UK when it comes to environmental and social issues. As the cost of living crisis and extreme weather events heighten these concerns, it’s encouraging to see people become increasingly committed to tackling the issues in the world they see around them, and recognising investing as a means of effecting positive change.
“We are seeing the investment industry looking for new ways to encourage retail shareholder participation. However, while the number of engaged investors is on the rise, one area that is too often overlooked is the importance of voting at AGMs. The majority of investors, regardless of how many years they have been investing, are missing out on critical opportunities to vote on the issues that matter most to them. For those worried that their individual vote won’t make a difference, investing in investment trusts such as F&C Investment Trust can be one such solution, offering the opportunity to be part of a collective and boost voting power. F&C Investment Trust actively votes and engages with the companies it invests in, with an eye to its net zero commitment and the UN’s Sustainable Development Goals framework, to drive meaningful change on behalf of shareholders.”