Info not readily available for ethical investors

22 October 2014

Although almost two-thirds of UK investors want to invest ethically in the next few years, TD Direct Investing claims not enough information is readily available for them to make an informed decision.

A survey of investors by the investment platform found that 64% plan to invest ethically in the near to mid future, but 57% need more information about the performance of ethical stocks before they commit, and 42% find it difficult to find information about specific funds.

Also, although they claim an increased interest in ethical investing, only 6% of ethical investors have specifically avoided the oil and gas industry despite its strong environmental impact.

This suggests that financial considerations sometimes outweigh the moral motivations for investing, even in self-described ethical investors.

Financial hit

About two out of five people surveyed said their ethical investments result in lower returns. However some said they are still willing to go ahead with their ethical investments even if it does mean taking a financial hit.

Ethical or socially responsible investing is becoming more mainstream, with some institutional investors beginning to shun companies with poor governance or social records.

John Tracy, head of TD Direct Investing Europe, has called for a more 'fine-tuned' definition of ethical investing, saying there is still uncertainty surrounding what ethical investing actually means.

"There is a paradigm shift in the UK, with investors wanting to know more about the performance of ethical funds, but also wanting the ethics of the business in which they invest to reflect their own."

Shareholder rights

Tracy's claim coincides with the publication of research from The Share Centre that found although seven out of 10 investors would want to voice their opinions on unethical company activity - including child labour, tax evasion or animal testing - almost 80% said they don't know how to go about raising concerns, and only a fifth said they know their shareholder rights.

Tracy adds: "The industry needs to be clearer about the definition of ethical investing and the funds themselves should provide more detailed information about their investments."

The number of trades made by TD Direct Investing customers in ethical funds has grown by 84% in the past year, and 94% of its ethical funds have increased in value over the same period, by as much as 17%.

This article was written for our sister website Money Observer

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