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Press Releases - Thematic Studies - 22/10/2014

Half of financial consumers likely to consider switching main provider if they have ethical concerns

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.[i]

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.

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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.

 

Key findings

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).

The full findings of the survey are available on the Ipsos MORI website.

 

Press contact:

Stephen Hine
stephen.hine@eiris.org
Tel: +44(0)207 840 5716

Notes to editors

1. The survey was conducted by Ipsos MORI using its online i:Omnibus service on behalf of the social enterprise and leading global responsible investment research firm EIRIS, to gauge attitudes to green and ethical finance in Great Britain. A quota sample of 2,010 adults between 16 and 75 years responded to the online survey, across England, Scotland and Wales. Among these, 1,837 had ever personally bought or taken out a financial product / service. Fieldwork took place between 10th and 14th October 2014. Data has been weighted by age, gender, region, social grade and working status to known population figures for Great Britain. 1,681 of those surveyed had ever taken out a current account; 1,332 of those surveyed had ever taken out a savings account; 873 of those surveyed had ever taken out a pension; and 527 of those surveyed had ever taken out an investment product such as stocks, shares, investment bonds or equity ISAs.
2. EIRIS is a leading global provider of independent research into the environmental, social, governance (ESG) and ethical performance of companies. Wholly owned by the EIRIS Foundation, EIRIS is a social enterprise, working to help our clients develop the market in ways that benefit investors, asset managers and the wider world. Our mission is to empower responsible investors with independent assessments of companies and advice on integrating them with investment decisions. EIRIS provides responsible investment services to over 200 clients including asset owners, asset managers, banks, wealth managers and charities around the world – as well as major index providers. We have over 30 years’ experience of promoting responsible investment and helping consumers, charities and advisers to invest responsibly. EIRIS has offices in London, Paris, Boston and Washington, D.C.. In addition to overseas offices, EIRIS has a global network of partners in Australia, Germany, Israel, Mexico, South Korea and Spain to further extend our research and sales coverage.
3. YourEthicalMoney (yourethicalmoney.org) is a free, online, independent resource for consumers beginning to explore green and ethical finance. The resource addresses green and ethical concerns related to areas of finance including banking, investments, insurance and credit cards.
4. Good Money Week (goodmoneyweek.com) is a national campaign from 19 – 25 October 2014 run by the UK Sustainable Investment and Finance Association (UKSIF), which is aimed at raising awareness of sustainable and responsible finance to help people and organisations make good money choices.

[i] As at end of June 2014 EIRIS estimates that there was approximately over £13.5bn invested in the UK’s green and ethical retail funds. The figure is an estimate based on funds under management figures of around 85 UK domiciled green or ethical retail funds. It seeks to avoid money in ethical funds domiciled outside of the UK. This information is based on information available to EIRIS, provided by fund providers or available through research in October 2014. Due to availability of information, some funds under management figures are based on figures other than June 2014. EIRIS’ historic estimates on the UK green and ethical retail fund market are available online.
[ii] Of these 2,010 adults, 1,837 reported they had ever bought or taken out a financial product or service.
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