Consumers not embracing green financial products
Research by Beacon Asset Management showed a lack of motivation by consumers to embrace ‘green’ financial products.
The data showed that overall, consumers are concerned about the environment but the majority (85 per cent) do not consider ‘green’ credentials when choosing a financial product.
Despite a high level of knowledge (73 per cent) as to what a green investment is, very few consumers (15 per cent) appear to take this factor into consideration when purchasing products. However, men (14 per cent) and women (15 per cent) are equally likely to consider the ‘green’ credentials.
Of the vast array of potential investments available houses (22 per cent), general investments such as ISAs (19 per cent) and savings accounts (12 per cent) were rated as the top three products consumers were most likely to consider the ‘green’ credentials of when purchasing. On the other end of the scale, Car finance was the financial product that consumers were least likely to check the ‘green’ credentials of, with only 8 per cent of respondents doing so.
Surprisingly, of those respondents that did check the ‘green’ credentials of financial products, the most popular credential (52 per cent) was ‘Ethical stance of the Company’. This concern for the ethics of financial products and companies is possibly due to the spotlight that has fallen on this value in other retail markets and lead to the rise of brands such as Fair-trade and Innocence.
When it came to the most important factor in choosing a financial product finding an ‘environmentally responsible fund’ was the top choice. Surprisingly, ‘potential return on investment’ and ‘past performance’, which ordinarily would be considered very important factors when choosing a financial product, were considered the two least important factors by those that responded to the questionnaire. This potentially reflects consumers desire to appear ‘socially responsible’ and does not actually appear to reflect the reality of consumers’ investment purchases.
One of the main stumbling blocks when it came to green investments becoming part of most consumers portfolios appeared to be lack of advice and intermediary support. Only 28 per cent of respondents had an IFA and of those only 1 per cent had been offered any green investments. Slightly fewer males (26 per cent) than females (29 per cent) had an IFA which may support the traditional view that males are more financially confident than females and are therefore more comfortable looking after their own finances.
Simon Goldthorpe, Director at Beacon Asset Management, commented: “Green issues are currently receiving a lot of exposure in the press so I wasn’t surprised to see that consumers are concerned about the effect they are having on the planet. However, I was surprised to see that the green credentials of investments are given so little consideration. There are a large variety of investments available that can have an effect on the environment in any number of positive ways.
“Consumers simply don’t realise that their investments can have a direct effect on the health of the planet. IFAs and the companies that offer investment products need to actively step up and offer their customers the chance to invest in green investments. Indeed, they need to educate their clients as to the choices that are available in the market. The rest of the country is doing there bit for the environment, it is time that we in the financial services industry followed suit.”
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