If you strongly believe that your investments should be managed responsibly and ethically, you aren’t alone. In fact, recent research into consumer attitudes by the Responsible Investment Association of Australasia showed that an overwhelming majority of Australian investors (92%) expect it. That research also revealed many other ways that values are likely to dominate investing trends for the next decade.
Below are some of the most important findings of that research, and some information on how these attitudes are likely to change investing.
Young Investors are driving a change in attitudes
Perhaps not surprisingly, young investors are the most committed to acting on their principles. Compared to Gen X and the Boomers ahead of them, they are significantly more likely to prefer responsible funds over funds that maximise returns. Nearly 9 in 10 millennial investors claimed that they would move their investments if they found that their current fund engaged in behaviour that violated their values.
Women (millennial women in particular) felt strongly that they should expect ethical behaviour from their funds. Women are a rapidly growing portion of Australia’s investors, and their strongly-held beliefs are no doubt contributing to the fact that ethical investing has gone beyond a preference and become an expectation.
Preferences for ethical investing have become expectations
Australian investors are no longer just shopping around for ethical investments; they are expecting ethical behavior as a standard. More than half of all Australians already expect that their advisers are considering societal and environmental values before making decisions about their accounts.
Moreover, it has become a priority for investors that their funds not merely avoid harmful practices, but actively seek out ways to accomplish good through investment. Investors cared most about renewable energy, but cared almost as much about societal issues such as the treatments of laborers.
Yet, ethical investors don’t believe they’re being given all the information
Australians care about making ethical investments, but many of them still feel that they aren’t getting as much information as they need to make these decisions. Nearly 60% of Australians claim that the independent information available is not sufficient. This may signal a coming demand for a legislative or 3r d -party solution.
Amid this uncertainty, certifications have become an important signal for marking ethical investments. A high percentage of Australians (86%) believe that certification by a third party is a good mark of safety for an investment. They are far more likely to prefer an investment that has been certified over one that has not.
Funds need to adapt fast
Value-based investors have become a significant amount, even a majority, of all investors. As this new generation looks for more options and more information, those who are able to create solutions that speak to those needs have the potential to carve out a powerful place. At least for the time being, investing on values may be the most profitable proposition.