Brits set to embark on ethical savings drive says research from Foresters Friendly Society

Friday, September 24, 2010

58% of UK adults expect the amount invested in the £7bn UK ethical investments market to grow over the next decade

Independent research commissioned by Foresters Friendly Society and undertaken by YouGov has revealed UK adults' attitudes towards ethical investments.

With the amount invested in ethical investment products by the UK public having doubled to more than £6.8bn (1) during the last ten years, the research found that the majority of people asked (58 per cent) believe this trend will continue over the decade ahead.   

More than one fifth (21 per cent) of those surveyed believed the growth to date has been driven primarily by a combination of a genuine commitment to support companies involved in ethical operations, such as sustainable energy.

An acceptance that financial returns should not be the sole guide of investment choices was the primary growth driver identified by another 20 per cent of respondents.

Among higher gross income groups, for example those adults in the £40,000 - £44,999 band, the proportion of respondents believing investment in ethical products will continue to grow in years ahead rises significantly to 74 per cent, compared with 58 per cent of those with incomes of £20,000 - £24,999.

The children's savings market can potentially expect to witness growth in volume and aggregate value of ethical investments, after a third (34% per cent of respondents), all with children and grandchildren, said they would consider an ethical investment if the beneficiary was either their child or grandchild.

The publication of the research coincides with Foresters Friendly Society's new offer of an Ethical Child Savings Plan (ECSP) .

The product is a new variety of Tax Exempt Savings Plan (TESP), a regular premium savings plan that can only be offered by friendly societies. It has been designed to bridge the gap in the children's savings market created since the Government's decision to terminate the Child Trust Fund (CTF) scheme from January 2011.

The ECSP allows grandparents and parents to invest £25 (or from £15 online), per month, for a self-selected term between 10 and 25 years. On maturity, the savings plan will provide the child recipient with a cash lump sum exempt from both income and capital gains tax (2).

Premiums will be invested in the ethical section of Foresters Friendly Society's with profits fund, which avoids investing in companies that are harmful to the environment, people and animals.

The research also established that nearly half of UK adults (45 per cent) believe the Government has a responsibility to promote ethical investments.

Neil Armitage, Marketing Director, of Foresters Friendly Society said, ""Ethical investing is the ideal choice for anyone seeking a sensible and socially responsible way to save for the future. 

Neil Armitage continued: "As a benevolent organisation we naturally have an interest in ethical investments and we're delighted to offer our new ECSP product which reflects both our own values and those of the public who are increasingly endorsing ethical products."

"Mirroring the Government's drive to promote the notion of a 'big society', we believe that the launch of the Ethical Child Savings Plan will reconcile the void left by the end of the Child Trust Fund scheme and this new ambition to empower communities."

The UK Regional Picture

LondonEmerges As Ethical Investment Awareness Hub

  • The research also found that London is the UK's awareness hub of ethical investments. Londoners have the highest awareness of ethical investments with only 45 per cent of respondents from the capital being unaware of the term compared to 58 per cent of those living in the North of England.
  • People in the Midlands and Wales are the least likely to support the suggestion that the Government should actively promote the concept of ethical investment with only 40 per cent strongly agreeing or agreeing with this view. This compares with 50 per cent of people in the East and 55 per cent of people in Northern Ireland.

(1) Source: Ethical Investment Research Service (February 2010)

(2) Tax rules may change and are subject to individual circumstances.  The child may not get back the amount that has been saved in the plan.