Providers must up their game in communicating the benefits of investing responsibly or miss an open goal, The Wisdom Council has warned.
Research released today (10 October) by the financial services consumer engagement specialist found wording plays a key role in engaging investors.
This comes after it put consumer-friendly descriptors of responsible investment approaches to 1,000 investors in an online survey and found eight out of 10 were warm to at least one of the concepts.
This increased to nine out of 10 for millennials.
Anna Lane, chief executive of The Wisdom Council, said: “Responsible investing resonated with the majority of retail investors once it was explained in terms that they could understand.
“Socially responsible behaviours are becoming the norm – green and ethical issues have moved in to the mainstream, while environmental, social and governance and impact investing tap in to a growing social awareness and desire to effect change.
“This comes through most clearly with younger investors - if we can help millennials to understand how responsible investing harnesses some of the causes they care so passionately about, it could be the key to engaging with them on long-term saving and investing.”
Two-thirds of 25 to 34-year-olds said if an environmental, social and governance fund were easily available they could see themselves investing for the first time or investing more in a fund like this in the next 12 months.
Even among the over-55s, one in four reported they would invest new money or increase investments in the sector.
More millennial investors said they would invest in responsible strategies through their corporate pension or personal pension if they were available.
A total of 63 per cent of advised investors showed greater awareness and interest in responsible investing than self-directed investors – which accounted for 54 per cent.
Over a quarter of all investors cited a lack of understanding as a barrier to actively invest in an ESG or impact strategy.
For the majority industry terminology did not help them understand what the funds did or how they were managed.
The research, which coincides with Good Money Week, was conducted in collaboration with a number of organisations from across the industry, including Aberdeen Standard Investments, Equiniti, M&G, Nutmeg and Royal London Asset Management.
Kusal Ariyawansa, a chartered financial planner at Manchester-based Appleton Gerrard, said: "I agree with the sentiments from the millennials.
“While the baby boomers are agnostic until a discussion is commenced, millennials have actively asked where the money is going.
“I've found specific questions around the dislike of animal-based and armament-related issues.”
