Table of Contents
Issues in the Market
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- Abbreviations
Future Opportunities
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- Raise the profile of green finance
- Compete on traditional selling points to convert potential green targets
- Combat consumer cynicism
Market in Brief
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- The green movement
- A growing market
- Ethical investments suffer setback
- Competitive environment
- Long-term prospects are highly favourable
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- Figure 1: Current market penetration of green and ethical finance products, January 2009
- Figure 2: Future consideration of green and ethical finance products, January 2009
- Ethical issues considered most important by consumers
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- Figure 3: Top six ethical issues of importance to consumers, January 2009
- Putting ethics into practice
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- Figure 4: Top six green and ethical activities undertaken, by consumers, January 2009
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- Figure 5: Population segmentation, by number of green/ethical activities undertaken, January 2009
- Consumers are starting to take more notice of companies’ ethical practices…
- …but there’s still plenty of scepticism to overcome
- Some companies have more work to do than others
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- Figure 6: Overall ethical trust score of selected financial companies, January 2009
Market Background
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- Key points
- So what is green and ethical finance?
- Still a relatively niche sector
- The green agenda is gaining momentum…
- …prompting companies to respond and play their part…
- …although most consumers remain unconvinced of their commitment
- Recent industry initiatives
- Ethical investing
- Approaches to ethical investing
- Varying shades of green
- Ethical banking sector
- Ethical insurance
Trading Environment
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- Key points
- Summary of the main market and macroeconomic developments
- The crunch effect on investor behaviour
- Stockmarket turmoil
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- Figure 7: FTSE 100 and FTSE All Share – daily index movements, January 2000-January 2009
- Implications for ethical investors
- FTSE4Good
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- Figure 8: FTSE4Good UK Index – monthly index movements, July 2001-March 2009
- Other indices
- Income and spending growth slows, while the savings ratio collapses
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- Figure 9: Total PDI, consumer expenditure and savings ratio, 2003-12
- Implications
Strengths and Weaknesses in the Market
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- Significant opportunities to expand green finance offerings
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- Figure 10: Green and ethical finance – summary of strengths, weaknesses, opportunities and threats, 2009
Market Size and Segmentation
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- Key points
- A small but fast-growing market
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- Figure 11: Value of the ethical finance market and other ethical consumerism – UK, 2003-07
- Ethical finance accounted for over two fifths of ethical consumerism in 2007
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- Figure 12: Total value of ethical consumerism and proportion represented by the finance sector – UK, 2003-07
- The largest sub-sector is ethical investments
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- Figure 13: Composition of the ethical finance market, by sub-sector, 2007
- Ethical investment sector grew by nearly a quarter in 2007…
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- Figure 14: Value of ethical finance market, by sub-sector, 2003-07
- 2008 performance
- …but the gain was wiped out in 2008
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- Figure 15: Ethical unit trust and OEIC fund sector, by funds under management and retail sales, 2003-08
- 2009 outlook
- Green mortgages: a very niche sector
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- Figure 16: Value of green mortgage repayments, 2003-07
Ethical Brands and Products
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- Key points
- Ethical investment sector
- Friends Provident
- Others
- Do ethical funds perform just as well?
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- Figure 17: Five-year returns for selected ethical versus non-ethical funds, 2009
- Ethical banking sector
- Co-op Bank
- Ecology Building Society
- Triodos
- Charity Bank
- Green mortgages
- Green insurance
- Green motor insurance
- The Green Car Insurance Company
- MORE TH>N
- Eco-friendly home and travel insurance
The Ethical Consumer – Issues of Importance
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- Key points
- About Mintel’s consumer survey
- Online focus group
- Climate change is top concern
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- Figure 18: Ethical issues of concern or importance, January 2009
- Concern for the environment is evenly spread among the age groups…
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- Figure 19: Ethical issues of concern or importance, by age, January 2009
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- Figure 20: Top three issues of concern of importance, by gender and age, January 2009
- …while excessive company profits are more important to the older age groups
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- Figure 21: Ethical issues of concern or importance, by gender and age, January 2009
The Ethical Consumer – Shades of Green
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- Key points
- One in 17 people bank with an ethical provider
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- Figure 22: Green/ethical activities undertaken, January 2009
- Women are ‘greener’ than men
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- Figure 23: Green/ethical activities undertaken, by gender and age, January 2009
- One in four people concerned about animal welfare are Ultra Green
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- Figure 24: Green/ethical activities undertaken, by ethical issues most concerned about, January 2009
- Ethical bank customers like to be insured
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- Figure 25: Financial products owned, by customers of ethical banks versus non-customers, January 2009
- Profile of an ethical banking customer
- Company ethics are often weighed against other key selling points
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- Figure 26: Propensity to buy ethical finance products, January 2009
- Scope to expand the market
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- Figure 27: Green/ethical activities undertaken, by propensity to buy ethical finance products, January 2009
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- Figure 28: Propensity to buy ethical finance products, by number of green and ethical activities undertaken, January 2009
- So what are the main barriers to growth?
- Those who occasionally choose an ethical provider record highest take-up of equities…
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- Figure 29: Financial products owned, by propensity to buy ethical finance products, January 2009
- …and are very ethically aware
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- Figure 30: Ethical issues of concern or importance, by propensity to buy ethical finance products, January 2009
How Much do Consumers Trust Financial Brands to be Ethical?
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- Key points
- Co-op Bank is the most trusted to behave ethically
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- Figure 31: Degree to which people trust selected financial companies to behave ethically, January 2009
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- Figure 32: Degree to which people trust selected financial companies to behave ethically (illustration), January 2009
- Non-shareholder companies tend to engender greater trust levels
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- Figure 33: Degree to which people trust selected financial companies to behave ethically – rebased*, January 2009
- Supermarket banks and insurers are least trusted to behave ethically
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- Figure 34: Overall ethical trust score of selected financial companies, January 2009
- Implications
Attitudes and Approaches toward Ethical Finance
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- Key points
- Many people are cynical about the green claims made by finance companies
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- Figure 35: Agreement with attitudinal statements about ethical finance, by gender, January 2009
- Despite the cynicism, finance companies can make a difference
- Men are more sceptical than women
- Young, free and positive
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- Figure 36: Agreement with attitudinal statements about ethical finance, by age, January 2009
- Almost a third of Ultra Greens will pay extra for ethical products
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- Figure 37: Agreement with attitudinal statements about ethical finance, by number of green and ethical activities undertaken, January 2009
- Experience of ethical products improves perception of their value
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- Figure 38: Agreement with attitudinal statements about ethical finance, by propensity to buy ethical financial products, January 2009
Ownership and Future Consideration of Green Financial Products
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- Key points
- Huge market potential
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- Figure 39: Current ownership and future consideration of ethical financial products, January 2009
- Over half would consider choosing ethical finance products in the future
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- Figure 40: Current size of the green and ethical finance market versus its potential size, January 2009
- Co-op Bank’s customer profile is biased towards the over-35s
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- Figure 41: Current ownership of ethical financial products, by gender and age, January 2009
- Highest penetration of ethical finance products among 18-24-year-olds
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- Figure 42: Penetration of green/ethical finance products, by gender and age, January 2009
- One in eight Ultra Greens are customers of Co-op Bank
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- Figure 43: Current ownership of ethical financial products, by number of green and ethical activities undertaken, January 2009
- Scope to convert potential prospects into actual customers
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- Figure 44: Current ownership of ethical financial products, by propensity to buy ethical products, January 2009
- The young are keen to consider ethical products in the future
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- Figure 45: Ethical financial products would consider getting in the future, by gender and age, January 2009
- Future consideration is even greater among those concerned about ethical issues
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- Figure 46: Ethical financial products would consider getting in the future, by ethical issues of concern or importance, January 2009
- Nearly a third of adults expect to consider a firm’s green and ethical credentials when next arranging finance products
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- Figure 47: Likelihood of considering ethical factors when next buying financial products, January 2009
- Again, providers most need to convince younger consumers of their ethical merit
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- Figure 48: Likelihood of considering ethical factors when next buying financial products, by gender and age, January 2009
- Non-shareholder firms set to benefit the most
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- Figure 49: Ethical issues of most concern or importance, by likelihood of considering ethical factors when next buying financial products, January 2009
- Further analysis
Appendix – Number of Green Activities Undertaken by Demographics
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- Figure 50: Number of green and ethical activities undertaken, by gender, age, socio-economic group, marital status, presence of children and region, January 2009
- Figure 51: Number of green and ethical activities undertaken, by working status, household income, daily personal internet usage, daily newspaper readership and main supermarket used, January 2009
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Appendix – Propensity to Buy Ethical Financial Products by Demographics
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- Figure 52: Propensity to buy ethical financial products, by gender, age, socio-economic group, marital status, presence of children and region, January 2009
- Figure 53: Propensity to buy ethical financial products, by working status, household income, daily personal internet usage, daily newspaper readership and main supermarket used, January 2009
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Appendix – Future Buying Intentions by Demographics
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- Figure 54: Likelihood of considering ethical factors when next buying financial products, by gender, age, socio-economic group, marital status, presence of children and region, January 2009
- Figure 55: Likelihood of considering ethical factors when next buying financial products, by working status, household income, daily personal internet usage, daily newspaper readership and main supermarket used, January 2009
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