“Positive investing: a growing market”

By Jamie Hartzell on 7th December 2015

What is positive investing?

“Positive investing: a growing market”

Positive investing is about choosing to save and invest in businesses that are changing the world for the better. These businesses have a clear social and environmental mission at their heart and work in areas like renewable energy, fair trade, social housing, organic farming, or micro-finance.

Growth of the market

According to Ethex’s Positive Investing Report 2015, the total amount saved and invested positively across the UK is up 11% on last year to £3.6 billion. This is more than four times greater than the growth in all UK household savings and investments, which averaged 2.4% growth per year over the last 5 years. The people making positive savings and investments also grew, by around 100,000 to 1.85 million. This means that 2.9% of the UK population now invests positively, with these people on average saving and investing an estimated 10% of their financial wealth.

The fastest growing area was direct investment in community shares, charity and company bonds and equities, which grew by 31% on the year. This is largely due to the increasing popularity of internet-based crowdfunding as a means of making direct investments. Growth in credit unions was slower, although still reached 7%.

Positive investing hotspots

Ethex’s report shows that there are areas of the UK that are positive investment hotspots. The analysis focuses on share offers where the investors are predominantly local to the business. This year Bath and Lancaster and the Lake District raised over £10 million putting them in the top slot. Oxfordshire (£3.9 million) and Bristol (£3.6 million) came in third and fourth place. Fifth was South Devon (£2.4 million) and sixth Hereford and Ludlow (£0.9 million).

Widening of investor choice

For positive investing to grow there needs to be a wider choice in the market. A promising development is the arrival of genuinely positive funds such as the WHEB Sustainability Fund and the Threadneedle Social Bond Fund. These differ from negatively screened funds in that they set out to make investments that deliver genuine social and environmental benefits, are more transparent about what they invest in, and are now also measuring and reporting on the impact of the fund.

The Retail Charity Bonds Platform has enabled charities, like Golden Lane Housing, to raise significant amounts through the London Stock Exchange. But until more direct positive investments are available on the stock exchange, they will not reach a mass market, and it will remain difficult to invest in them as part of a pension scheme.

The rise of crowdfunding equity platforms has provided stimulus to the market in direct investment in positive or social businesses. However, only a handful – Ethex being one of them – put social or environmental objectives of these businesses centre stage and list offers in a range of share offers in areas such as renewable energy, micro-finance, social housing and fair trade.

For most people, bank accounts are the commonest and perhaps only point of contact with the financial system. But with the difficulties faced by the Co-operative Bank, there is currently no positive bank account available. This means that the young, or those without investment funds, have no positive financial options open to them – although this will improve if Triodos starts to offer current accounts in 2017 as planned.

Scope for growth

Currently, the total amount saved positively represents only 0.2% of the UK total financial wealth. Over the next five years, Ethex thinks that positive saving and investing could reach 6% of the population, or 3.8 million people, with each person positively saving or investing on average 20% of their financial wealth. This would take the total market size to £11 billion. This represents a modest overall growth of 25%, only slightly more than the 23% a year growth the market has shown over the last two years. The scope for growth in the positive investing and saving market is huge.

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Ethex is a positive investment and savings platform that makes it easy to make money do good. On our platform, you can browse, compare and invest in a range of products from bank accounts and ISAs to equity investments and charity bonds that offer a social and environmental as well as a financial return. Through Ethex you can invest and save with businesses you believe in – whether it’s renewable energy, fair trade, social housing, organic farming, green transport, or micro-finance schemes.

Since 2013, Ethex has helped raise over £25 million of investment in 45+ charities and social businesses. It won Investment Deal of the Year at the 2014 Social Enterprise Awards, the Finance Award at the 2014 PEA Awards, the Sustainable Finance Award at the 2015 Sustainable City Awards and, most recently, the Community Energy Funding Award in the 2015 Community Energy Awards.
www.ethex.org.uk  | 01865 403304 | help@ethex.org.uk

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The Co-operative Bank
London Stock Exchange Group

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