The £214 billion impact investment opportunity: Retail investors could unlock crucial net zero funding

News

19 Dec 2023

Thrive research shows more than two thirds of investors would put money into opportunities that deliver environmental impact.

Article written by alex.lomax

Share this article

Retail investors could unlock over £214 billion worth of investments needed to fund UK net zero infrastructure ambitions. New research conducted by Opinium reveals that more than two-thirds (67%) of investors would put £8,200 into opportunities that align better with their environmental values.

This would form a significant part of the £330 billion needed in the next six years to deliver the energy infrastructure required for net zero [1]. But, concerns over greenwashing and a lack of available information on impact investments – financial investments which generate measurable, positive environmental impacts – are holding back this crucial investment. When surveyed on their actual plans, 18% of people say they will start or increase impact investments within the next year.

‘Changevestors’ want more investment options that combat climate change

Our research identified a new group of younger investors, aged 18-34 named ‘changevestors’, as being the most focused on delivering environmental impact. This group has a larger proportion of their portfolio (33%) in impact investments, compared to other age groups (24%). Furthermore, a third (33%) of this group say they have plans to increase this in the next year. This reflects their wider choices with more than two thirds (73%) saying they have made some or significant lifestyle changes.

However, some changevestors are held back by a lack of information and suspicions of greenwashing. The FCA is currently looking to better regulate how sustainable investments are framed to investors: 44% say they do not trust firms which position themselves as environmentally friendly.

Meeting the desire for change

Those who participated in our research reported a desire for change, with Changevestors leading calls for more sustainable investment options. Close to two thirds (63%) of 18-34 year-olds want to see more investment options that would help prevent climate change; over half (55%) were frustrated by a lack of mainstream options for more sustainable investing.

Galvanising the eco-over 55’s

In contrast, our research reported that over 55’s are the least likely to invest in impact focused investments, despite being the group most likely to have investments and prioritising longer-term returns and mitigating against financial risk. This also contrasts with their behaviour: they are highly likely to have made changes to their lifestyle to reduce their impact on the environment with 73% saying they have made at least some.

“Greenwashing and a lack of information around impact investments are knocking the confidence of would be impact investors. This is subsequently holding back billions of pounds from being invested in the projects that are vitally needed if we want to see a just transition to hit our legally binding net-zero goals. We in the industry need to do better at characterising what we’re delivering – long-term investment opportunities that also answer a societal need – to better attract a more diverse investor audience. After all, there are few better ways individuals can support the environment than funding impact-driven projects: research has shown this makes 21 times more of a difference than any other lifestyle change [2]. We need to look forwards, not backwards when making these important decisions.”

Matthew Clayton, Managing Director, Thrive Renewables.

[1] Energy infrastructure investment needed, taken from net-zero-strategy-beis.pdf (publishing.service.gov.uk)

[2] Green my pension – Make My Money Matter