A new study has found that the vast majority of consumers value sustainability in their purchases of financial services. Over 60% are looking for more sustainable financial products and services, but over half also believe that there is not enough choice in the market today.
Sustainable finance is a trend that the financial sector can no longer afford to dismiss. Sustainable finance refers to the process of taking environmental, social and governance (ESG) considerations into account when making investment decisions in the financial sector, leading to longer-term investments in activities and projects. sustainable economic.
For most consumers, the biggest impact they can have on sustainability is through their finances. Switching to a sustainability-focused pension, for example, is more than 21 times more effective at reducing carbon emissions than stopping flying, going vegetarian and switching to a renewable energy supplier combined. However, the financial services industry is not taking advantage of this opportunity, according to a new report from PA Consulting. There is currently a lack of choice when it comes to sustainable financial products – one is not taking advantage of the fact that as consumers become more aware, the demand for more sustainable financial choices will increase.
A study of 3,500 consumers found that over 86% of consumers of financial services think sustainability is a top priority, reaching 87% in the UK and 88% in Norway. However, far fewer consumers believe that financial institutions are meeting this demand and have committed to a larger goal beyond maximizing profits.
Only 17% of those surveyed said they believe that many financial institutions have done the right thing to contribute positively to ESG causes, or behave responsibly. This figure fell to 16% in the UK and to 15% in the Netherlands and Sweden.
Speaking on the results, Mark Griep, Director of PA Consulting Netherlands, said: “Consumers don’t realize how big the impact their financial choices can have on the climate. This impact is many times greater than other lifestyle changes, but it lacks knowledge. Yet they want to make choices that matter, so service providers must act quickly and seize the opportunity, attract and retain conscious consumers, and create a responsible social role.
At the same time, while 64% believe that financial service providers play an essential role in the movement towards a sustainable lifestyle and conscious consumption, 53% believe that they are not sufficiently involved in the public debate. And beyond that, with 63% looking for more sustainable financial products and services, 53% agreed there was an urgent need for new, sustainable financial products.
After Cop26, however, there appears to be a growing appetite for sustainable investments among financial services firms, which may facilitate changes to meet these needs. In recent years, divestment from fossil-fuel-based energy companies has accelerated, with institutions managing $ 40 trillion pledging to divest from fossil-fuel companies. In addition to this, in the run-up to the COP26 climate conference, there were pledges to invest $ 130 trillion to reduce emissions to zero in investment portfolios, which represents more than 40% of investments. global financial assets under management.