Green Finance - UK

ISSUES IN THE MARKET

Main findings of the research

INSIGHTS AND OPPORTUNITIES

A strong latent demand for green finance

Green finance can provide a route to high-net worth customers

‘First, do no harm’

Banks need to convince consumers of their green sincerity

Ethical investments provide significant scope for growth

MARKET IN BRIEF

Environmental issues have risen to the top of the global agenda

Green financial services cover a broad spectrum of initiatives

Ethical investment market is the most developed green sector

Trade perspective: trend to green finance is a genuine market shift

Mintel’s research findings: How Green are We?

Mintel’s research findings: Demand for Green Financial Services

Mintel’s research findings: Perceptions of current industry efforts

Mintel’s research findings: What do people want?

MARKET ENVIRONMENT

Key points

Green issues have risen to the top of the global agenda

Climate change is now viewed as the planet’s greatest challenge

Intense media coverage has increased consumer awareness

Politicians seem ready to tackle the environmental challenge

The Climate Change Bill has set out a legislative framework

The business world is increasingly taking a proactive role

Financial services has been at the forefront of green initiatives

ClimateWise further demonstrates this commitment

Figure 1: Organisations that have endorsed the ClimateWise principles, 2008

Ethical consumerism within the UK continues to rise

Figure 2: Total value of ethical consumerism in the UK, 1999-2006

Tax incentives could stimulate demand for green products

WHAT ARE GREEN FINANCIAL SERVICES?

Key points

An increasing focus on green issues is evident in financial services

Green financial services cover a broad spectrum of initiatives

Figure 3: Green financial services

There has been an expansion in the green product range

But there are still gaps within the green finance offering

Firms are keen to demonstrate their corporate green credentials

The basis of competition has focused on corporate policies

Internal issues need to be resolved before products are introduced

Some organisations have shown a particularly strong commitment

HSBC has taken steps to become a sustainable bank

Barclays is also demonstrating its ‘green’ commitment

STRENGTHS AND WEAKNESSES IN THE MARKET

Strengths

Weaknesses

TRADE PERSPECTIVE

Green issues continue to gain prominence within financial services

Business practices increasingly aim to minimise environmental impact

A variety of green financial products have been launched

Green financial services are becoming increasingly popular

The trend to green finance represents a genuine market shift

Firms must do more than ‘green-wash’ their existing products

MARKET SIZE

Key points

Consumers hold more than £13 billion in ethical forms of finance

Figure 4: Ethical finance in the UK, 1999-2006

Ethical investments account for more than half of total funds

Figure 5: Ethical finance in the UK, by product area, 1999-2006

The growth in ethical investments has continued in last 12 months

COMPANIES AND PRODUCTS

Key points

Ethical investment market is the most developed green sector

More than 90 ethical funds available to investors

Three main approaches to ethical investing

Friends Provident remains the ethical investment market leader

The ethical banking sector is comparatively less developed

Co-operative Bank has demonstrated strong ethical credentials…

…and new products are being developed

Other specialist ‘ethical’ providers are also key players

The market benefits of green finance

Triodos and Charity banks also taking a harder line on ethics

A number of building societies have launched green mortgages…

…but most rely on offsetting

Some of the large banks are taking tentative ‘green’ steps

HSBC using green policies as a marketing tool…

…and the trend is set to continue

The insurance sector has been relatively slow to react

Some green insurance products have now been launched

Discounts for ‘green’ cars…

…and for climate-friendly housing

The insurance sector is set for further product innovation

THE CONSUMER - HOW GREEN ARE WE?

Key points

Survey background

Most consumers now participate in at least one green activity

Figure 6: Proportion of consumers that participate in green or ethical activities, November 2007

Implications

Women are more likely to undertake green activities than men

Figure 7: Proportion of consumers that participate in green or ethical activities, by gender, November 2007

The 55-64s have been keen to embrace green consumerism…

Figure 8: Proportion of consumers that participate in green or ethical activities, by age, November 2007

…but the young seem to be more talk than action

Implications

ABs tend to take part in a broad range of green activities

Figure 9: Proportion of consumers that participate in green or ethical activities, by socio-economic group,

November 2007

Implications

Dissecting the sample according to green and ethical deeds

Figure 10: The green spectrum, November 2007

The boomers turning darker green

Cashing in on the environment

Bottling it?

Environment? What environment?

Green crusaders tend to own a broad range of financial products

Figure 11: Ownership of selected financial products, by ‘green’ typologies, November 2007

THE CONSUMER - DEMAND FOR GREEN FINANCIAL SERVICES

Key points

One in six consumers have already been swayed by green issues

Figure 12: ‘Taken ethical/environmental factors into account when choosing a financial provider’, November

2007

Implications

Green factors have influenced over a fifth of ABC1 35-54s

Figure 13: ‘Taken ethical/environmental factors into account when choosing a financial provider’, by gender,

age and socio-economic group, November 2007

The ‘well-educated’ are more likely to value green credentials

Figure 14: ‘Taken ethical/environmental factors into account when choosing a financial provider’, by

lifestage, income, ACORN group and age finished full-time education, November 2007

Green issues have influenced almost half of all Guardian readers

Figure 15: ‘Taken ethical/environmental factors into account when choosing a financial provider’, by TV

region, newspaper readership and supermarket usage, November 2007

Three in ten consumers intend to take account of green issues

Figure 16: ‘Will take account of ethical/environmental factors when next arranging a financial product’,

November 2007

Implications

The over-65s and DEs are less likely to consider green issues

Figure 17: ‘Will take account of ethical/environmental factors when next arranging a financial product’, by

gender, age and socio-economic group, November 2007

A large minority in the Urban Prosperity group are set to go green

Figure 18: ‘Will take account of ethical/environmental factors when next arranging a financial product’, by

lifestage, income, ACORN group and age finished full-time education, November 2007

Implications and Opportunities

Green issues will influence over four in ten Waitrose customers

Figure 19: ‘Will take account of ethical/environmental factors when next arranging a financial product’, by TV

region, newspaper readership and supermarket usage, November 2007

A quarter of consumers would pay a premium for a ‘green’ bank

Figure 20: ‘Prepared to pay a little more to bank with a company with strong green credentials’, November

2007

Implications

A third of ABs would pay more to bank with a ‘green’

company

Figure 21: ‘Prepared to pay a little more to bank with a company with strong green credentials’, by gender,

age and socio-economic group, November 2007

Almost four in ten students would pay more for a ‘green’ bank

Figure 22: Prepared to pay a little more to bank with a company with strong green credentials’, by lifestage,

income, ACORN group and age finished full-time education, November 2007

Most Guardian readers would pay a ‘green’ banking premium

Figure 23: ‘Prepared to pay a little more to bank with a company with strong green credentials’, by TV

region, newspaper readership and supermarket usage, November 2007

Saving the world on the cheap

Figure 24: Attitudinal groups based on demand for green financial services, by gender, age, socio-economic

group, lifestage, income and TV region, November 2007

THE CONSUMER - PERCEPTIONS OF CURRENT INDUSTRY EFFORTS

Key points

Most consumers are interested in environmental issues

Figure 25: ‘All this talk about the environment just bores me’, November 2007

Implications

The vast majority of ABs declared an interest in green issues

Figure 26: ‘All this talk about the environment just bores me’, by gender, age and socio-economic group,

November 2007

More than a third of low earners find the environment boring

Figure 27: ‘All this talk about the environment just bores me’, by lifestage, income, ACORN group and age

finished full-time education, November 2007

The environment interests a large majority of broadsheet readers

Figure 28: ‘All this talk about the environment just bores me’, by TV region, newspaper readership and

supermarket usage, November 2007

A large minority feel banks can make an environmental impact

Figure 29: ‘Banks can’t really make much difference to environmental issues’, November 2007

Implications

A majority of ABs think banks can help with environmental issues

Figure 30: ‘Banks can’t really make much difference to environmental issues’, by gender, age and socioeconomic

group, November 2007

Over half of high earners feel banks can make a difference

Figure 31: ‘Banks can’t really make much difference to environmental issues’, by lifestage, income, ACORN

group and age finished full-time education, November 2007

Most Guardian readers think banks can help tackle green issues

Figure 32: ‘Banks can’t really make much difference to environmental issues’, by TV region, newspaper

readership and supermarket usage, November 2007

A majority of consumers are cynical about banks’ green efforts

Figure 33: ‘When banks talk about being green, I tend to think it's a PR stunt’, November 2007

Implications

Three-quarters of ABs question the banking sector’s motivations

Figure 34: ‘When banks talk about being green, I tend to think it's a PR stunt’, by gender, age and socioeconomic

group, November 2007

A large proportion of Wealthy Achievers doubt banks’ integrity

Figure 35: ‘When banks talk about being green, I tend to think it's a PR stunt’, by lifestage, income, ACORN

group and age finished full-time education, November 2007

A large majority in South West/Wales and Ulster are cynics

Figure 36: ‘When banks talk about being green, I tend to think it's a PR stunt’, by TV region, newspaper

readership and supermarket usage, November 2007

Converted, sceptical, or fatalist?

Figure 37: Attitudinal groups based on perceptions of current industry environmental efforts, by gender, age,

socio-economic group, lifestage, income and TV region, November 2007

Banks can make a difference - and they want to make a difference…

…or do they?

Is it even worth making the effort?

Or do we just not care?

THE CONSUMER - WHAT DO PEOPLE WANT?

Key points

Consumers’ key concerns focus on avoiding unethical practices…

Figure 38: Green features that are important when choosing a financial provider, November 2007

…but there’s still scope to be proactive

Implications

The 35-44s are keen to avoid firms that invest in unethical areas

Figure 39: Green features that are important when choosing a financial provider, by age, November 2007

A high proportion of ABs could be influenced by green features

Figure 40: Green features that are important when choosing a financial provider, by socio-economic group,

November 2007

Green features could sway a large proportion of mortgage holders…

Figure 41: Green features that are important when choosing a financial provider, by selected financial

product ownership groups, November 2007

…but investor priorities belie the growth of ethical funds

The ethical investment market has significant growth potential…

Figure 42: Agreement with statements relating to ethical investments, November 2007

…but many haven’t even considered it

Implications

More than one in seven 35-54s feel ethical issues are important

Figure 43: Agreement with statements relating to ethical investments, by age, November 2007

Making the most of their investment muscle

Figure 44: Agreement with statements relating to ethical investments, by socio-economic group, November

2007

Unit trust holders are less likely to view ethical issues as key

Figure 45: Agreement with statements relating to ethical investments, by selected financial product

ownership groups, November 2007

APPENDIX - DETAILED DEMOGRAPHICS

Figure 46: Typologies based upon participation in green or ethical activities, by gender, age, socioeconomic

group, lifestage, income and TV region, November 2007

APPENDIX: RESEARCH METHODOLOGY