Green Finance - UK - January 2008

Table of Contents

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