Ethical Performance
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SRI turns over new leaf with newfound investors

December 2013

There is emerging evidence that in addition to straight philanthropy through donation or foundations, Ultra High Net Worth Investors (UNHWIs)are also financing social investment. Equally, there has also been a strong growth in investment in sustainable/ethical investments through private banks and family offices on behalf of UNHWIs.
Professor Tony O’Rourke reports


The key for success in doing socially responsible investments has moved quite markedly into the investment mainstream as activities with a social, ethical or environmental impact.

As we know, the original ethical investment funds avoided industries engaged in addictive products, armaments or the exploitation of the natural environment.

Over the past decade there has been strong growth in the availability of investment products relating to green energy, recycling and climate change. There have been growing opportunities for investment in socially responsible areas such as affordable housing or community projects.

In general we have tended to see such investments as within general retail investment - investment with a conscience. What is not so obvious is that socially responsible investments have also attracted a following among High Net Wealth (HNWI) investors (above USD 1m in disposable assets) and Ultra High Net Wealth (UHNW) investors (above USD 50m in disposable assets).

The European Sustainable Investment Forum (EUROSIF) has calculated that socially responsible investments by European HNWIs and UHNWs increased by 60% (valued at EUR 421bn) between 2010 and 2012, compared to an 18% increase in overall investment in the same period.

EUROSIF also commented that this level of growth mainly derived from new HNWI/UHNW clients (44%), followed by existing clients deepening their commitment to socially responsible investment (37%).

In general the most popular investment objects are clean energy, water and green technology. EUROSIF also mentions that 50% of the wealthy investors they surveyed over 2010-2012 ranked investments with a social-environmental impact as important as straight philanthropic giving.

Where is this trend coming from? Are the wealthy becoming more concerned about the longer-term sustainability of investments? Or are wealth managers and private bankers looking for novel investment classes, with beneficial returns, to attract and to retain clients?

The EUROSIF evidence would indicate that an appetite for socially responsible investment exists. We can also take account of the fact that wealthy investors now appear far more committed to longer-term investment strategies – this has been instanced in recent reports on global wealth trends by Boston Consulting Group, CapGemini/RBC Wealth and McKinsey.

This would then imply a relationship between socially responsible objectives and acceptable returns on investments with socially responsible structures. Again, to revert to EUROSIF data, they estimated that in 2010 11% of all HNWIs/UHNWs in Europe were making investments with strict sustainability criteria.
In general, these investors were relying on wealth managers and private bankers to adopt policies which included:

  • •Thematic investing – e.g. protecting the environment
  • •Positive investing – e.g. looking for opportunities which will engage in positive social-environmental outcomes
  • •Responsible ownership – e.g. encouraging better business behaviour and observing Corporate Social Responsibility norms
  • •Negative screening – e.g. moving in investments related to armaments, pornography, exploitation of children, addictive substances or support to regimes indulging in supression of beliefs or views

Interestingly, to meet these objectives private bankers and wealth managers have been expanding the investment vehicles available to include, for example - discretionary portfolio management services; ETFs with sustainable/responsible objectives; “Green business angel” funds investing in sustainable SME projects and “Green” REITs.

So who is driving this interest by the wealthy and ultra wealthy in socially responsible investment – investors or their advisors?

Perhaps it is possible to respond to that question by introducing a potential connection between socially responsible investment and philanthropy.

Wealth managers and private bankers have been developing philanthropy as a major area of customer service and advice over the past decade.

In general philanthropy has been seen as an act of making donations or establishing funds to distribute donations.
There is evidence that in the volatile macro-economic environment of the past five years, the level of philanthropic activity, especially by UHNWs, has increased. Barclays Wealth have commented that “the experience of financial ups and downs creates a strong tendency for philanthropy”.

They explain that wealthy individuals who have seen volatility in their asset base are more likely to engage in philanthropic activity than those who whose levels of wealth have remained stable. The problems of banks and the financial markets may therefore be seen as a stimulus to philanthropic engagement.

We are aware that many philanthopists are keen to evaluate impact.

Direct philanthropic engagement or operation through foundations may not necessarily provide immediate feedback on impact. It could be argued that socially responsible investment may be able to provide a faster form of feedback. We can see this in microfinance funds, or social finance for housing or in community projects.
At the same time such projects tend to have a longer term horizon where wealthy investors contributions may be seen to encourage large scale retail investment.

In conclusion, perhaps we can therefore see the engagement of High and Ultra High Net Worth investors into socially responsible investment as being a means for them to see an applicable impact, to encourage wider contribution into those funds or investment opportunities and over the longer term to dynamise those investment classes as sustainable, applicable and socially valuable investments.

However, this is speculation, and to a strong degree there is an urgent need to undertake serious research into the sourcing of socially responsible investment flows – a subject as important as the actual destination of theose investments.


Barclays Wealth (2013) Origins and Legacy Vol 17 Insights series. Available at:
Barclays Wealth (2010). White Paper: Global Giving – The Culture of Philanthropy [online]. Insights series. Available at:
Eurosif (2012) 3rd Study on High Net Worth Individuals & Sustainable Investment. [online] . Available at: report_hnwi.pdf.pdf
Boston Consulting Group (2013) Maintaining momentum in a complex world. BCG Perspectives [online] Available at:
McKinsey Global Private Banking Survey (2013): Capturing a new generation of clients. McKinsey Insights [online]. Available at:
CapGemini/Royal Bank of Canada Wealth Management (2013) World Wealth Report [online]. Available at:


EUROSIF | UK & NI Ireland | SRI


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