Opportunities for social business as survey finds growing interest in positive investment

New research from positive savings and investment platform Ethex shows that more than half of the eligible UK population is keen for its wealth to have a positive impact on society.

Findings that should make welcome reading to co-ops and community businesses seeking investors show that 58% of respondents favour projects and investments that have an impact in their local area.

Top concerns include health and social care (31%) and old age support (26%).

It reveals that 19.5 million people – 51% of the eligible population – are investing positively, or interested in doing so.

The report, Understanding the Positive Investor, found that those under 40 are the most interested in positive investment and have the highest belief in the impact it can have.

And it offers advice for social businesses looking to tap into the desire for positive investments.

The research highlights that there is an urgent need for the finance industry to provide more information and better education about these kinds of investments. 50% of those asked did not feel they know enough about positive investment and savings, although 45% were willing to learn more.

In addition, over a third (39%) did not know whether to expect a stronger or weaker financial return from positive investments when compared to traditional ones and 55% did not think they were wealthy enough to make positive investments.

While people under 40 were most interested in positive investment, those who currently invest in this way are significantly older and wealthier, suggesting that positive investment is currently only reaching a select group of society.

It identifies five types of investor:

• Well-informed: Financially savvy and already engaged in positive investment. The report suggests engaging these by measuring and reporting on the benefits of the such investment
• Progressive: Interested in positive investment but divided in opinion as a group, and likely to want recognition for their efforts. The report suggests education and communication are the key to engaging them, especially through social media
• Receptive: The wealthiest, and smallest group, who are willing to learn about positive investment but need convincing of the financial benefits
• Unsure: Receptive but lacking in financial resources and confidence; most likely to be interested in current account products
• Sceptic: Making up nearly half the eligible population, they are the second wealthiest group but least interested in positive investment.

“The challenge for positive investment providers is to find the best way to communicate beyond the relatively small number of people currently involved and to take positive investment forward from a minority pursuit to mass participation,” says the report. “It is only when this is achieved that the half of the population that make up the sceptics are likely to become involved.”

It adds: “The higher level of interest in investing to improve health and social care and to provide old age support presents an opportunity for positive investment providers, as there are currently few products of this kind available.”

Youth engagement is also crucial, the report says. “The level of enthusiasm is far higher, and the level of cynicism much lower, among those under 40. The younger generation is also more likely to have a university degree and be well educated.

“Reaching this younger group will require a whole new approach by those operating currently offering savings and investments. Given that they have less money now, but are likely to be wealthier in the future, attracting the under 40s is a longer-term consideration, but one likely to pay off.”

Lisa Ashford, director and CEO of Ethex, said: “Consumers are increasingly looking to buy and use products that align with their personal values and it is no different when it comes to savings and investment.

“Our research clearly demonstrates that interest in positive investment in the UK is high, with those under 40 particularly engaged. This represents a real opportunity for social enterprise projects to secure vital finance from retail investors. Those seeking investment must ensure they appeal to the motivations of investors and undertake offers which allow a younger demographic to get involved.

“However, there is much confusion and misunderstanding around investing positively, from both individuals and social enterprises. There is a lot of work to be done in educating people and making positive investment products more accessible as well as highlighting to social enterprises that retail investors can offer an important opportunity for funding.

“By offering simpler and more accessible products, positive investment can be opened up to enable more people to tackle the local issues that matter to them the most. This will help change positive investment from a minority pursuit to a mainstream one and by doing so deliver on the benefits that investing in this way can bring to society.”