Abstract
The last few years have seen environmental and ethical concerns continuously climb towards the top of the global agenda. This trend has been driven by a powerful combination of inter-related factors: an increase in environmental knowledge and media coverage; a rise in consumer awareness and concern regarding the environment; and a growing political will to legislate.
A key consequence of these various factors is that businesses have found that they are increasingly expected to play a leading role with environmental efforts, not only by taking steps to reduce their own carbon footprints, but also by helping their customers reduce the impact they have on the environment. Furthermore, as an increasing proportion of the consumer base begins to assess and actively respond to the environmental impact of their own lifestyles, this trend can only be expected to gather momentum.
This report looks at the impact that this rise in green issues is having within the financial services market. It considers what specific initiatives and policies are covered by the term green financial services, along with the prospects for future market growth, and reports industry views on a range of salient issues. In addition, it provides an analysis of Mintel' s independently-commissioned research, which provides an insightful consumer perspective on developments within the green financial services market.
Table of Contents
Issues in the Market
- Main findings of the research
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
