BRUCE Davis, co-founder of ethical crowd bonds platform Abundance Investment, has urged the government and the City watchdog to do more to support the green finance market.
Davis (pictured), who is also a founding director of the UK Crowdfunding Association, gave evidence in front of the Treasury select committee of MPs on Tuesday morning regarding green investments.
“Regulators should be asking why there aren’t more competitors to Abundance,” said Davis. “It took us two years to get regulated because we said social return is more important than financial return. It blew their minds!
“Regulators need to understand that green finance is longer term and use regulation as a way to encourage people to build green businesses, which will bring more projects into the pipeline.”
This was one of the last committee hearings before Parliament is prorogued until 14 October. During the hour-long discussion, Davis said that the financial sector had a long way to go when it comes to promoting green finance, despite widespread public interest in green and ethical investing.
The hearing followed the publication of a new government study titled ‘Investing in a Better World’, which found that the public want their investments to reflect their values.
Three in five people believe that financial institutions should avoid investing in companies that harm people or the planet, while more than 70 per cent of those surveyed said that they want their investments to avoid harm and achieve good for people and the planet. More than half (52 per cent) of people said that they would be motivated to save more if they knew their savings and investments made a positive difference in the world – rising to 67 per cent among millennials.
“[The survey results] are contrary to what the finance industry has been thinking, that somehow it’s a trade-off between doing good and making profit,” said Davis. “The regulator needs to send stronger signals that it’s not just a market thing; it’s part of their fiduciary duty to their members that they need a world to spend that money in that isn’t detrimental to the goals they’re setting out for their retirement.
“We are all impact investors and we are trying to raise people’s consciousness so they realise that,” he added. “Investment itself is a political act – you are using it to decide what sort of world you want to see even if you are not conscious of it.”
Davis also called on pension funds to make their default funds green or socially aware; but pointed out the difficulties in achieving this.
“Pension funds are politically aligned but not practically, we need to change the way they are regulated,” said Davis.
“Green finance investments don’t all have the characteristics which allow them to be held in retail funds. Businesses with explicit net zero goals often have a difficult relationship with the City which tends to focus on short term returns rather than looking at the long-term benefits.”