Appetite for carbon neutral investment funds growing
Nearly half of UK investors would choose a “carbon neutral” share class version of a fund if it was available to them, according to new research shared with Net Zero Investor today.
Overall, 50% of investors who would choose carbon neutral share class versions of funds, would be prepared to pay up to 10% more in fees, and 13% say they would pay up to 25% more, City investment firm Kana Earth said.
When asked what impact fund managers purchasing carbon offsets to compensate for the climate impact of their funds would have on their investment decisions, 55% said it would make them more likely to invest with them.
Overall, the research found that if there were more carbon neutral funds available, one in three investors say they would invest more in such financial products.
“Not only do fund managers have a duty to be transparent about the impact their investments have on the environment, and what their plans are to reduce this, they should also see this as an opportunity to use their work here to attract investors," argued Andy Creak, CEO, and co-founder, Kana Earth Ltd.
"If fund managers can show a real commitment to reducing the impact on the environment from their investments, this can attract significant numbers of new investors, many of whom are willing to pay more in charges to help achieve this," he stressed.
The UK nature carbon offsetting challenge
Carbon offsetting is critical in meeting the UK’s target to reduce carbon emissions targets by 78% by 2035 from 1990 levels, and to be carbon neutral by 2050, but the domestic market is disjointed and underdeveloped.
Between now and 2035, the country will emit a sizeable 3,340m tonnes of CO2 but the UK’s Nature based Carbon projects to date will absorb only 18m tonnes CO2.
The UK carbon offsetting market’s complexity and lack of scale means it is missing out to massive carbon growth in other countries.