Rachel Mountain, head of marketing and communications at Lendahand Ethex, explains how ethical investing is open to everyone
SUSTAINABILITY was once a term reserved for recycling, eating organic foods and driving fewer miles. However, a global movement has brought the consequence of economic development to the population’s attention, and the impact of activity is being scrutinised against the UN’s sustainable development goals.
As consumers, we are increasingly aware of how our choices threaten the future of the planet and this is influencing the products we turn to.
It is therefore not surprising that the most recent data from HMRC shows that uptake of the Innovative Finance ISA (IFISA) hit £17m in the last financial year. With an ever-increasing number of peer-to-peer lenders receiving ISA authorisation, this figure is only going to rise in 2018.
Adding to the increasing variety of opportunities available for the positive investor, ethical ISAs enable investors to benefit from tax-free returns while safe in the knowledge that their money is being invested ethically, supporting projects that actively support initiatives such as the sustainable development goals.
Research from Ethex has shown that 90 per cent of the population are interested in making their money do good and 50 per cent are interested in positive investment. However, many people are still unaware of some of the ‘socially good’ investment opportunities or how accessible these options can be to retail investors.
This October, Energise Africa, a partner initiative between Ethex and Lendahand, launched its ethical ISA that offers UK investors an opportunity to invest in solar companies, installing life-changing solar systems in homes in Africa, tax free. (Please note that Lendahand Ethex recommends that you take your own tax advice on any investments made via Lendahand Ethex).
Currently 600 million people in Sub-Saharan Africa do not have access to electricity, which dramatically limits their life chances and opportunities. The solar businesses that are funded through Energise Africa help to provide affordable, clean energy to tens of thousands of families as well as schools, businesses and health clinics.
The gap between demand for investment products that make a positive impact and the products on offer is closing. However, there is still more work to be done by the investment industry to educate consumers that they have the power to apply their own values to investment choices, and to put these products on offer.
The Energise Africa model makes it easier for eligible retail investors to browse available projects and see clear social and environmental benefits with the potential of financial return. Their ISA is an example of how innovation in financial products can take full advantage of tax benefits being offered through the government’s IFISA scheme, which allows tax-free returns for investments up to a £20,000 allowance per tax year.
Since its launch, Energise Africa has seen all its bond offers close early, having reached full funding. The high demand for these products is a testament to people’s appetite to make an impact with their personal finance. With a £50 minimum investment and choice of projects to invest in, the flexibility of this product means it may be easier for retail investors to access.
There’s no reason why it shouldn’t be easier for more people to invest ethically. IFISAs, such as the one offered by Lendahand Ethex as part of Energise Africa, are an example of how small investments from a large number of people can make a difference to lives worldwide.
Capital is at risk and returns are not guaranteed. Investing on Lendahand.co.uk involves risk, including the loss of all of your capital, illiquidity (the inability to sell assets quickly or without substantial loss in value), and it should be done only as part of a diversified portfolio. Investments are not protected under the Financial Services Compensation Scheme (FSCS). Please read the full risk warning on Lendahand.co.uk before deciding to invest.
Click here for more information on Lendahand Ethex.