The COP26 summit has highlighted the importance of sustainable investing for the future of our planet.
With ethical, social and governance (ESG) credentials on everyone’s lips, is the peer-to-peer lending sector doing enough?
The core premise of P2P lending is tied to ethics, supporting financial inclusion while generating returns for individual investors. Since its inception the industry has evolved and many platforms now offer environmentally friendly or socially beneficial investments as well.
Crowd bonds platform Abundance Investment allows investors to fund renewable energy projects and has worked with councils to provide community municipal bonds that support renewable energy projects in a local area.
Folk2Folk has highlighted that it is community oriented, with local lenders supporting local regions and investing in renewable energy projects.
Assetz Exchange, which is part of the Assetz group alongside P2P platform Assetz Capital, has funded the development of supported living apartment blocks to house people with learning disabilities and ex-prisoners.
Furthermore, several P2P property lending platforms, such as Assetz Capital, JustUs and CrowdProperty, fund the offsite construction of greener, sustainable housebuilding.
Speaking at the latest P2P Investing Summit, a virtual event hosted by Peer2Peer Finance News and AngelNews, industry stakeholders said the P2P sector is doing a good job of implementing ethical investing standards.
However, there is always more to be done. The Financial Conduct Authority published a discussion paper coinciding with COP26 Finance Day, to seeking views on potential criteria to classify investment products to help investors make more informed investment decisions.
This is something that could help investors decide what projects they want to back and may push ESG-type investing further into the minds of platform bosses.
The appetite is already there from industry stakeholders. P2P lenders have previously spoken out in support of introducing green labels on their products to help fight climate change.
Ethical and sustainable investment strategies are at the forefront of people’s minds in the wake of the COP26 summit, so there is a great opportunity for P2P platforms to ride the ESG wave and contribute to saving the planet.