Scotland can lead way in responsible investment after Covid-19 crisis, report finds

Scotland can lead the way in responsible investment following the coronavirus crisis, and it is already “punching above its weight” in this area, according to a major new report out today.

The report notes renewed calls for finance that works for people and the planet. Picture: contributed.

The Edinburgh-based Ethical Finance Hub has analysed the scale of the nation’s responsible investing market for the first time, and published the report, named Mapping the Responsible Investing Landscape in Scotland.

Contributors include the University of St Andrews Centre for Responsible Banking & Finance and non-executive director Jon “JB” Beckett, an independent advisory committee member for Royal London and emeritus for the Association of Professional Fund Investors.

Scotland was chosen for the study as the birthplace of modern asset-management, serving as a “good benchmark” for the wider market. Industry experts said Scotland is now well-placed for the re-evaluation of global economic systems following the Covid-19 pandemic, with renewed calls for finance that works for people and the planet.

Ethical Finance Hub board member Graham Burnside. Picture: contributed.

Scotland’s £9.5 billion UK-domiciled responsible investment represents 11 per cent of the UK market, compared to its 7 per cent share of the total market. The report has found rapid sector growth of around 27 per cent a year since 2004, mainly in climate, impact and Environmental, Social and Governance (ESG) funds.

A total of 35 Scottish responsible investing funds are identified in the report with Scottish listings representing approximately 18 per cent of the UK total.Although 99 per cent of responsible investment is concentrated among four major asset-managers (Aegon Asset Management, Aberdeen Standard Investments, Stewart Investors and Baillie Gifford), there is also a “rich array” of smaller firms all committed to responsible investing.

Collaboration

The report recommends local asset-managers working together to position Scotland as a global HQ for ethical finance, and public sector pension schemes in Scotland committing to investing in line with the government’s ambitions to create a greener, fairer and healthier country by 2032.

A third recommendation is that the Scottish Government’s advisory group on economic recovery should engage with the Ethical Finance Hub to inform and support economic recovery post-Covid-19.

Graham Burnside, Ethical Finance Hub board member, said: “This report reinforces Scotland’s position as a leading international centre for responsible investing… Scottish asset-managers are well placed to build on their strong foundations and play a leading role.”

The findings will be presented and discussed at the 2020 global ethical finance summit, to be held on 6 and 7 October in Edinburgh.

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