Could we save, not only spend, our way to a sustainable world?

Shifting consciousness from how we spend our money to how we save our money could be the necessary key to a more sustainable, resilient world.

Could we save, not only spend, our way to a sustainable world?

8 Jul 2020

Today's global reset has not only focused a spotlight on the response of companies and governments in relation to society and their stakeholders, but also where we stand in relation to that impact personally. For many, the unprecedented events of recent weeks have caused a re-evaluation of the way we live our lives, bringing our core beliefs into focus, and offering a rare opportunity to decide how we might 'build back better' as the world gears up once again.

In parallel with this backdrop, whilst more conscious consumerism has been gathering steam in recent years, attention is now shifting to another powerful way in which we have freedom over our choices – our savings. The freedom to choose not only where we spend, but also how we save, can have powerful consequences. In just one example by Nordea, analysis shows that it’s 27 times more powerful to change to environmentally conscious investing than to switch to a plant-based diet or stop flying. If this is true, and given the complex environmental and societal factors behind today’s critical challenges, is it possible that we could save, rather than only spend, our way to a more sustainable, resilient world?

Catherine Howarth, CEO of the campaign group ShareAction points to a rise in consumer consciousness amongst more informed shoppers about how they spend their money. Shifts to more conscious consumerism have broader consequences for driving the success of companies in the future. But is this encouraging us to think beyond how we spend, and towards how we save?

Research suggests that the answer is yes.

FNZ commissioned research shows that 78% of long-term savers wanted information on the environmental and societal impact of their portfolio alongside more traditional financial metrics. Not only that, 54% said they'd consider switching platform provider if their current platform did not provide this information. Top concerns were investors' impact on nature and preventing unethical practises. Our research showed that 25-34 year olds were the demographic who expressing most interest in the concept of understanding their footprint (83%), with almost three quarters likely to save with a provider who provided this service, and nearly 8 in 10 saying they would switch platforms in order to access this information in order to be in more control of their money.

Supporting this, research finds that responsible investment is a powerful motivator for ‘Generation DC’, 22-38-year-olds, the first generation to rely heavily on DC pensions to fund their retirement needs. [1] 45% of respondents said they would be motivated to increase their own contributions if their pension incorporated responsible investing, with a 20% estimated increase in the amount currently contributed by employees represented by additional contributions if responsible considerations were incorporated.

Finally, technology is a powerful enabler of our freedom to make choices that are in line with our priorities, both financial and non-financial. Increased reliance on technology not only by consumers, but also platform providers, advisers and wealth managers, both to deliver access to personalised investment solutions, and for delivering guidance or education individualised to personal needs, presents challenges but also a powerful opportunity.

Over half of respondents in the Franklin Templeton’s Generation DC report said they wanted responsible investment information delivered digitally, and as in so many areas of our lives, the move to an increasingly digital, personalised ‘on demand’ world is fast accelerating and becoming the norm. Because of this, solutions like FNZ Impact have been developed to enable the democratisation of access to knowledge on the environmental and societal impact of investments by integrating personalised sustainability preferences into client platforms at scale, yet with individual client personalisation. FNZ Impact delivers a range of individually tailored sustainability analytics and services to clients and customers, empowering leading financial institutions to participate in the rapid shift to sustainable investing, alongside deepening their engagement with clients. Crucially, with this technology, consumers can be enabled to take back their freedom to choose whether they want to back the drivers of negative or positive change.

What is certain is that these findings are crucial in a world where closing the pensions gap is perhaps more important than ever, and rebuilding our economies tops the agenda. The rise of apps like Giki, which allows consumers to scan the barcodes of thousands of supermarket products to understand the health, environmental and societal impact of products, provides users with the freedom to choose how they allocate their hard-earned, precious income. If we are now to take this opportunity to build back better, shifting consciousness from how we spend our money to how we save our money could be the necessary key to a more sustainable world.

[1] Franklin Templeton: The Power of Emotions