How the cost-of-living-crisis is impacting our green habits

The cost-of-living crisis has had a knock-on effect on the UK’s lifestyle habits, with half of UK adults (49%) reporting that they have implemented greener habits in the past 12 months, according to new research by F&C Investment Trust*.

The research suggests this move has been prompted by a desire to both protect the environment and minimise living costs. Measures to curb energy usage are unsurprisingly at the top of the list of habits Brits have adopted, with the majority having curbed or looking to curb foreign holidays (52%) and their energy use (51%)*.

Other top habits included repairing and reusing items (34%), shopping second-hand (28%), and growing produce at home (24%)*.

Second hand becomes first choice

Having used Facebook buy-and-sell groups, as well as Vinted myself in recent months, it came as no surprise that as well as shopping for second-hand goods, the research found that around a third of adults (31%) have also been supplementing their income by selling personal goods on online marketplaces over the past twelve months, minimising contributions to landfill in the process.

The research also shows that younger generations have been leading the charge in terms of implementing greener habits. Three out of five (60%) aged 18-34 have implemented more environmentally friendly habits over the course of the year, compared with 43% of those aged 55+*.

Green habits also being sacrificed as costs rise

While the cost-of-living crisis is encouraging the UK to adopt more “green” habits, the research also highlights that there are some areas where UK adults have had to sacrifice green habits to minimise living costs.

With energy bills at record heights, many UK adults have switched from renewable to non renewable tariffs, or plan to do so in the next six months* while others are choosing to heat their home with wood fires in a bid to minimise energy bills.

Shopping with less sustainable but cheaper brands (35%), eating less ethical, local, or organic food (28%), and driving more instead of paying for public transport (17%), are some of the additional measures UK adults are taking to reduce living costs in the current climate*.

Juliet Schooling Latter, research director at FundCalibre, commented: “Less consumption generally saves money and is better for the environment. But trying to consume sustainably is a lot more expensive, as I know from experience. People may want to be sustainable but only if it makes economic sense them. They certainly aren’t willing to pay up for sustainable brands in the environment when all their costs are increasing, and they are having to prioritise.

“The only way to change this is via government legislation – like banning single use plastic – or if something that is non-sustainable becomes much more expensive by comparison. But if we all consume less and consider whether purchases are really essential, it will be good for the environment but bad for economic growth. This is where the conflict lies for government.”

Green investments also see decline

According to the latest data from the Investment Association, the amount of money going into responsible investments has also declined in recent months.

While 2021 was a bumper year for the asset class with funds under management rising from £54.1 billion in 2020 to £90.5 billion, 2022 saw assets fall**. Net retail sales fell from a steady £4 billion + a quarter in 2021 to just £34 million in the third quarter of 2022, with net redemptions in both September and November of that year**.

Beatrice Hollond, Chairman of F&C Investment Trust, said: “The inflationary backdrop is applying a level of pressure on our day-to-day finances that many UK adults have not seen in their lifetime.

“However, as we contend with rising costs, it’s important to not overlook the impact this inflationary climate is having on our long-term finances too. Alongside increasing the prices of everyday goods, inflation also has the potential to erode the value of your hard-earned savings, reducing its value in the long-term.

“We would therefore encourage those with long-term savings, or who are able to save after they’ve topped up their rainy-day fund, to invest some of this money to ensure it can grow meaningfully and retain its value in the future. Furthermore, investing this money in funds with a commitment to sustainability can bring added benefits, knowing that your money is being invested to help drive positive change for the environment and society.”

Which sustainable funds should you invest in?

FundCalibre has rated 14 funds that have sustainable investing at the very heart of their process.

Equity funds in this category include CT Responsible Global Equity, NinetyOne Global Environment and EdenTree Responsible and Sustainable UK Equity.

Bond funds include Liontrust Sustainable Future Monthly Income Bond and Rathbone Ethical Bond.

You can research all our Elite Rated responsible investment funds here.

*Research based on an online survey of 2,000 UK adults (18+ years) conducted by Opinium between 28th October – 1st November 2022

**Source: Investment Association, November 2022