The recent global riots, sparked by inflated-food prices, in a number of the world’s poorer nations, reinforced just how fragile civilised life can be.

If people cannot afford to or are unable to feed themselves and their families then all other aspects of society become irrelevant.

Economists refer to basic foodstuffs as ‘necessity goods’, which have high price inelasticity due to the fact such goods are by their very definition – a necessity.

At the other extreme, ‘luxury goods’ (as economists define them) have high income elasticity of demand i.e. as incomes rise demand increases and vice versa.

For the majority of people living in OECD countries and a large number of those living elsewhere, they have the fortunate dilemma of having to make regular decisions far beyond the mere survival decisions of the world’s poorest inhabitants – for example, whether to buy an iphone, where to go on holiday, what brand of products to buy etc.

With this in mind, I turn to the notion of investing – specifically so-called ‘green’ investing.

Is investing with a consideration for the environment a ‘necessity’ for investors today, or is it merely a ‘luxury’ with high income (investment return) elasticity i.e. when times are good, investors consider the environment and when times are less fruitful the ‘bottom-line’ is all that matters?

At the beginning of the decade a bevy of Socially Responsible Investment (SRI) funds debuted into the market.

For a while times were good and investors pumped some of their funds into these products, however once the poor returns across the market kicked in post the tech-bubble bursting, the money walked out the door seemingly as fast as it had walked in.

Since then the mining sector has been in boom as more ‘traditional’ or ‘old economy’ stocks came back into vogue.

Any investor without a weighting to the resources sector over the past five years is likely have seen their share portfolio underperform the ASX All Ordinaries.

However unlike in 2000 when the tech-wreck occurred, today, the environment and particularly climate change is much more entrenched into the mindset of individuals, politicians and mainstream media.

Yet it appears while many of us recycle more, minimize our energy use and generally worry about climate change, it seems our investment behaviour has not really changed.

Very few people are directly invested in ‘green’ investment products according to a new piece of CoreData research.

Only 1 in 20 Australians have or are aware of having a direct exposure to ‘green’ funds despite 77.8% of both investors and non-investors believing their own behaviour can make a difference to environmental issues.

The actual number may be higher when you take into account super funds that may have made allocations on behalf of members – but nonetheless it’s interesting that so few Australians are actively invested in environmentally screened products.

Another interesting perception fact, is that almost one in three respondents (31.%) expect an average return from ‘green’ investments to be 6% or less – 2% below the present return on straight cash investments, while 41.1% expect returns of between 7% and 10%.

Environmental concerns are certainly higher up the mainstream agenda than they were when the tech bubble burst in 2000, when investors focused on chasing whatever measly returns they could muster from where ever they could – at the expense of many socially responsible funds.

Yet while more and more people are taking steps to minimise their carbon footprint, it seems this hasn’t necessarily flowed through to an inclination to invest in ‘green’ funds over traditional funds.

Interestingly, given a hypothetical scenario of investing in an ‘unethical’ fund with high returns, a regular fund with normal returns or an ‘environmental’ fund with lower returns:

One in eight (14.8%) individuals stated they would put their money in ‘unethical’ stocks, which had no concern for their impact on the earth’ if they delivered a 75% per annum return.

Three in five (60.7%) would invest in regular stocks with a 15% return, while one in four (24.5%) would accept much lower hypothetical returns of 6% from a ‘green’ fund.

Clearly the flow of money into investments is down on last year even if the flows from the changes to superannuation in 2007 are taken into account.

At the end of August AMP, a reasonable barometer of the general health of the wealth management industry, released some sobering figures to the market.

With many investors struggling to top up or allocate more assets to under performing funds, investment returns and not the environment seems to be the key concern for the majority.

As Franklin D. Roosevelt said: “True individual freedom cannot exist without economic security and independence. People who are hungry and out of a job are the stuff of which dictatorships are made.”

Despite the huge increased awareness of environmental issues and modified behaviour of Australians in their day to day lives, it seems there is still a discord when it comes to investing.