More than 70% of investors want to invest sustainably 3
ESG Investing Trends
Corporate sustainability was once an afterthought in the business world.
Now with trillions of dollars flowing into ESG investments it's clear that this "new way" of doing business is here to stay.
We're going to talk about three key trends
1) The flow of money INTO ESG investments.
2) Corporate acknowledgment of the importance of sustainability.
3) The future of ESG investing.
1) Below is a chart from the Visual Capitalist.
You'll see that the amount of money invested into ESG investments has more than doubled in the seven years between 2012 & 2018.
Blackrock reports over $11 Billion in new ESG investments in the first half of 2020 which is more than double the $5 Billion of inflows for all of 2019!1
You may also notice that Europe is the clear leader in ESG investments.
This is in part due to more progressive regulations and cultural shifts regarding climate change.
Source: Visual Capitalist
2) Mid 2019 at the Business Roundtable, 181 of the worlds largest CEO's signed a pledge to focus on stakeholders rather than just shareholders.
Suppliers
Customers
Governments
Employees
Investors
Communities
STAKEHOLDERS
This marks a monumental shift in corporate thinking.
Blackrock CEO and Chariman Larry Fink stated:
With the impact of sustainability on investment returns increasing, we believe that sustainable investing is the strongest foundation for client portfolios going forward.
CEO's understand the importance of focusing on sustainable business practices.
With our increasingly connected world, companies can not afford to ignore the sustainability "elephant" in the room.
Consumers are demanding more accountability from corporations and are increasingly voting with their dollars.
3) The Future of ESG investing
In a recent quarterly report, Saxo Bank head of equity strategy Peter Garnry stated:
Governments will increase investments and subsidies for 'green'industries, starting a new mega trend in equity markets. 2
He goes further in saying:
We believe that these green stocks could, over time, become the world's most valuable companies - even eclipsing the current technology monopolies as regulation accelerates during the coming decade. 2
A 2020 global ETF investor survey estimated that 74% of global investors plan to increase their ESG ETF allocation over the next year. 3
Why this is important to you
Think of some of the biggest investment, technological & innovative shifts you can recall.
What if you had invested early instead of late (or not at all)?
While the numbers in this article may make it sound like the wave of ESG investing has already passed. You may feel like it is already too late to make the change.
I urge you to throw that worry out.
Think of how many times over Apple's history people have thought "the wave has already passed" and yet Apple has continued to grow.
Same case with Tesla.
It's not too late to start investing sustainably.
To sum it up:
ESG investing is not a fad. It is a major investment trend that is here to stay.
With increased regulation and societal desire, I believe that sustainable investing will eventually become THE way to invest.
It's not too late to get started.
If you want to talk more about ESG Investing, but don't know how to get started feel free to schedule a phone call. We're happy to help...
We're a different kind of financial firm than you may be used to.