The growing energy crisis will act as a catalyst for sustainable investing, according to deVere Group CEO Nigel Green.
Green’s statement comes amid concerns that soaring energy prices could increase yet further as the Northern Hemisphere moves into winter.
Green says: “The global energy crunch triggered by the world economy rebounding from the pandemic faster than was anticipated is impacting households and businesses across the world.
“From ongoing and increasing blackouts in China and India to mass panic-buying in the UK and Europe, and urgent calls from the US for OPEC nations to up oil production as fears continue to grow, the crisis is going to get a lot worse as the northern hemisphere moves into winter when energy demand is even greater.”
Green says that while the price surge is in danger of pushing back the transition towards cleaner energy resources, “savvy” investors will take a wider longer-term look at the dynamics.
He continues: “They will see that the current energy crisis is a combination of factors, including ongoing geopolitical tensions to which there are no quick fixes and infrastructure and supply issues and that these problems are not going away.
“It will bring into sharp focus that rather than staying with fossil fuels, the longer-term answer to this and future energy crunches is ESG investing. They will be moving quickly to have an early advantage, foreseeing the undeniable value, necessity and rewards of sustainable investing.”
In June 2020, just over a quarter (26%) of deVere clients around the world were eyeing exposure or already had exposure to ESG investments. This has increased to 44% over the past 12 months and Green expects momentum to continue to gather pace.
Green says: “First, governments and regulators are becoming increasingly supportive of ESG criteria which boosts investor confidence. For instance, despite recent alarm over energy prices, the United States is putting climate concerns temporarily on the back burner, yet the Biden Administration is overall taking a tougher approach on the use of fossil fuels and is promising swift action to tackle climate change.
“Second, as millennials who are more likely to seek responsible investment options, become the major beneficiaries of the largest intergenerational transfer of wealth, we can expect both retail and institutional investors to continue to pile into ESG.
“And third, the pandemic has focused minds on the fact that the health of our planet directly affects human health which, in turn, affects the way we all live and work.
“What is perhaps more impressive is that those investments with robust ESG credentials are continuing to outperform the market and experience lower levels of volatility.”
deVere recently became one of 18 founding signatories of the UN-backed Net Zero initiative that will help accelerate the transition to a net zero financial system.
Green adds: “It’s becoming increasingly clear that the best way and most sustainable way to solve this and future energy crises is to accelerate the transition towards cleaner power.
“Investor keen to get ahead of the curve as well as earn profits with purpose will be more keenly seeking out the opportunities as the world scrabbles to mitigate the environmental, economic and social fallout of the current situation – a situation which is likely to be a constant risk.”
