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ESG investments being seen as ‘safe havens’

3 August 2020

Many investors now regard sustainable and responsible investments (ESG) as ‘safe havens’ amid the ongoing financial uncertainty, says financial advisory group deVere. 

Research by the firm found that 56% of clients who opt for ESG investments in their portfolios do so because they believe sustainable funds offer financial protection in times of uncertainty.

Nigel Green, CEO, deVere Group, says there’s been a surge in the number of clients looking for ESG investments.

Green says: “More than a quarter of all clients are currently considering or are already actively engaged in responsible, impactful and sustainable investing.

“It’s a phenomenon that’s particularly prevalent with millennials, with eight out of 10 putting ESG credentials at the heart of their investment decision-making process.”

According to Green, while the Covid-19 pandemic has prompted a “growing collective awareness of mutual responsibility”, investors are also viewing it as a safe-haven asset class in the way gold or US government bonds were traditionally used. Recent research has shown that the majority of ESG investments have outperformed their non-sustainable counterparts this year and have experienced less volatility.

Green previously noted that the trend for ESG is likely to grow as millennials – who are statistically more likely to pursue responsible investment options – become the beneficiaries of an estimated $30 trillion intergenerational wealth transfer in the next few years.

Green adds: ““The data shows that the view held by traditionalists who claim ESG investments are ‘nice to have’ but not ‘a need to have,’ falls apart under scrutiny in the virus-driven global economic downturn.

“And whilst this short time frame is not determinative, those investors citing ESG’s safe-haven credentials are, for now at least, being proven right.”

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