ESG will reshape global investment landscape
3 March 2020
Environmental, social and governance (ESG) investing will fundamentally reshape the global investment landscape, according to deVere Group chief executive Nigel Green.
Green believes ESG investing will be “the new norm in less than five years”, driven by demand from both retail and institutional investors.
He says: “Respectful and impactful investing is already fundamentally reshaping the global investment landscape. It is the trend that will define the 2020s – so much so that I’m confident that ESG investing will be the new norm in less than five years.”
According to Green, the growing interest in ESG is being fuelled in part by activism by the likes of Greta Thunberg, Extinction Rebellion and Jane Fonda, as well as growing media coverage of climate change and its effects.
A recent deVere survey found that eight out of 10 millennials now consider ESG as part of their investment decision-making process and this is only likely to increase with Generation Z going forward.
Green’s prediction followed an announcement by Amazon founder Jeff Bezos that he would commit $10 billion to fight climate change.
Currently, the US and Europe are leading the way when it comes to responsible investment, but Asia is set to increase its share of the market going forward. By 2025, Asia will be home to 33 of the world’s49 megacities as a result of a rise in the number of millennials.
Green argues that ESG investing will allow governments across Asia to realise some of their policies, including shrinking labour forces and weakening economic growth, migration and global low-carbon transition threats.
“Demand for ESG-related strategies will go stratospheric when Asia goes full throttle into this direction, which it will do. As the sector develops around the world, naturally, institutional investors will pile in, bringing with them their institutional capital and expertise. This will act as a further catalyst for the ESG investment arena,” he says.
ESG-related investment strategies have also been shown to regularly outperform the market.
Green concludes: “It would not be unreasonable to assume that those companies that offer ESG-compliant investment could ultimately become some of the world’s most valuable companies. The investment world is evolving perhaps more rapidly than it has in decades due to the rise and rise of responsible and impactful investing.”
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