The US Senate’s decision to pass a $430 billion bill to fight climate change highlights the importance of ESG exposure for investors, says Nigel Green, founder of deVere Group.
The legislation, known as the Inflation Reduction Act, is aimed at reducing carbon emissions and shifting consumers to green energy. Following its success at the Senate, the bill will now go before the House of Representatives for a vote, which is expected to pass.
Green described the new bill as a “game-changer” for impact investing.
Green said: “It supports our prediction made at the very start of 2020 that ESG is the investment megatrend of the decade.
“The legislation, which is designed to reduce carbon emissions and move consumers to cleaner energy, amongst other factors such as cutting prescription drug costs for the elderly, will shift the world’s largest economy forever towards a greener future.”
Global ESG assets are on track to exceed $53 trillion by 2025 according to Bloomberg Intelligence, but Green forecasts this figure to be even higher in the wake of the new bill.
Green believes ESG assets deliver a legitimate diversification tool, allowing investors to seize opportunities and minimise risk during periods of higher volatility.
Green explained: “These investments cannot any longer be dismissed as woke or whimsical. In fact, I believe that every investment portfolio should have exposure to ESG if the investor is serious about building long-term wealth.”
In addition, global regulatory scrutiny of ESG investing and growing focus on corporate behaviour will help to drive ESG investing.
Green commented: “A seismic shift has occurred in corporate behaviour. How companies approach ESG factors and the value they place on them compared to other considerations has already changed forever
“Investors and the wider public need unambiguous information about how firms are contributing to greenhouse gas emissions, and how they are managing – or not – environmental challenges internally. This can only happen through compulsory disclosure in the public domain.”
He added: “The case for having ESG exposure in an investment portfolio is unquestionable. The three pillars of ESG are already embedded in the global economy as this is only set to grow in the years to come.
“Investors should be embracing the concept of having early advantage of this undeniable megatrend to create and grow their future wealth.”
“I believe that every investment portfolio should have exposure to ESG if the investor is serious about building long-term wealth”
In addition, global regulatory scrutiny of ESG investing and growing focus on corporate behaviour will help to drive ESG investing.
Green commented: “A seismic shift has occurred in corporate behaviour. How companies approach ESG factors and the value they place on them compared to other considerations has already changed forever
“Investors and the wider public need unambiguous information about how firms are contributing to greenhouse gas emissions, and how they are managing – or not – environmental challenges internally. This can only happen through compulsory disclosure in the public domain.”
He added: “The case for having ESG exposure in an investment portfolio is unquestionable. The three pillars of ESG are already embedded in the global economy as this is only set to grow in the years to come.
“Investors should be embracing the concept of having early advantage of this undeniable megatrend to create and grow their future wealth.”
