Sustainable investing in the new normal
Sustainable investing is becoming part of business today as businesses face environmental and social challenges. Addressing these sustainable challenges in global markets allows for financial advisors and investors who are actively seeking places to invest their money that support their sustainable values.
Refinitiv provides a rich source of environmental, social and governance (ESG) research data, covering 80% of global market cap, spanning 76 countries. However, only 35% of companies have specific reduction targets around their emissions, meaning many are setting up policies without backing up their intentions.
Sustainable investing has become more important now more than ever. In the world of new normal, investors will look for their portfolio companies to integrate ESG objectives.
Why sustainable investing is growing?
The reason behind the high interest in sustainable investing starts with climate change that was most discussed theme this year in Davos. From a corporate and market perspective, that shows more opportunities for tech companies. Some of the companies that showed interest in green investing are Starbucks and Salesforce.
According to Barron’s, Salesforce.com announced it would plant a trillion trees over the next 10 years. Starbucks (SBUX) committed to a 50% reduction in emissions. That said, big companies are willing to speak loudly about climate risks in 2020. The fact that climate change was number on the topic at Davos, says a lot about how important this issue really is.
The climate solutions market could double from $1 trillion a year now to $2 trillion a year by 2025, says BofA’s Israel, including renewables, electric vehicles, batteries, biofuels, and circular economy plays.
Technology is changing what we demand and how we consume. Whether it’s driverless cars, smart metering in utilities, renewables in oil and gas, or online sales in retail, most sectors of the economy are seeing paradigm shifts in the way business is conducted.
Together these are the reasons why sustainable investing is rapidly growing. Therefore, sustainable investing has become more than a trend, it’s become the new normal.
In today’s environment where change and uncertainty seem to be the only constants, more and more investors are taking a long-term view and choosing to put their money into companies that generate a return and act responsibly. ESG investing is already reshaping global markets.
To sum up, ESG investing is growing and it is becoming part of business today. In the recent article, we discussed the ESG legislation requirements.
Registered data on ESG investing growth showed a good path for sustainable investors and could serve as a proof point of how investors can trust ESG funds in turbulent markets.
There is no question about ESG becoming an integral part of doing business. If you are looking to integrate ESG criteria to your business strategy, we can advise you on devising the ESG strategy and communicating it to various stakeholders.