More than a quarter of all clients are currently considering or are already actively engaged in responsible and sustainable investing. That’s according to a recent study by deVere Group, an independent financial advisory and fintech organization.
The company reports that since the beginning of May, 26% of clients around the world are eyeing exposure to or are now part of the environmental, social and governance (ESG) “megatrend.”
This illustrates how ESG investing has become more highly valued by investors than ever before in the last few months. According to deVere, the global pandemic has brought into laser-like focus how the health of our planet affects human health which, in turn, affects the way we all live and work.
The firm says that these shifts in values and new economic realities have meant that companies’ responses to the public health emergency are being carefully scrutinized by investors in terms of their social and governance policies, too. These include employees’ rights, consumer protections, board diversity, corporate transparency, and stakeholder accountability.
Firms that have responded well and that have strong ESG credentials are being rewarded by investors. The research found that responsible investing funds secured historic levels of capital in the first quarter of 2020, despite the extreme jitters of traditional markets.
deVere research found that ESG funds continue to outperform the wider market and typically have lower volatility over the long-term, which helps attract investors.
Of the 26% finding, deVere says that this figure is only set to grow. “As millennials, who are statistically more likely to seek responsible investment options, become the major beneficiaries of the largest intergenerational transfer of wealth — an estimated $30 trillion in the next few years — we can expect both retail and institutional investors to continue to pile into ESG,” said company CEO and founder Nigel Green.
Green refers to ESG investing as the investment megatrend of the decade. “There’s no doubt that once a ‘quirk,’ ESG investing is becoming increasingly mainstream,” he said.
A majority of asset owners globally actively integrate ESG factors into their investment process, according to a new survey published today by the Morgan Stanley Institute for Sustainable Investing and Morgan Stanley Investment Management.
The survey polled 110 public and corporate pensions, endowments, foundations, sovereign wealth entities, insurance companies, and other large asset owners worldwide, 92% of which had total assets over $1 billion.