(Credit: Pixabay)The coronavirus pandemic and its economic fallout will trigger a “skyward surge” in sustainable, responsible and impactful investing over the next 12 months, according to deVere Group, one of the world’s largest independent financial advisory organizations.
The prediction comes following Bloomberg analysis that revealed during the covid-19 crisis so far, the average ESG fund fell by just half the decrease registered by the S&P 500 Index over the same period.
According to Nigel Green, CEO of deVere Group, sustainable, responsible and impactful investing over the next 12 months will surge for three key reasons.
First, research has shown that investments that score well in terms of ESG credentials often outperform the market and have lower volatility over the long-run. Second, the coronavirus pandemic has underscored the vulnerability and fragility of societies and the planet, which indicates that in order to thrive, companies will need to operate with a nod from the “wider court of public approval,” Green says.
Finally, Green says, demographic shifts will support the trend. Millennials - those who were born in the time period ranging from the early 1980s to the mid-1990s and early 2000s - cite ESG investing as their top priority when considering investment opportunities. “This is crucial because the biggest-ever generational transfer of wealth - likely to be around $30 trillion - from baby boomers to millennials will take place in the next few years.”
In January, deVere Group carried out a global survey that revealed 77% of millennials said that Environmental, Social and Governance (ESG) investing was their top priority when considering investment opportunities.
This survey highlighted that whilst traditional factors - such as anticipated returns (10%), past performance (7%), risk tolerance (4%) and tactical allocation (2%) - are important factors in millennial respondents’ investment decision-making, they are no longer enough by themselves.
Nigel Green concludes: “ESG investing was already going to reshape the investment landscape in this new decade – but the coronavirus will quicken the pace of this reshaping.”
