Does ESG investment deliver higher returns? Investors acknowledge that resolving environmental issues is one of the decade.
Most difficult challenges. Hence, flows into ESG funds more than doubled between 2020 and 2021.
Research perform for asset manager Fidelity analyse the performance of a variety of ESG investments around the world between 1970 and 2014 and discovered that half of them beat the market ― only perform poorly.
According to BlackRock, the world’s largest asset management firm, during the peak of the COVID-19 pandemic in 2020, more than eight out of ten sustainable investment funds outperformed non-ESG-based share portfolios.
This trend is expected to continue in the following years, according to a new analysis from Broadridge Financial Solutions which estimates that ESG assets would reach US$30tn by 2030.
Today’s investors anticipate more in terms of return and returns. They expect that these funds will deliver a competitive return. They want to ensure that businesses will live up to their promises.
So far, assessing the performance of these funds has been simpler than estimating the carbon dioxide emissions they are reducing. Morningstar discover that ESG funds had lower volatility while delivering a good return on equity.
ESG and sustainable investing are project to increase at a rapid pace in the future. By 2025, it is that around 33% of all global assets under management (not just local) would have ESG mandates.
Between 2018 and 2036, the industry is predict to grow 43%, leading to significant global assets of US$160tn. The International Finance Corporation estimates almost US$23tn in investment opportunities in growing markets between now and 2030 as a result of the Paris Agreement, which was adopted in 2015.
In recent years, the sector has been chastis for greenwashing, and investors have begun to seek more valuable insights into whether businesses were advancing ESG principles.
Investors now demand specifics. On how businesses are decreasing their carbon footprint and enhancing diverse and inclusive hiring procedures, for instance.