More than a quarter of all clients are currently considering or are already actively engaged in responsible and sustainable investing, reveals one of the world’s largest independent financial advisory and fintech organisations. deVere Group 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.”
The CEO and founder, Nigel Green notes: “The fundamentals that ESG investing represent and champion have become more highly valued by investors than ever before in the last few months. Why? It is the Covid-19 effect, which has shifted the values of our society. 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.
These shifts in values and new economic realities have meant that companies’ responses to the public health emergency are being carefully scrutinised by investors in terms of their social and governance policies too. These include employees’ rights, consumer protections, board diversity and corporate transparency and stakeholder accountability. Firms which have responded well and which have strong ESG credentials are being rewarded by investors. Indeed, responsible investing funds secured historic levels of capital in the first quarter of 2020, despite the extreme jitters of traditional markets.”
But, says Mr Green,” it isn’t all about values and conscience. It’s also about profits.”
“ESG funds continue to out-perform the wider market and typically have lower volatility over the long-term. Naturally, investors are being increasingly attracted to the market-beating returns.”
Of the 26% finding, Mr Green 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 $30tn in the next few years – we can expect both retail and institutional investors to continue to pile into ESG.”
Last month, the deVere CEO said alongside technology, ESG investing is the “investment megatrend of the decade.” He noted: “It’s often said in investing that a ‘trend is a friend.’ A megatrend is likely, therefore, to be your best friend. “Megatrends – like the advancing technology and the search for purposeful profits through ESG funds – affect how we live every day, therefore they impact global markets and investor outcomes.”
Mr Green concludes: “There’s no doubt that once a ‘quirk’, ESG investing is becoming increasingly mainstream.”