Guest post by Ben Hiorns
The world is in a bit of a funny place at the moment and we’re currently sitting on the precipice of a major sea change. Covid has blown in like a tornado for many of us and significantly altered the way we are living our lives.
What it hasn’t changed, however, is the fact that, if we carry on abusing the world the way we have been doing for decades, there might not be much of a world left to leave our grandchildren. This is something that has been brought into sharp relief by the pandemic and as such, now might be the ideal time to invest in something sustainable.
Not only are sustainable assets more popular today than they ever have been but top asset managers from Nucleus Commercial Finance believe they have several other major benefits too.
It’s the future
There is a massive shift under way and sustainable investing is at the forefront of that change. According to the Global Sustainable Investment Alliance, at the start of 2016, sustainable investments constituted 26 per cent of assets, up from under 22 per cent just four years earlier. Today, that percentage is even higher and it will only increase as more investment managers start to discover what a bright future is ahead.
Fund companies are getting in on the action
Twenty three new sustainable funds were launched in the first half of 2020 alone and in 2019, Morningstar found that almost 500 funds added ESG (environmental, social and governance) criteria to their prospectuses.
Millennials love it
As millennials get older and start to accumulate more wealth, investors need to begin pivoting their strategies away from the tired old norms. Passive investment might have been all the rage in the 80s and 90s but more socially conscious millennials want to feel a part of their investments and that they are doing something worthwhile with them. Indeed, it’s estimated that millennials are almost twice as likely to invest in companies with positive societal or environmental outcomes.
Risk management gains
To say 2020 has been a bit of an uncertain year would be the mother of all understatements and in such a climate, risk management is key. The great thing about sustainable companies is that they are far less likely to be disputed by the PR nightmares, boycotts and labour problems that can often affect bottomline earnings on other investments. Indeed, a majority of advisors (70%) in Nuveen’s 5th annual responsible investing survey “say superior risk management is the top reason why their high-net-worth clients invest in responsible investments.”
It will make you feel good
As investors, we rarely get an opportunity to look at ourselves in the mirror and feel like we’ve helped achieve something genuinely ‘good’. This could be that opportunity!