The coronavirus pandemic has accelerated the global interest in the environmental, social and governance (ESG) element of investing.
A report by global independent financial advisor deVere Group shows that 26% of its 80,000 clients were considering or were already actively engaged in responsible and sustainable investing in the past four weeks.
The trend is expected to grow further as the new generations, who are statistically more likely to seek responsible investment options, become larger investors.
The acronym ESG refers to the three central factors in measuring the sustainability and societal impact of an investment.
The regulations do not account for ethical investing, but provide a framework for risk analysis to help determine the future financial performance of a company.
“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,” said deVere’s chief executive and founder Nigel Green.
“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.”
Companies involved in sustainable investments have been voicing their long-term benefits in light of the pandemic.
“COVID-19 has provided us with real-life insight into the potential risks facing us as we transition to a more sustainable economy,” Jon Forster, a fund manager at investment trust Impax Environmental Market PLC (LON:IEM), said earlier this month.
The investment trust, managed by Impax Asset Management PLC (LON:IPX), invests in ‘pure-play’ companies which derive at least half of their revenue from environmental products or services in green markets.
“With the global economy under incredible strain, the world will look to those companies which emerge from the crisis in a strong position and the reasons why they have steered a course through,” Forster added.