ESG: A megatrend here to stay

New research suggests environmental, social and governance (ESG) investing is set to continue gaining prominence, with ESG issues increasingly converging into mainstream investment strategies.

A growing trend

The last few years have seen a substantial rise in ESG investing around the globe, driven by an increasing desire for investors to know both where their money is going and that it is having a positive impact. According to a survey conducted by CoreData, three-quarters of UK professional fund buyers now expect all investment funds to incorporate ESG factors within their strategies during the next five years.

Pandemic has raised awareness

Another finding suggests the pandemic has accelerated this momentum, with eight out of ten UK fund investors saying they increased their focus on ESG in the wake of COVID-19.

Commenting on the survey, founder and principal of CoreData, Andrew Inwood, said, “The pandemic has helped reset humanity’s moral compass and encouraged people to favour investments aligned with their beliefs and values.”

COP26 to generate interest

Research3 has shown that environmental issues top the list of ESG concerns, particularly pollution and waste, and climate change. The trend towards ESG investing is therefore expected to receive a further boost in the run-up to the 26th UN Climate Change Conference of the Parties (COP26) which the UK is hosting in Glasgow this November.

The election of President Biden and his commitment to an ambitious new climate regime can also be expected to raise the profile of both COP26 and climate change issues in general. And this, in turn, will bring ESG investing into even sharper focus during 2021.

3BlackRock, 2020

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