More than half of investors plan to increase their ESG orientated investments in 2024, reveals a new global survey from deVere Group, one of the world’s largest independent financial advisory, asset management and fintech organisations.
The more than 800 clients polled from deVere Group, which writes business in more than 70 countries globally, illuminate a strong trend in the investment landscape: 56% of investors are gearing up to increase their allocations to Environmental, Social, and Governance (ESG) investments next year.
The findings are published as more than 70,000 political and business leaders, diplomats, financiers, and activists are flying to Dubai to talk about ways to avoid environmental disaster due to climate change at COP28, the annual international climate summit convened by the United Nations.
Of the survey, deVere Group CEO and founder Nigel Green commented: ‘The surge in ESG oriented investments is not just a statistical blip; it mirrors a fundamental shift in investor mindset.
‘People are increasingly drawn to ESG investments for a multitude of reasons, spanning ethical considerations to financial prudence.
‘Investors are increasingly aware that their capital can be a force for positive change. ESG investments allow them to channel funds towards companies that actively contribute to a sustainable and socially responsible future.
‘Far from being a sacrifice for moral high ground, ESG investments are proving to be financially astute.
‘Numerous studies suggest that companies with high ESG scores tend to outperform the market; and Reuters has reported that ESG positive funds outperformed globally over five years.’
Not only are companies with high ESG ratings often better positioned to weather market volatility and capitalise on emerging opportunities, ESG factors are increasingly recognised as critical elements in risk assessment.
‘Companies with robust environmental, social, and governance practices are better equipped to navigate regulatory changes, reputational risks, and operational challenges. Investors are, therefore, drawn to ESG investments as a means of fortifying their portfolios against unforeseen risks,’ he continued.
Governments and regulatory bodies worldwide are also embracing sustainability measures.
‘Unsurprisingly, investors are keen on future proofing their portfolios by aligning with these shifting regulatory requirements. ESG investments position portfolios to thrive in a world where sustainable practices are not just a preference but a regulatory imperative,’ added Nigel.
The deVere Group poll highlighting that in 2024 more than half of investors plan to increase their ESG focused holdings bucks the trend since over the last year.
For four consecutive quarters, the market has seen outflows from ESG funds in both the US and Europe, and elsewhere, amid rising energy prices and political backlash.
‘Awareness among investors about ESG has been increasing in recent years. But we should work harder to ensure it is consistently at the heart of investment decision making,’ said Nigel.
‘Climate change is a key defining issue of our time. It will be a critical determinant in long term financial returns, and the highest net economic benefit is reducing the impact of climate change.’
He concluded, ‘This survey reflects a broader shift in investor consciousness – a realisation that investing in a sustainable future is not only ethical, but also a savvy financial strategy.
‘As we navigate the complexities of the contemporary investment landscape and an intensifying climate crisis, ESG focused investments emerge not only as a path to profitability but as a commitment to building a better world.’