2021

March 2021

Posted by Anton Murray Consulting on . Posted in 2021

The last year has taught us many things, one of which is that ESG-related investing is here to stay. Fund Managers, Superannuation Funds and Investment Managers have all hired people into sustainability and corporate governance roles if they didn’t already exist, and pressure from investors is getting stronger to ensure that investments are sustainable. In recent months we’ve seen individual customers demanding more of their Super Funds and a generational shift in attitude towards investment policies. As we prepare globally for a huge intergenerational transfer of wealth in the realm of $30 trillion, millennials are making their concerns heard, and wanting them to be reflected in the way they invest. Furthermore, late last year it was found that the Task Force on Climate-related Financial Disclosures (TCFD) framework, first released in 2017, had become the most common benchmark for companies reporting in high-risk sectors.

Citizens around the world are becoming more conscious of ESG-related issues, but that does not always translate to big business feeling or acting the same way. Demanding more of funds and the big firms they invest in, is a clever way of making changes to the way business is done. But this seismic shift in the way we collectively manage our investments makes sense for companies, too. Analysis by Fidelity International concluded that during the pandemic crisis of 2020, firms with high sustainability ratings outperformed those with lower ratings. The pandemic accelerated pressure on business regarding ethical investments, and as investment in sectors such as healthcare increased as a result of Covid-19, a shift took place in the way firms conducted business and the demands on these firms from their customers. Fidelity mentioned a specific focus on the ‘S’ of ESG. After Covid-19 swept the globe, companies needed to focus on their people and “the societal responsibility of businesses in a global crisis”. This ESG-focused trend is being seen globally. The NYU Stern Center for Sustainable Business recently reported that “we’ve seen an exponential increase in ESG and impact investing as evidence builds that business strategy focused on material ESG issues goes hand-in-hand with high-quality management teams and improved returns.”

So this is good news for the planet, our collective conscience and for business. So where to from here? UBS recently stated they believed to see “increased targeted investment in the areas of climate, resource scarcity, diversity, food and agriculture, and healthcare, among others, as society rebuilds post-pandemic and investors seek return opportunities through solutions to these large-scale challenges.” Super Funds are all over the financial services news of late, making big changes to the way they’re conducting business. Just last week Cbus Super awarded a $240 million mandate to UK group Impax Asset Management that will focus on sustainable investing opportunities and protecting the savings of its members from climate risk. Cbus has also pledged to reach net-zero emissions by 2050. This is the post-pandemic megatrend of 2021 and we expect to see this pressure on investment firms and funds to continue across the industry this year and beyond.

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