KPMG Outlook 2023: ESG and Impact Investing More Important Than Ever
Sustainability is seen as a key strategic growth theme for this year. Providers of financial services can adapt the focus of their offerings to the growing trend as part of a sustainable corporate strategy. This is because there is a great willingness to invest in ESG assets, especially in Germany. In this country, more than half of CEOs intend to invest at least 10% of their revenue in sustainable programs.
Through tokenization technology, any project imaginable can gain access to the capital market. This brings new business and, for many investors, new opportunities to diversify their capital investments. The topic of sustainability is currently moving the financial markets like no other. In the field of Environmental, Social, Governance (ESG), the UN and the EU are addressing the challenges of finding responsible and sustainable strategies in difficult market situations, and how investors can make a valuable contribution to greater sustainability.
Read more about the latest KPMG report on ESG and discover the latest business news of the day with the born2Invest mobile app.
According to KPMG, CEOs increasingly agree that ESG initiatives optimize customer relationships
That is true not only in terms of becoming more sustainable as a company but also in bringing ESG issues to the financial world. This is the intention of the UN, which is drafting a total of 17 sustainability goals. Under ESG, requirements are formulated for sustainability, social responsibility, and governance, i.e. having a say.
The standards can also be summarized under the technical term Sustainable Finance. Like the other Sustainable Development Goals, they are to be implemented or achieved globally by 2030. For the financial markets, this means responding more strongly to the needs of investors in the future, because they want to include sustainable investments in their portfolios.
82% of CEOs in Germany are prepared to divest a profitable part of the business if it damages the company’s reputation.
Sustainability is seen as a key strategic growth theme for this year. Providers of financial services have the opportunity to adapt the focus of their offerings to the growing trend as part of a sustainable corporate strategy. This is because there is a great willingness to invest in ESG assets, especially in Germany. In this country, more than half of CEOs intend to invest at least 10% of their revenue in sustainable programs, according to the KPMG CEO Outlook 2022.
As the survey shows, inflation concerns and geopolitical uncertainties in German companies are currently overshadowing other challenges such as ESG or digital transformation. However, the latter two topics remain the most important trends in the long term.
ESG aspects become value drivers
The foundation of a robust portfolio this year is sustainability. In addition to ESG, technology is also one of the megatrends. But in addition to ESG criteria, investors should also pay attention to what kind of companies are supported.
74% of CEOs of German companies confirm increasing pressure from their stakeholders with regard to ESG reporting.
ESG has long ceased to be a pure compliance issue, KPMG emphasizes. It is now a matter of linking ESG and digital strategies and embedding them in corporate strategies. In the long term, ESG and digital transformation remain the most important trends.
Impact investing is not just about the measurable impact on the environment. It is also about how the company is positioning itself financially, what its plans are for the future, and what measures are being taken to inspire investors.
When it comes to ESG, there is a growing recognition that there are not only risks and high demands but also great opportunities for future growth. And this is exactly what investors can benefit from this year in particular.
Impact investing brings benefits to the portfolio
According to Janus Henderson Investors, they are convinced that a consistent application of ESG analysis can bring higher risk-adjusted returns. According to the analysts, ESG criteria reduce investment risk and add value. They go on to say that a more forward-looking, dynamic approach is needed when making investment decisions.
To increase pressure on providers and companies to develop responsible projects, investors should invest more in sustainable assets. As demand increases, so will supply. The world is facing major sustainability challenges. Overcoming these will require investors to look boldly to the future and invest strategically.
(Featured image by geralt via Pixabay)
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First published in finanzen.net, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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