Currently, few institutional investors still do without ESG investment strategies. For example, the proportion of major investors who invest sustainably has recently risen to a record level of 80%. That is a key finding of the sustainability study conducted annually by Union Investment. This year, 166 major investors with a capital volume in the trillions took part in the survey.
In this context, the investors’ knowledge of sustainable investment has grown. Five years ago, only 38% of those surveyed rated their level of knowledge as good or very good, whereas 60% now expressed the same opinion. There has also been a significant increase in the proportion of investors who are satisfied with their sustainable investments. In the past five years, it has risen from 43% to 56%.
More than half (56%) of all assets of sustainability users are invested according to ecological, social, ethical or governance criteria. As expected, the proportion of 75% is particularly high for churches and foundations. However, insurance companies also have a high value at 66%.
Read more about the ESG investment strategies and be the first to find out the most important economic news with the Born2Invest mobile app.
The exclusion criteria are dominant
Exclusion criteria predominate in the procedures for selecting sustainable investments. 92% of sustainability users use them. At the same time, however, three-quarters (74%) of those surveyed are against excluding companies from sustainable portfolios where a transformation to a sustainable company is planned but not yet completed.
“Investors are particularly interested in companies that are undergoing change. As an active and sustainable investor, it is important to find and support them in good time before the market discovers their potential,” said Alexander Schindler, member of the Management Board of Union Investment responsible for institutional client business.
The exclusion criteria are followed by negative screening at 72%, positive screening at 58% and the best-in-class approach at 55%, depending on the frequency of application. In contrast, only one third of investors (34%) use engagement, although it is precisely this active dialogue with the issuers of their own investments that 57% of those surveyed consider to be particularly effective. “Although the commitment as an active shareholder is costly, it is a very effective instrument for implementing the sustainability preferences of investors in a targeted and long-term manner. For this reason, it is expedient for institutional investors to use engagement approaches via outsourcing mandates.”
The sustainable investment strategies will increase in importance
The vast majority of investors assume that the importance of sustainable investment strategies will continue to grow in the future. 83% expect ESG investment volume to rise very strongly or sharply in the next twelve months, 14 percentage points more than in the previous year. Above all, 70% of those surveyed cite ongoing regulation as the main reason for a more intensive focus on sustainable investments. Just as many investors consider climate policy regulation to be fundamentally sensible and believe that sustainable investments can have a positive influence on the development of the global climate.
Investors in Germany agree on one important point: The sustainable restructuring of the economy will reshuffle the cards and bring new opportunities and risks for the capital markets. However, not all sectors and business fields offer the same opportunities. Major German investors see above-average potential for sustainable investments above all in the energy sector (95%) and in the transport and mobility sector (93%).
The high level of investor satisfaction with ESG investments can also be attributed to their performance
Only two out of 130 respondents who invest sustainably and conventionally stated that the return on their sustainable investment was worse than that of conventional portfolios. At twelve percent, however, the return was significantly better.
With regard to the risk of their sustainable portfolio, 25% see clear advantages here. Around half of the investors said that the sustainable and conventional portfolios performed similarly in terms of performance (59%) and risk (46%). “This confirms the findings of various studies, which generally find no yield disadvantages with regard to sustainable strategies and even see slight advantages in ESG strategies. Even in the current corona crisis, sustainability-oriented strategies seem to have done somewhat better than conventional approaches so far,” Schindler noted.
DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.
This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.
First published in INSTITUTIONAL Money.com, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.
API fintech TrueLayer cashes in on new $70m round lead by Addition
The injection of new capital will be used to accelerate the global expansion and development of premium open banking services,...
Canopy Growth bought out its competition to consolidate leadership
Canopy Growth announced the acquisition of one of its main rivals, Supreme Cannabis, in a transaction valued at $345.6 million...
Aortyx closes €1.6 million financing round to initiate clinical trials
Aortyx, a Barcelona-based startup specialized in devices to treat vascular problems.closes $1.9 million (€1.6 million) financing round. The company, which...
Third successful million-dollar campaign in three months for Walliance
The real estate equity crowdfunding campaign for "Treviso G Park" project raises $2.4 million (€2 million) bringing Walliance's Q1 2021...
US crypto exchange Coinbase had a record quarter before IPO
The US crypto exchange Coinbase has presented brilliant financial figures for the 1st quarter of 2021. This further fuels expectations...
Business7 days ago
Why Elon Musk Should Consider Precious Metals-Backed Currency
Cannabis7 days ago
Senators in Mexico seek agreement on cannabis regulation changes
Featured7 days ago
A close look at the huge margin debt and the Archego Capital collapse
Biotech7 days ago
Boehringer Ingelheim increases revenues by 3% in 2020 to €19.57 billion