Sustainable Investment?
Climate change is the greatest challenge of our times, and this is an opportunity to build a new economic model.
Sustainable investment covers a range of premises, notably in green energy projects or investment in companies that demonstrate social or behavioural values, such as social inclusion
According to the “European Green Deal”, sustainable financing plays a key role in the global transition to reduce net greenhouse gas emissions. The Deal foresees the transformation of the EU into a modern, resource efficient and more competitive economy, ensuring that net greenhouse gas emissions are zero by 2050.
An analysis made by BlackRock, one of the world’s largest asset management firms – found that during the peak of the COVID-19 pandemic in 2020, more than eight out of ten sustainable investment funds outperformed, and clearly outperformed equity portfolios not based on ESG criteria.
And why do “ESG Friendly” investments currently provide higher returns than conventional investments?
One of the factors is undoubtedly the change in mindset of potential customers. According to a study conducted by 5WPR (Annual Consumer Culture Report) two thirds of consumers prefer to buy from companies that share the same values as theirs, however, if we look at the Millennial generation (ages 18 to 34) – this percentage rises to 83%.
An increment can be expected in investments in projects embracing sustainability, following the current trends of new generations breaking the barrier with new habits. Carbon intensive industries, such as coal, oil and gas, currently present greater difficulty, and costs relative to raising their capital, as the main creditors show more and more resistance in joint negotiations.
In contrast, sustainable businesses are more likely to succeed today, while also contributing to cost savings and reduced resource use. According to data shared by Reuters, in 2021, companiesabsorbed a record $859 billion in sustainable investments globally, including $481.8 billion in green bonds that raised capital for specific environmental projects.
According to Bloomberg, the total value of ESG investments points to a value of $53 trillion by 2025, representing more than a third of all global investments.
Thus, we believe that the financial system can contribute widely to a greener and better future for us all.
