ESG will define investing in the 2020s and become the "new norm"

Investment advisory chief sees demand from both retail and institutional investors

ESG will define investing in the 2020s and become the "new norm"
Steve Randall

The acceleration of demand by investors for responsible and sustainable investing is changing the global investment landscape.

That’s according to Nigel Green, CEO of global financial services and advisory firm deVere Group, who says that environmental, social, and governance (ESG) investing is being fuelled by awareness of issues, helped by the efforts of Greta Thunberg and Extinction Rebellion.

“As a result, these issues now sit at the heart of the investment decision-making process amongst eight out of 10 millennials, according to a recent deVere survey. Some argue this is likely to be even higher for Generation Z,” Green said.

Green also referenced the news that Amazon founder and world’s richest man Jeff Bezos has committed $10 billion to help fight climate change. These high-profile moves further fuel the interest in responsible and sustainable investing.

“It is the trend that will define the 2020s – so much so that I’m confident that ESG will be the new norm in less than five years,” he added.

Asia to catch up
Currently, the US and Europe lead the charge in ESG investment, with 80% of the responsible-investing market, while Asia lags. But Green says this is set to change.

“By 2025, Asia will be home to 33 of the world’s 49 megacities, according to Global Data. The rise in the number of megacities – cities in which there are more than 10 million permanent residents – will be fuelled by millennials who seem to be fully on board with ESG,” he said.

And there will be an escalation of institutional capital in the ESG investing space.

“As the sector develops around the world, naturally, institutional investors will pile in, bringing with them their institutional capital and institutional expertise. This will act as a further catalyst for the ESG investment arena,” said Green.

Performance driven
While many investors are moving towards responsible investing for values-driven reasons, there is growing evidence of ESG investments producing better results too.

“It would not be unreasonable to assume that those companies that offer ESG-compliant investment could ultimately become some of the world’s most valuable companies.  Could they take over from the current big tech firms? I would not be surprised,” said Green. “The investment world is evolving perhaps more rapidly than it has in decades due to the rise and rise of responsible and impactful investing.”