Terry Devitt, Head of Investment Advisory in Harvest was recently joined by Andre Kislev, Investment Manager with AEGON Asset Management for an ESG focused webinar for Harvest’s clients. Andre is Investment Manager with responsibility for the management of the Aegon Global Sustainable Equity Fund.
Andre and Terry discussed the factors driving the ESG agenda by examining what Andre titled the Structural Tailwinds behind ESG investment.
Structural Tailwinds
Sustainability is a structural tailwind fuelled by a combination of consumers, governments, businesses and investors.
Firstly, consumers are demanding sustainable products. According to research by Nielsen – a global consumer research firm – 66% of consumers are now willing to pay more for products associated with sustainable brands. The emphasis that consumers place on ESG will continue to grow over time – 40% of millennials list climate change as a top 5 concern, tied with finances and health.
Governments are responding to this consumer (and voter) sentiment with policy. In 2020, all new homes in California were required to include the installation of solar panels for new residential property builds.
The Irish Government’s Climate Action plan includes legislation targeting new home insulation standards to reduce the 10% of national greenhouse gas emissions attributable to Irish homes.
Examples like these are spread throughout the globe as Governments try to respond to the climate crisis.
It logically follows that Businesses in turn now have to adapt and evolve to the combination of consumer demand and the direction of government policy shift.
80% of S&P500 companies published sustainability reports in 2018, an increase of 20% from 2011. By 2030, 30% of annual global car sales are expected to be electric vehicles, a six-fold increase when compared to today’s levels.
Finally – and critically – investors are deploying capital. $51 billion flowed into sustainable investment funds during 2020, according to Morningstar. The Global Sustainable Investment Alliance estimated that there were over $1trillion in sustainably-themed investments across the globe in 2018.
So, what does all this mean for Irish Investors?
It is clear that companies are now trying to ‘pivot with purpose’ to ensure they not only survive; but build their reputations and grow consumer loyalty over the long-term.
As with any sustainability challenge, different industries will need to adopt their approaches to fit their unique skills, challenges and consumer base.
Investors too can look to adapt their own investment strategy and tailor their pension and investment portfolios, in order to take advantage of these structural tailwinds and to make their money matter.
As always, we are here to help. If sustainable investment is something you want to explore; our Investment Advisory team will provide you with straight forward advice and options to access ESG themed investment strategies.
Contact Harvest on 01 237 5500 or email justask@harvestfinancial.ie.
Source: Aegon Asset Management
