Sustainable investing at “an inflection point” says UBS

Written by Rebecca O'Connor on 21st Aug 2018

Sustainable investing has moved from the niche to a new mainstream “standard” for all investing, according to a new study.

The study from UBS Asset Management states that sustainable investment is now at an “inflection point”, enabled by the increased availability and quality of non-financial data which could have an impact on the future value and performance of companies.

Sustainable assets under management increased from $14 trillion in 2012 to $22 trillion in 2016, according to the Global Sustainable Investment Alliance.

Meanwhile separate research from Client Earth, the environmental campaign group of lawyers, found that:

  • More than eight in ten people believe that fossil fuel companies who knew about climate change early on and continue to lobby against taking action should be responsible in some way for the costs of major weather events (83%);
  • Three-fifths would be interested in a financial institution, such as a bank account or pension fund, that considers the climate change impacts of the companies it invests in (62%).
  • Almost two-thirds thought investing in fossil fuel companies was risky long-term and more than half thought such companies could not be trusted to change their business model;
  • More than two thirds were in favour of breaking up the Big Six’s market share to allow smaller, cleaner, and locally owned energy systems to develop (68%); and,
  • Almost three quarters of consumers would be interested in joining a community energy scheme if the government made it easier (71%), and individuals keen to install their own solar panels (62%) and home energy storage (60%).

James Thornton, chief executive of ClientEarth, said: “Our survey revealed that the financial world has much work to do if they are to match consumers’ wishes. The British public said quite clearly they want their banks and pension funds to avoid investments in fossil fuel projects, and were surprised to learn that this might be the case.”

While pension funds and individuals get with the sustainability programme, it seems insurers are still lagging behind. A report on the insurance sector from Vigeo Eiris, the sustainability research group, which was also published this week, awarded an average overall score of 29.7 to 159 companies in the Insurance sector, on a scale of 0 to 100. The sector’s performance remains unchanged since 2016 and it ranks 23rd out of 39 business sectors analysed.

If you haven’t seen this video before – not only are you in for a treat, you are also in for a neat summary of what has happened to the sustainable investment industry in the last year.

Want to invest your ISA in ethical and sustainable funds only? Who doesn’t? Download the Good Investment Review, from 3D Investing and Good With Money

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