The COVID-19 pandemic is turning out to be an inflection point for ESG investing. Sustainable investing firms are increasingly cropping up, looking to increase the growing number of impact investors eyeing opportunities amid the emerging investing trend.
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Sustainable Investing Growth
Impact investing firms are on the rise on the pandemic altering society values and how investors perceive and pursue investments. Gone are the days when investors and money managers made decisions based on returns promised. The pandemic has altered investment strategies, with most people looking to impact while also pursuing market returns significantly.
The investing approach has changed significantly. In the aftermath of the pandemic, most investment approaches focus on evaluating investments and companies’ environmental, social, and governance stance. It is no longer all about basing decisions on financial metrics, but the impact investment will have on society and the environment.
Similarly, impacting investing funds that focus purely on sustainable investments have cropped up. The funds see record capital inflows amid the market turmoil as impact investors seek to address environmental, social, and governance issues through investments.
A spike in the number of sustainable investing firms providing valuable data insights on ideal investments should continue to fuel sustainable investing post-COVID. However, it is the death and destruction left by the pandemic that should make investing for a cause a top priority for most people.
While the focus for the longest time has been on the environment when it comes to ESG investing, companies’ and investments’ social and governance attributes will influence investment decisions greatly.
“Investors are increasingly scrutinizing corporation’s responses to the pandemic focusing on how they are helping alleviate the pandemic fallout. Corporations that are helping societies bounce from the pandemic and pushing for ideal governance structure stand to be the biggest winners,” said Ekaterina Chernova, The Altruist League’s Managing partner.
Guaranteed Market Returns
Sustainable investing firms attracting capital inflows in the volume are not expected to slow anytime soon. Contrary to perception, sustainable investments have proved reliable in generating market returns marching traditional investments.
With investor momentum returning on the easing of COVID-19 fears, impact investing firms should continue to draw record inflows on investors pursuing the high impact investing returns at stake. Investors should continue to allocate capital towards sustainable investments to help address ESG issues in the aftermath of the pandemic while also eyeing high returns on offer.
Increased awareness of the economic benefits at stake with ESG investing should continue to spur sustainable investing post-covid-19.
Sustainable investing is also expected to surge post-COVID-19 as investors move to reward companies that responded to the crisis and helped societies bounce back. The impact of the COVID-19 shocks could have been far much high had some companies not come in and helped the worst affected.
Besides, companies that came up with solutions to the issues triggered by the pandemic are well-positioned to generate long-term value post-COVID-19.
“The urge to reward companies and corporations that rose to the occasion and helped alleviate the impact of the pandemic should help steer sustainable investing funds to new heights,” said Milos Maricic, The Altruist League President.
Rather than prioritize near-term profits, investors increasingly pay close watch to how corporations treat stakeholders, the community, and the environment.
Increased Focus on ESG Issues
The COVID-19 pandemic has elevated investors’ focus on ESG issues, something not expected to change but gather momentum post-COVID-19. Investors coming to terms with sustainable investing meaning are one reason ESG investing is poised to be the new norm that should see impact investing funds attract more capital inflows.
Human rights, employee wellbeing, environmental protection are key factors that investors consider before making key investment decisions in the new investment age. With such actions expected to have a long-lasting impact and influence, it is safe to say impact investors’ influence in the investment world can only grow.
Sustainability becoming a key aspect of governments’ recovery plans worldwide should help take ESG investing to greater heights. Governments are increasingly passing legislation designed to encourage and enhance sustainable investing. Likewise, they are investing in large-scale renewables, clean transport, and sustainable food, a development that should continue to support sustainable industries post COVID-19.