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Responsible investing goes mainstream

ESG investment
Photo by Chris Lawton on Unsplash

Toilet roll is worth more than oil right now. The pandemic has rendered it worthless, creating huge knock-on effects.

One area expanding as a result is Environmental, Social and Governance (ESG) investing. As money flees to escape the meteorite devastating industries reliant on fossil fuels ESG is being seen as a safer haven.

Nigel Green, the chief executive and founder of deVere Group, said: “At the start of 2020 I said that ESG investing would reshape the investment landscape in this new decade – but this phenomenon has been dramatically and irreversibly accelerated by the current situation.

“Even before the start of the Covid-19 pandemic, ESG investments often outperformed the market and had lower volatility over the long-run.  

“What is perhaps more impressive is that those investments with robust ESG credentials are still typically continuing to outperform throughout the coronavirus-triggered stock market crashes where major indices were extremely volatile, with some plummeting 20 per cent.”

He added: “The collapse of oil prices, which are likely not to rebound to pre-crisis levels in the short-term, has also helped drive ESG investments to the top of the performance charts and keep them there.

“This is because ESG funds circumnavigate oil stocks, so their performance will not be adversely impacted by the fall in share prices.”

Read more about the ways ESG creates value in this report by McKinsey.

 

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