2020 will go down in history as the year when Covid-19 accelerated the trend toward responsible investing. As sustainable enterprises outperformed their conventional counterparts, ESG integration became widely acknowledged as a factor in investment returns. As a result of an increase in sustainable issuance, more investors are entering the market, and the investable universe is growing. But what comes after that Adrie Heinsbroek discusses five themes that will impact responsible investment in 2021 and beyond in this interview, which is a part of our Responsible Investing Report 2020 series.

1) Clients will place a greater emphasis on funding initiatives that have a genuine impact.

“How can we make sure that the money we invest in the financial markets has a beneficial impact in the real world? In the coming years, this will be one of the questions that clients will use as a guide. They are now concentrating even more on the basic problems affecting people’s lives all across the world as a result of Covid-19. Green bonds, sustainable equity solutions, and other products that allow customers to directly impact societal or environmental change are experiencing rising demand. Additionally, investors are calling for greater openness regarding the impact of their holdings. This trend will only get worse, thus we are always enhancing our reporting and coordinating our data-processing procedures.

2) Investors will increasingly understand the need of taking prompt climate action

   “The 2021 United Nations Climate Change Conference will heighten the sense of urgency to address climate concerns. People’s eyes were opened to what is possible by images of clear blue skies during the pandemic’s early stages, therefore I believe there will be increased pressure on governments to intensify their efforts. It’s critical for investors to have a more comprehensive perspective on climate. Companies will encounter social difficulties related to job security and the skills gap as they make the shift to a more environmentally friendly business model. Long-term investors must continue to fund firms and offer assistance as they make difficult but essential decisions. If we want them to change, we also have to pay for the change In the future; we anticipate asset managers to change their rules to more fully account for this.

4) Investors will employ additional techniques to sway businesses.

ESG will become a crucial component of asset managers’ stewardship duties. Investors haven’t had much success using voting to affect ESG policy up until now, but this is about to change. We anticipate that the first businesses will allow shareholders to vote on their sustainability policies at the annual general meeting in the upcoming years. Companies will begin including a “say on climate” or “say on diversity” as a routine item on the AGM agenda, similar to the “say on pay.” Additionally, investors will have greater opportunities to engage in shaping ESG policy. As we assist businesses in making the shift to more sustainable business models, we will actively engage with them. We will also continue collaborating with society groups to promote change on particular concerns.

5) Regulatory action will alter the industry’s structure.

“Regulatory action will be a key impetus behind the industry’s growth. Investors will be required to demonstrate how they integrate ESG and how their investments contribute to sustainable development under the EU’s updated Sustainable Finance Action Plan. Initially, this tendency will mostly affect businesses in Europe, but as European investors demand greater transparency from their investments around the globe, it will also have an impact on businesses worldwide. The advantage to customers is that it will be simpler for them to compare products and learn more about how their money is being spent. Additionally, we anticipate asset managers to provide more investment solutions that enable customers to actively contribute to positive change. It’s possible for our posts to include links from our affiliate partners. Giving 10% of all profits to sustainable organizations that share our principles, helps support the site. Our ratings or opinions are unaffected by this, though. To learn more, please review our Terms and Conditions.

The idea of ESG investing trends is not new. For years, these tendencies have been lowering and raising the stock values of firms. On the other hand, over time, ESG investing trends are anticipated to have a considerable impact on the investment market. Explore my list to learn more about these trends. Most of us seek the anticipated returns when making investments, right? However, as public awareness of climate change, a sustainable environment, and ethical investing have grown over the past several years, things are beginning to change Investors are now increasingly considering ESG issues, or environmental, social, and governance factors. It is now established that ESG investments are on the rise. Simply put, traditional investment practices are giving way to ones that are more moral, sustainable, and responsible. And it won’t disappear any time soon either If anything, it is now entering the mainstream rather than a specialist market. To help you gain more understanding of the topic, let’s examine the top ESG investing trends for this year.

Top ESG Investing Trends to watch for as interest in ESG investments rises, new ESG investing trends are also beginning to emerge. Despite the fact that the market is still in its infancy and is still developing, some definite investment tendencies are beginning to emerge. Here are a few of the biggest sustainability trends we expect to see in the future years.

Notably, high-scale industries like energy production, the steel industry, and resource mining are responsible for the majority of carbon emissions in every nation. As a result, the concerned nations would need to demand that the world’s largest corporations cut their emissions since its inception; the pact has forced numerous businesses to seriously alter their policies or suffer the wrath of the government. Only 16% of IMI companies, according to research done last year, are in compliance with the rules set forth to attain the 2-degree Celsius global temperature target, despite five years of policy enforcement the Paris Agreement also established a second, more difficult goal of 1.5 degrees Celsius year. Only 5% of IMI enterprises worldwide have succeeded in doing this.

The number of investors eager to fight climate change is increasing every year, despite the fact that some may view these data as being unimportant. We can anticipate more businesses aligning with the ESG trend and opening additional investment trends for sustainability, which will add to the yearly increase in pressure on the government level. Imagine, however, that a large number of the companies in your portfolio plan to sign an alignment commitment this year. If that happens, you can experience a significant decline in investment returns until the companies make up their initial loss.

Biodiversity Restoration

At long last, individuals are beginning to take biodiversity seriously when discussing sustainable trends in the investing sector. Comparably, the global attention of investors and governments has been drawn to the biodiversity problem and its devastating repercussions on our ecosystem. Regarding the climate change crisis that was the same stance the Paris Agreement took.

The meeting is anticipated to take place again in May of this year, albeit it was postponed due to the global pandemic last year. Given that the conference is taking place at the beginning of the year, it will alter market trends for businesses that rely on the environment and natural resources. The policies are anticipated to focus on the grave health risks posed by declining biodiversity, which will have an immediate impact on the food, agricultural, and real estate sectors Depending on where they are located and the nature of their business, companies will need to develop thorough portfolios of their biodiversity footprint. As they take steps to lessen climate risk, this will help policymakers develop a strategy to revive biodiversity.

Following this pattern, investors could anticipate seeing more corporations present their whole portfolios to demonstrate how they engage specifically with sectors with strong diversity values.

Let’s use the agricultural sector as an example to help you gain some understanding. The sector relies heavily on biodiversity for fertile soil and seed preservation in order to grow food However, the sector is responsible for about 80% of global deforestation, which displaces thousands of species and affects biodiversity as a whole Investors should keep an eye out for favorable improvements in the major investment sectors that will undoubtedly result from a greater understanding of these facts and numbers.

Paying Attention to Mental Health as It Deserves

A year of chaotic schedules and perplexing reality were gifts from the global pandemic. Long lockdowns and social segregation rule profoundly altered our conception of urban life.

Naturally, this led to a sharp increase in the number of reported cases of anxiety and sadness. While 64% of US individuals experienced the typical symptoms of depression, 57% battled debilitating anxiety which resulted in a terrible conclusion. A second epidemic that the globe had to deal with as a result of the global pandemic’s effects was mental health. The idea became clearer when local mental health clinics received five times as many visitors and referrals as they did in the pre-COVID era I can imagine what you’re wondering: how will these figures affect future investment trends? There is an easy solution. Due to mental illnesses, work pressure, and a lack of emotional support, businesses are losing excellent personnel.

Unbelievably, 25% of all UK organizations have stated that at least one of their key team members left because of depression and emotional exhaustion. Therefore, businesses will continue to suffer enormous financial loss if they don’t give mental health the attention it needs in the upcoming years by fostering flexible work arrangements and outcome-based employment models, several companies are already addressing the problem. This can enable workers to find time for socializing, engaging in leisure activities, and pursuing their interests Businesses that successfully apply these strategies will experience a rise in productivity over the next few years, which will translate into more money for investors. However, organizations that continue to ignore these problems risk significant employee burnout and catastrophic financial losses in the near future.

How? Read on. Companies will need to improve how they treat their employees and maintain relationships with their supply chains in the coming years as a result of the pandemic pushing workplace operational issues into the spotlight.

The previous year’s similarly brought to light other impending problems like inequality, variable pay ratios, and executive payment discrepancies. Investors will need to ensure their portfolio companies contribute positively to these social challenges as people become more conscious of their rights.

Choosing a Variety of Foods

The fact that Gen-Z and millennial customers have forced food firms to change their business models is hardly breaking news. Wiser consumers have fueled both sectors’ explosive expansion by rising demand for vegan food options and plant-based protein substitutes.

Impossible Foods, a well-known manufacturer of plant-based meat substitutes, is a clear example. The company sells its products in more than 11,000 retail outlets across the US because the epidemic, lockdowns, and a lack of exercise influenced individuals to adopt healthier eating options that indicate a considerable increase in demand—nearly 77 times more than it was before the outbreak. Similar efforts are being made by well-known eateries like Taco Bell and McDonald’s to provide customers with a variety of meal options. While the latter is getting ready to launch McPlant, the first plant-based protein option on its menu, the former is anticipated to join with Beyond Meat later this year.

These data points and updates demonstrate an expanding trend in the food industry. The market for plant-based proteins is estimated to grow from its start-up value of $20 million. For investors wishing to diversify their portfolios, businesses that offer cutting-edge solutions and distinctive farming techniques to suit this need can prove to be very profitable investment opportunities How Do ESG Investments Work?

Here is a quick explanation of the ESG trends for those who may find the topic a little confusing. Environmental, social, and governance investing trends are generally referred to as ESG.

In a word, the genre includes all investment alternatives that seek to provide a stable income for the investor as well as favorable returns for global challenges. These trends encompass more than just ethical investing, which enables the investor to contribute to society and the environment Today, sustainable investing encompasses all investments based on social values or principles, such as ethical investing and social impact investing. To put it simply, current ESG investment trends indicate that it is extremely advantageous to simply be a decent person and

Companies all around the world are following ESG investment trends to stay relevant, from lowering their overall carbon footprint to collaborating with other businesses to manage resources effectively to assuring ethical labor employment Furthermore, a new study demonstrates that adopting sustainability trends has no negative effects on the performance of your assets. You have choices for where to put your ESG funds. Before engaging in anything, you must do your homework to become informed. Check out my list of ESG investment trends below if you’re worried about the environment and want to incorporate conservative practices in your company.