Environmental, social and governance (ESG) investing will be "the new norm in less than five years," says the CEO of one of the world's largest independent financial services and advisory organizations.
The bold prediction by Nigel Green, CEO and founder of the deVere Group, which operates in 100 countries, comes as Amazon boss Jeff Bezos commits $ 10 billion to combat climate change.
Mr. Green notes: “Responsible and impactful investing is already radically changing the global investment landscape.
"It is the trend that will define the 2020s, so much so that I am confident that environmental, social and governance (ESG) investment will be the new norm in less than five years."
He continues: "Growth in responsible investing will be driven by demand from retail and institutional investors."
“Global awareness has skyrocketed on environmental, social and governance considerations in the past 12-18 months, in part due to activism by the likes of Greta Thunberg, Extinction Rebellion and Jane Fonda, and due to increasing media coverage. on climate change and its serious effects.
“As a result, these issues are now at the heart of investment decision-making among eight in 10 millennials, according to a recent deVere survey. Some argue that this is likely to be even higher for Gen Z. "
This is of great importance because of the Great Wealth Transfer. "This will see an estimated $ 68 billion go from baby boomers to millennials in the next two decades, and could make them even richer than previous generations." This important wealth transfer is expected to begin in the next few years, "says the CEO of deVere.
Currently, the US and Europe lead the charge in ESG investing, with 80% of the responsible investing market. Asia is currently lagging behind. But, says Mr. Green, this could change and fuel demand will increase.
By 2025, Asia will be home to 33 of the world's 49 megacities, according to Global Data. The increase in the number of megacities, cities in which there are more than 10 million permanent residents, will be driven by millennials who seem to be in full agreement with ESG. "
“Additionally, investing in ESG will enable Asian governments to pursue some of their broader core policies. These include reducing workforces and weakening economic growth, migration, and global low-carbon transition threats.
"Demand for ESG-related strategies will become stratospheric as Asia goes full throttle in this direction, which it will."
Nigel Green goes on to say, “As the industry develops around the world, naturally, institutional investors will accumulate, bringing with them their institutional capital and institutional expertise. This will act as an additional catalyst for the ESG investment field. "
He goes on to say: “One of the most compelling reasons why responsible investing will be the defining trend in less than five years is due to the growing body of evidence and ongoing research that ESG-related strategies can consistently outperform the market. .
"It would not be unreasonable to assume that companies offering ESG-compliant investments could become some of the most valuable companies in the world." Could they take over today's big tech companies? It wouldn't surprise me. "
The deVere CEO concludes: "The world of investing is evolving perhaps faster than it has in decades due to the rise and fall of responsible and impactful investing."
By George Prior Twitter: @PriorConsults