ESG investment market to double in 2021 as traders look to support businesses tackling climate change
The environmental, social and governance-based investment market is set to double this year with 12% of traders planning to move investments to ESG related funds in 2021, new data has shown.
Figures released by sustainability-driven investment house OnePlanetCapital revealed that a further 17% of people plan to move investments in 2022 or later to make a positive impact on the environment and invest in a collective future.
Three quarters of the 2,005 UK investors surveyed said investing in businesses that tackle climate change, or have a positive impact on the environment, is important to them.
Some 70% of investors said that they would avoid investing in a business with a negative societal, corporate governance or environmental impact, while 28% would consider building a riskier investment portfolio if the companies were committed to tackling climate change.
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A tenth of UK investors currently hold ESG investments. Out of the respondents who did not plan on moving investments to ESG this year or next, two-fifths (40%) are still considering moving them in the future.
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The 18 to 35 age bracket was most keen to make their portfolio more environmentally-friendly, with 77% saying it was important to them. This drops slightly for over 55s with 71% admitting the same.
On a regional level, ESG investors are more common in London, with one in five (18%) Londoners currently investing in sustainable investments. This is followed by 12% of those in the South East and South West, and then 10% or less for all other regions.
Matthew Jellicoe, co-founder of OnePlanetCapital, said: ‘We are hugely encouraged to see a real desire amongst the investor community to invest in ESG as we plot a course for the post-COVID economic recovery.
“ESG is highly regarded among investors. The world is waking up to both the positive and negative influences that businesses can have on the environment, and a company’s ESG credentials, or lack of, is not going unnoticed by investors.
He added: “In order to meet the goals set out in the Paris Climate Agreement, and the UK’s commitment to end its contribution to global warming by 2050, unprecedented change is required to our global economy. We are on the verge of a green industrial revolution and we have the opportunity here to emerge from Covid-19 with a much greener, and more sustainable economy.”
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It comes as businesses are urging chancellor Rishi Sunak to change the Enterprise Investment Scheme (EIS) to promote the creation of thousands of jobs in growth businesses.
The EIS allows financial backers to access income tax relief on a maximum of 30% of their investment, and is designed to boost enterprise and entrepreneurship.
It currently has a limit of £1m and is restricted to firms that have been operating for fewer than seven years and have fewer than 250 full-time employees.
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