Previously, investments did not prioritize the social or environmental impact of the projects. Today the landscape has changed, and thanks to the importance that governments, international organizations, and citizen groups have given to socio-environmental aspects, asset managers seek sustainable investments that also generate economic returns.
According to the asset management company Schroders, in the Global Investment Study 2018, 76% of investors claimed to be familiar with socially responsible investments. According to Forbes magazine, investment products with ASG criteria (Environmental, Social and Corporate Governance) total more than the US $20,000 billion under management worldwide. (We invite you to read the article What are ASG investments? )
These figures show that every day sustainable investments gain more ground and importance in the industry.
A report by MSCI (research company providing information for institutional investors), published at the end of 2018, revealed the five sustainable trends for 2021.
What are the sustainable investment trends for 2021?
Reduction of plastic waste: Companies are looking for alternatives to phase out plastic waste. For example, a plastic bag takes about 150 years to degrade. Therefore, eliminating this type of waste has become a goal of corporations. In 2018, China banned the import of waste, affecting European Union countries that sent some of its waste to this country.
Greater ASG regulation for investors: Not only are the issuing companies reinforcing information on ASG criteria, so are investors and asset managers, who must submit reports on the sustainability of their investments.
Climate change: The increase in temperature worldwide is causing tragedies, such as the defrosting of the poles. Therefore, strategies to eliminate carbon dioxide (CO2) emissions have become an investment trend.
Use of ASG data: Big Data has allowed the collection of millions of previously impossible data to capture. Today, asset managers and companies are using the data to learn more about sustainable investments and create funds for this business type. Through the use of Big Data, companies and asset managers access information on ASG criteria, which allows them to learn about this type of investment.
Leadership for ASG: Social networks and digital media allow the rapid dissemination of complaints against companies that affect the environment. Therefore, investors and asset management companies are looking for formulas to periodically rotate the board of directors and ensure transparency in ASG investments.
Corporate Social Impact for the future
Companies need to demonstrate the level of their business operations that leverage the environment and society. That’s why they have long self-touted their corporate social responsibility (CSR) efforts. Organizations vary their CSR, and it takes on several different forms. Some companies discuss community engagement and philanthropic efforts and strive to avoid access to their business operations. Companies that have highly deliberate social influence make efforts to concentrate on the way of their product’s entry into the market and the reason for their satisfaction with unmeet requirements. They also find effective strategies that can improve their working conditions or worker’s programs. They also emphasize the implemented action of sustainability in their supply chains.
It’s a fact that a change is underway with corporates believe more holistically about their influence. According to the definition of our customers, we work on material sustainability factors, measure, and report on their progress. Organizations enjoy sustainability improvements when social influence integrates into decision-making across executive compensation and management layers.
Corporations also look for the best practices for better understanding when it comes to sustainability performance and board governance—integrated corporate propriety social influence funds to generate their positive impact. Perhaps, the most prominent example of this act is Salesforce Venture. Corporate Social Impact is the best strategy to build value. That’s why many organizations have issued an annual CSI report rather than Corporate Social Responsibility (CSR). It would be best if you kept an eye on more advanced of these in the future for further progress.
In 2021, more companies and investors became aware of the importance of social and environmental issues in the financial industry. Therefore, the trend towards sustainable investments is increasing. Will you keep growing? Everything indicates yes. Therefore, if you are an investor, it is time that you evaluate your investments and enter the world of ASG investments.
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