PHOTO
Investors are increasingly looking at climate change when making investment decisions and are willing to sacrifice higher returns for environmental, social and governance (ESG) goals, according to a new Deutsche Bank study.
The Chief Investment Office (CIO) survey, which included 849 of the bank’s clients, found that more than half of investors (53%) now regard climate change as the most significant factor affecting their decisions, up from 47% last year.
Climate change earned the highest votes as a top priority for investors, ranking higher above ocean pollution (15%), land degradation (21%) and biodiversity loss (7%).
More private and business clients (78%) are also worried about the global economic impact of climate change, up from 74% last year.
ESG investing
The same number of investors (78%) also agreed that their investments should have a positive impact on the world, up three percentage points on last year’s 75%. Investors are now willing to invest their money in schemes with higher-rated ESG investments, even if the potential return is lower.
“What is most interesting about this year’s findings is that client expectations of ESG are growing, not diminishing, even as the ESG universe reorientates through debate and development, and while volatility persists in capital markets,” said Markus Müller.
“[The study] shows us that investors have significant expectations for real world returns, beyond financial returns.”
Addressing climate change
As to how climate change can be addressed, 51% of investors are either very optimistic or optimistic that technological innovation would be a solution, while 47% have faith in the power of nature-based solution.
Among the investors surveyed, millennials seem to be more aware of underlying ESG issues compared to those in other age groups.
Almost one in four among millennials said that they have a sophisticated knowledge of the concept of a net-zero emissions economy. They are also more knowledgeable and more optimistic about solutions to the climate change crisis.
(Writing by Cleofe Maceda; editing by Seban Scaria)
