“Stars are Aligned” for Sustainable Investment Growth

Dutch asset manager Robeco has predicted sustainable investing will become a “larger and more intense” presence, in the second edition of its ‘Big Book of Sustainable Investing’. The firm cited three supporting factors: the increasing financial relevance of sustainability issues for companies and investors; rising expectations of the finance sector from clients and wider society; and the introduction of regulation for financing sustainable growth, first in Europe, but increasingly around the world. “It seems the stars are aligned, as corporates, investors, regulators and society are clearly increasing focus on ESG,” it said. Noting anti-ESG sentiment in the US, Robeco said the Securities and Exchange Commission’s planned climate risk disclosure rule would provide information on material risks to business activities. “The backlash has temporarily postponed but not derailed this important piece of climate regulation,” it added. The book highlighted trends in sustainable investing that had emerged since the first edition was released five years ago, notably net zero targets and Paris-aligned investing, also highlighting the growing use of UN Sustainable Development Goals to channel investment to “across a comprehensive range of critical environmental and social goals”. Robeco also predicted a continuing evolution of sustainable investing practices and methodologies informed by changing approaches to materiality. “The number and nature of sustainability risks are also growing larger to encompass the risk to and impact of business activities on climate change, biodiversity and human rights. In the wake of these changes, companies and investors must grapple with devising new metrics, measurement frameworks, and reporting regimes without clear and agreed upon standards,” it said.

 

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