BERKELEY – Investors worldwide are increasingly seeking investment opportunities that promise to bring environmental and social benefits, in addition to market rates of return. If this trend continues, with the advancement of environmental or social objectives enhancing an investment’s value, it will strengthen the commitment to sustainability that is already gaining momentum among businesses around the world.
Last year, one out of every six dollars of assets under professional management in the United States – a total of $6.6 trillion – was allocated toward some form of sustainable investment, especially public equities.
Some 1,260 companies, managing $45 trillion worth of assets, are signatories of the United Nations’ “principles for responsible investment,” which recognize environmental, social, and governance (ESG) factors – and thus the long-term health and stability of companies and markets – as critical to investors. One signatory, CalPERS, one of the world’s largest institutional investors, has gone a step further: it will require all of its investment managers to identify and integrate ESG factors into their decisions – a bold move that could transform capital markets.
The number of companies issuing sustainability reports has grown from fewer than 30 in the early 1990s to more than 7,000 in 2014. And, in a recent Morgan Stanley survey, 71% of respondents stated that they are interested in sustainable investing.