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Five trends MSCI sees in the growth in sustainable investing

More financiers and lenders are set to include ESG criteria in their terms of capital, MSCI says.
The drive towards environmental, social and governance investing by corporate is likely to accelerate this year. Image: Supplied

MSCI, the world’s largest index provider, expects five trends to emerge this year that will drive environmental, social and governance investing over the new decade.

Investor interest in strategies that adhere to ESG standards has been rapidly growing. BlackRock Inc. unveiled a plan on Tuesday to put climate change issues at the center of its investment strategy for the roughly $7 trillion of assets it manages. A survey last year found that 95% of fund managers globally have adopted, or plan to adopt ESG criteria.

MSCI analysts including Linda-Eling Lee identified the following key themes for 2020 in a report earlier this month.

Five trends

  • Investors will increase the use of data to find large companies focusing on climate change innovation, rather than start-ups.
  • Financiers and lenders will find ways to include ESG criteria in their terms of capital.
  • Environmental factors will increasingly be taken into consideration in real estate investment, as local governments enact zero-carbon building standards.
  • Companies will need to balance job cuts due to automation with hiring workers with skills in new fields.
  • Stakeholders without proxy votes will join forces with shareholders to maximize their influence.

As an example of the kind of data investors might exploit to find climate change innovators, MSCI cites patent filings. The analysts note that the largest filers of low-carbon patents over the past five years include such corporate giants as Toyota Motor Corp., LG Chem Ltd. and General Electric Co.

“Companies with the most resources and large R&D budgets (more likely to file more patents overall) could also become the most capable of introducing efficient low-carbon solutions into the market,” the analysts said.

MSCI has launched multiple gauges focusing on ESG and climate change over the last few years. Earlier this month, It added 15 fixed-income ESG- and factor-based corporate bond indexes to its gauges “to meet investor demand”.

© 2020 Bloomberg L.P.

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Go woke – then broke.
Don’t know about you but I prefer my investments being put in places for maximum returns. Oil worked from 34$ a barrel to its current 65$ish a barrel….. Next up not too sure…. Could be certain metals, silver, gold…… I’d think of sustainable investments if they gave out the same returns…….. Feeling emotionally good isn’t one of them.

Not woke. History sides with this argument. Just focus on sustainability. There is a case to be made for large scale well run businesses that focus on future human needs to ensure their own sustainable profitability.

….it will take decades for the “Woke” idea to be globally initiated

Think for a moment of the aviation cargo industry and one small area of the globe
Louisville International Airport, one of the busiest cargo hubs in the US
UPS delivered 30 million packages in the 17 of the 21 days between thanks giving and Christmas. Now add Fedex, DHL and others from their prospective hubs and then add passenger flights at all airports ….all requiring on time departures and arrivals …using paraffin

Africa runs on diesl as does most of the Americas for haulage and then put India into the equation

Waiting for battery recharge in chop chop time is going to take a lot of time in the making of “history” and aviation is only one part

And here i thought that you only invest for growth.

U do – don’t let them fool you.

End of comments.

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