ESG takes centre stage
While the Covid-19 crisis unfolds, responsible investors need to step up their game to help reshape the recovery. Here we look at the growth behind ESG investing, why it is so important now and what to expect from companies going forward.
It is estimated that by 2018 more than $30tn
(£23tn) is invested in sustainable strategies.
How did we get there?
Secondly, the Earth has changed
Our planet has changed in a significant way. Some of these changes are the result of an increase in greenhouse gas emissions, which could rise to levels not seen since the dinosaurs disappeared.
The Covid-19 crisis in 2020 has changed our view of the world. The impact of the pandemic has been very dramatic in many areas of economies and societies, affecting sectors such as healthcare and infrastructure.
While most of the challenges around ESG remain the same, investors now have an even bigger role to play to help companies respond to the crisis. So, what are some of the renewed areas of focus?
What about today?
How did we get here? The backdrop.
Sources: Worldometer, United Nations Population Fund BP, Statistical Review 2019, World Bank Blogs International Energy Agency, Planète Energies
Source: Global Sustainable Investment Alliance
Source: Global Carbon Project
Other trends such as ocean acidification and deforestation are all interconnected. This is why academics describe sustainability as a ‘wicked’ issue without a one-size-fits-all solution.
Our economy needs to be circular to really be sustainable. Historically the world has operated on a 'take, make and dispose' model, but now we need to think about the real cost of sourcing raw materials or disposing of goods.
The shifting economy
Sources: PRI, M&G
From the increasing attention to climate change to the surge in the world population (we are on track to be eight billion by 2025), sustainability has become a staple among many investors.
Source: UN estimate
The world has changed drastically in the past 150 years. First of all, what are the new socio-economic trends?
Source: WWF report in 2019
Contribution of the natural world to our global economy is $125tn a year – this is higher than the global GDP