Investments with strong environmental, social, and governance (ESG) credentials are now seen as safe havens by the majority of high-net-worth investors, new research suggests.
The deVere Group found that 56% of its clients who look to include ESG-orientated investments in their portfolios believe that they offer financial protection in times of uncertainty.
The findings also show that more than a quarter of clients are currently considering, or are already actively engaged, in responsible, impactful and sustainable investing.
This is particularly true of millennials with eight out of 10 putting ESG credentials at the heart of their investment decision-making process.
“All the latest research underscores that the majority of ESG investments have outperformed their non-sustainable counterparts this year and have had lower volatility,”, said deVere Group CEO Nigel Green.
“This cannot be ignored by retail – and increasingly institutional – investors who are looking for resilience in these highly unusual times of this new era.”
The deVere Group is an advisor of specialist global financial solutions to international, local mass affluent, and high-net-worth clients.
It explained how the ESG trend is only likely to intensify as millennials receive the largest intergenerational transfer of wealth – an estimated $30tn (£24trn) – over the next few years.
This comes after separate research also found that the majority of private investors are now interested in ESG factors, and that many think these are more important than returns.
“The data shows that the view held by traditionalists who claim ESG investments are ‘nice to have’ but not ‘a need to have,’ falls apart under scrutiny in the virus-driven global economic downturn,” Green continued.
“And whilst this short time frame is not determinative, those investors citing ESG’s safe-haven credentials are, for now at least, being proven right.”
Author: Chris Seekings
Image credit: iStock