Table Of Content
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Does ESG Investing prioritize values over returns?
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Do Investors talk about ESG but don’t invest in it?
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Is there a limited pool of assets to choose from?
Welcome to our ESG Investing: Every Myth Debunked blog, where we separate fact from fiction in the world of sustainable investing. Environmental, social, and governance (ESG) investing has gained significant traction in recent years. Investors recognize that sustainable business practices are critical to long-term success. However, as with any investment approach, there are many myths and misconceptions surrounding ESG investing. In this blog, we will address topics by providing factual evidence.
There is a saying, "Sustainable investing is good for values but unsuitable for value". It captures a common sentiment among consumers and investors alike. It's understandable why people might feel this way. When we shop for "sustainable" products like organic food, we often find that they come with a higher price tag than their conventional counterparts. This can lead us to associate "sustainable" with "more expensive". This can make it difficult to see the financial benefits of sustainable investing.
Contrary to popular belief, sustainable investing has consistently generated higher returns. Even during the pandemic-induced market sell-off in 2020, companies with strong ESG ratings outperformed the overall market.
Of course, past performance does not guarantee future returns. But studies suggest that it may be possible to do well by doing good.
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Sustainable investing is rapidly gaining traction as more investors seek to align their portfolios with their values. According to MSCI ESG research, Global ESG assets under management (AUM) have grown from $ 6 billion in 2015 to $150 billion in 2020.
The pool of sustainability-focused investments is vast and continues to expand. Investors have access to a diverse range of securities, asset classes, investment styles, and products that align with their sustainability objectives.
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Learn moreThis includes everything from stocks and bonds to alternative investments like private equity, venture capital, and real asset funds that prioritize sustainability. For instance, the Global Impact Investing Network reported that the impact investing market was valued at $715 billion in 2019, indicating the significant growth and potential of impact investing.
Conclusion
In conclusion, sustainable investing generates higher returns, has a vast pool of investment options, and is not just a passing fad or limited to millennials. The investment theory remains sound, and the Covid-19 pandemic has only accelerated its adoption.
