Europe’s wealthy warm to sustainable investments –study
Sustainable investments by Europe’s wealthiest investors has increased by nearly 60% over the past two years, compared to an 18% increase in overall European high net worth wealth over the same period.
The findings comes from a study by EuroSIF, the European Sustainable Investment Forum, on High Net Worth Individuals and Sustainable Investment, created with the support of Bank Sarasin.
Sustainable investments rose to €1.15trn compared to €729bn in 2009, reflecting persistent demand even in volatile markets, the study showed.
The growth mainly derives from inflow of new money from new clients (44%) and from existing clients deepening their commitment (37%).
Many HNWIs have been testing the merits of sustainable investment over the past few years, and are now expanding their use of sustainable investment strategies.
The report shows that the number of HNWIs with more than half of their assets attributed to sustainable investments has doubled over the last two years to reach 25% of respondents.
Positive screening strategies (such as best-in-class) and sustainability-themed investments are still the most used. The most popular sustainability themes are clean energy, water and green technology.
The study also covers impact investing for the first time. The survey shows that impact investing is common among HNWIs, with one out of every two respondents allocating assets to this type of investment.
While the most frequently mentioned motivation for impact investing by HNWIs is contribution to sustainable development, it is interesting to note that just behind this, alternative to philanthropy is mentioned as the second most important motivation.
Impact investing is actually more often seen as an alternative to philanthropy than other sustainable investment strategies, which 51% of respondents now consider as financial discipline.
Looking to the future, 87% respondents predicted a steady or even sharp increase in sustainable investments by HNWIs, especially as more and more view sustainable investment as a financial discipline to be integrated across all assets.
While perceptions of financial performance remain a barrier to sustainable investment adoption, those HNWIs who overcome their initial scepticism and try sustainable investment have a tendency to become increasingly devoted despite (or maybe because of) the continued market turmoil.