ESG Investing Is a New Reality That Will Only Get Bigger

As interest in environmental, social, and governance investing gains in popularity, naysayers and skeptics are coming out of the woodwork, but that shouldn’t deter investors with a sustainable investing mindset.

“Sustainable investing can no longer be categorized as the future of investing,” Matt Christensen, global head sustainable & impact investing at Allianz Global Investors, told Barron’s. “It is a reality today, just as issues such as climate change, cybersecurity, data protection, workplace diversity and inclusion, and better stakeholder alignment are now widely accepted as vital for better corporate citizenship and social outcomes. If the past few years are any guide, ESG asset managers will continue to undertake this work to enhance standards, increase transparency, and continue to use the power of investing and capital markets to address the key issues facing governments and citizens alike while seeking better risk-adjusted returns for investors.”

Christensen noted that practices like greenwashing are deplorable and critics have been quick to accuse fund strategies of only giving off the semblance of acting in the good faith. Nevertheless, committed ESG asset managers who are acting in the best interest of investors will continue to play an essential role in tackling key ESG challenges we face today.

While some may be just jumping on to the bandwagon to capture the sudden hype behind ESG investments, Christensen believed that ESG remains an intrinsic part of the investment processes of some asset managers, including some who have been doing it for over a decade.

There were 3,821 United Nations’ Principles for Responsible Investing signatories as of this week, and the majority of those joined in the past four years, but there have have been many committed to sustainability cause for many years prior. Christensen pointed out that Allianz Global Investors was one of the first 50 asset managers globally to become a U.N. PRI signatory in 2007.

There was $17.1 trillion invested in U.S.-domiciled assets using ESG strategies at the start of 2020, up 42% from $12 trillion two years earlier, according to US SIF data.

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