Wealthy Investors Shifting Into Socially Responsible, ESG Investments

Socially responsible investments and environmental, social and governance funds could sustain their rapid pace of growth as high-net-worth investors consider doubling down on impact investing.

According to a recent survey conducted by Barclays Private Bank and research firms Campden Wealth and Global Impact Solutions Today, over three-fifths of respondents, which included individuals and family offices with a net worth of over $876 million, indicated that the coronavirus had encouraged them to broaden their risk assessment to include more environmental, social and governance factors in their portfolio, Private Equity News reports.

Consequently, the average portfolio allocation for investing in positive and social impact efforts is projected to almost to double to 35% by 2025 from 20% in 2019.

Almost nine in 10 of those surveyed highlighted the impact of climate change as a key influence in their investment choices. Additionally, a quarter of participants said they believe backing projects that will make the world a better place could improve returns and risk profiles.

“Investors are being challenged to safely pilot their family’s lives and their portfolios through the disruptions of 2020, and it means they are having more discussions about the future,” Damian Payiatakis, head of sustainable and impact investing at Barclays Private Bank, said.

The Covid-19 pandemic has been a key catalyst in the way investors are re-evaluating their investment portfolios. Almost half of the participants believe investing behaviors will not return to normal even after the coronavirus crisis passes, with 64% pointing to further activism by shareholders.

“Families are considering the impact of their capital and then increasingly taking action, by allocating more towards solving our urgent global societal and environmental issues,” Payiatakis added. “We see that investors wanting to make this shift are looking for guidance to navigate the rapidly evolving field and to access high-quality opportunities that can deliver financially and with positive outcomes.”