Investing Interest in Decarbonization Is Skyrocketing | ETF Trends

Impact investing, which includes investing in decarbonization efforts, has topped $1 trillion globally for the first time, according to a report from the Global Impact Investment Network. The size of the global impact investing market currently stands at $1.164 trillion in assets under management. Impact investing has risen 40% over the past two years.

“It is clear that investors recognize impact investing as a means to spur positive environmental and social development to better serve all people and the planet,” said GIIN Co-Founder and CEO Amit Bouri in the report’s introduction.

While impact investing has soared in recent years, GIIN calls for further action to achieve U.N. Sustainable Development Goals by 2030 and reach net-zero emissions by 2050. According to Bouri, “the work to scale the market with integrity is crucial if the world hopes to reverse the tide of climate change and address social inequity head-on.”

The key drivers of impact investing are the rapid growth of the green bond market, growing shareholder pressure on companies to invest cash reserves “productively,” and stakeholder demands for companies to address global issues like climate change.

“We should be optimistic about the capacity of the impact investing market to enact positive change, and we must be determined to continue to grow the use of impact investing as a critical strategy to address the challenges of our time,” Bouri added.

For investors wanting to invest in this growing megatrend of decarbonization, Neuberger Berman has launched the Neuberger Berman Carbon Transition & Infrastructure ETF (NYSE Arca: NBCT).

Launched in April, the actively managed NBCT seeks to invest in companies that are focused on or are transitioning their business to focus on one or more of the following themes:

  1. Low-carbon resources: issuers focused on producing renewable energy, such as solar, wind, geothermal, and green hydrogen, and the related storage and transport of these energies.
  2. Electrification: issuers that help enable the replacement of technologies that use higher carbon-emitting fuels with those that use low-carbon resources as a source of energy, including those that support smart grid and electric vehicle-charging solutions, as well as electricity transmission and distribution that helps expand usage of low-carbon solutions.
  3. Carbon reduction solutions: issuers that directly facilitate the carbon reduction goals of infrastructure owners, including innovative raw materials, industrial gases, engineering and construction service providers, environmental services providers, and environmental technology providers.

Neuberger Berman managed $18 billion in thematic equity investments for global clients as of December 31. Its ETFs are designed to broaden access for individual investors and their advisors.

“We feel that thematic investing, which is forward-looking in nature, can benefit from the adaptable forecasting abilities of active managers,” said Neuberger Berman ETF specialist Fred Edwards.

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