Alternative Investments/ESG: The COVID-19 Pandemic Spurred ESG Investing To New Records

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Sustainalytics Founder Michael Jantzi says people now want to do sustainable investing.

And “they’re putting their money where their mouths are,” said Jantzi at the virtual Morningstar Investment Conference on Wednesday. The COVID-19 pandemic boosted an already strong movement in favor of sustainable investing.

Jantzi cited the exponential growth of the United Nations’ Principles for Responsible Investment (PRI). It has grown from 19 signatories at inception in 2006 to over 3,000 signatories today. The organization controls more than $100 trillion in assets. (Chief Investment Officer)

The impact of the COVID-19 pandemic

“I do think that the current circumstances caused by COVID-19 have been an accelerator or a catalyst to this change,” Jantzi said. “There’s no doubt in my mind that the challenges and realities and disruptions we face today are causing people to ponder differently some of the sustainability risks and issues that we’ve been talking about for a long time.”

Sustainalytics, which Jantzi founded, rates the sustainability of companies based on their environmental, social, and governance (ESG) performance.

Figures on fund flow to ESG ETFs and ETPs validate Jantzi’s comments.

AUM tally of ESG ETFs/ETPs shoots past the $100 billion mark

ETFGI reported that inflows into global ESG ETFs and ETPs during July were $6.76 billion. That brought the total inflows into these funds for the year 2020 to date to a record of $38.78 billion. That’s more than triple the figure of $12.37 billion in 2019 at the same time.

In another indicator of the bullish fervor in favor of ESG, inflows for the first seven months of the year have already far exceeded the inflows of $26.71 billion received during the entirety of 2019. Globally, the AUM tally of ESG ETFs/ETPs shot past the $100 billion mark to $101 billion as at end of July 2020.

“We’re starting to see a real shift in how people are moving assets in the largest capital markets in the world,” said Jantzi. “People are not just saying they want to do sustainable investing, they’re putting their money where their mouths are.”

COVID-19:JP Morgan survey

A survey by JP Morgan (NYSE: JPM) echoes Jantzi’s sentiments.

“As action and awareness of long-term sustainability risks are likely to increase in the long run in the aftermath of the COVID-19 crisis, this should be a positive catalyst for ESG,” said JP Morgan in a July research report titled Why COVID-19 Could Prove to Be a Major Turning Point for ESG Investing.

The majority (55%) of the respondents of the J.P. Morgan investor survey shared this opinion. They saw it as a positive catalyst in the next three years. Only about a quarter (27%) of investors expected a negative impact, while 18% believed it will be neutral.

Related Story:  Global AUM in ESG ETFs and ETPs Shoots Past $100B End-July

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