The environmental part of environmental, social, and governance (ESG) investment seems to be the main focus among global investors that currently focus, or plan to focus on E, S, or G priorities, according to a survey conducted in 2020. Among the respondents who currently focus on ESG investments, almost 90 percent stated that they focus on the environmental factor, while 52 percent focused on the social aspect, and 60 percent on the governance aspect. The environmental factor was also the one with the highest likely focus over the next three to five years. The Europe, Middle East and Africa (EMEA) region had the highest share of sustainably invested assets in 2020.
Why is ESG investing important?
ESG investing is an approach aimed at generating sustainable, long-term financial returns incorporating environmental, social, and governance elements into asset allocation and risk decisions. Despite its overlapping with sustainability concerns, another key driver of ESG investing is financial performance. In 2020, half of ESG investors worldwide were motivated by the possibility to increase the return or mitigate the risk of their investments.
Challenges for sustainable investments
Despite the expected positive impact of the coronavirus pandemic in raising ESG awareness among investors, there are still many challenges that sustainable investors will have to overcome in the future. Among them, impact washing was cited by the large majority of impact investors worldwide as the most relevant threat for the industry. Impact washing practices rise from the lack of clarity about how impact investments are managed, and from the inability to measure impact results. Therefore, it is often possible for companies to make untruthful impact claims, without truly pursuing any social nor environmental impact. Clearly, impact washing poses a considerable threat to a fair and efficient allocation of funds in the impact industry.
Which of the ESG aspects is your main sustainable investment focus?
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BlackRock. (December 2, 2020). Which of the ESG aspects is your main sustainable investment focus? [Graph]. In Statista. Retrieved November 28, 2023, from https://www.statista.com/statistics/1199652/main-esg-focus-sustainable-investors-worldwide/
BlackRock. "Which of the ESG aspects is your main sustainable investment focus? ." Chart. December 2, 2020. Statista. Accessed November 28, 2023. https://www.statista.com/statistics/1199652/main-esg-focus-sustainable-investors-worldwide/
BlackRock. (2020). Which of the ESG aspects is your main sustainable investment focus? . Statista. Statista Inc.. Accessed: November 28, 2023. https://www.statista.com/statistics/1199652/main-esg-focus-sustainable-investors-worldwide/
BlackRock. "Which of The Esg Aspects Is Your Main Sustainable Investment Focus? ." Statista, Statista Inc., 2 Dec 2020, https://www.statista.com/statistics/1199652/main-esg-focus-sustainable-investors-worldwide/
BlackRock, Which of the ESG aspects is your main sustainable investment focus? Statista, https://www.statista.com/statistics/1199652/main-esg-focus-sustainable-investors-worldwide/ (last visited November 28, 2023)
Which of the ESG aspects is your main sustainable investment focus? [Graph], BlackRock, December 2, 2020. [Online]. Available: https://www.statista.com/statistics/1199652/main-esg-focus-sustainable-investors-worldwide/