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ESG

The sustainability is driving a new shift in finance and investment decisions

In a recent report, Cushman & Wakefield, revealed that ESG (Environmental, Social, Governance) investing is no longer just a trend but is becoming the new normal.

A striking finding from the report is that 60% of global investors believe that ESG investing leads to higher performance yields. This is a clear indication that sustainability is just good for the planet but also good for profits.

The demand for sustainable finance products is increasing. 78% of investors are willing to pay higher fees for ESG funds, showcasing a growing appetite for investments that align with their values.

This trend is being driven by several factors, including increased awareness of climate change and social issues, and a desire to support positive that are making a positive impact on communities globally.

Sustainability-linked loans are rising. These loans offer businesses financial incentives for achieving specific sustainability KPIs, targets and are driving corporate growth in green finance.

This presents a win-win situation for both borrowers and lenders, as it promotes sustainable practices and reduces risk.

Key Trends Shaping the Future of ESG Investing

  1. Institutional Investment in ESG: Institutional investors are increasingly recognising the financial benefits of ESG investing and are allocating more capital to sustainable funds.
  2. Building Performance Standards: Governments are introducing stricter building performance standards to reduce the environmental impact on the built environment.
  3. Mandatory ESG Reporting: Companies are being required to disclose their ESG performance metrics, increasing transparency and accountability.
  4. Energy Transition and Decarbonisation: The global shift towards renewable energy and a low-carbon economy is driving significant changes across various industries.
  5. Partnering with Tenants on ESG through Green Leasing: Landlords and tenants are collaborating on sustainability initiatives through green leases.
  6. Digital Transformation: Technology is playing a crucial role in advancing ESG goals, from real-time data capture, to monitoring emissions and optimising energy usage.
  7. Assessing and Mitigating Climate Risk: Companies are prioritising climate risk assessments and mitigation to protect long-term viability and useful economic life of assets.

As investors continue demanding sustainable products and with companies prioritising ESG initiatives, we expect to a global trend of increased growth and innovation for businesses in this space.

Sources:

https://esgnews.com/60-of-global-investors-report-that-esg-investing-results-in-higher-performance-yields-sustainability-megatrends-report/

https://cw-gbl-gws-prod.azureedge.net/-/media/cw/americas/united-states/insights/research-report-pdfs/2024/sustainability-megatrends-report_final.pdf?rev=2a66bfd3101e4428a9c459f4e5b85c7d