A tumultuous end to the year approaches, with a no-deal Brexit now considered more likely than reaching an agreement before Sunday’s deadline, and little sign of a new spending package on the horizon in the US as coronavirus deaths rise.
But if the EU’s recently-agreed EUR1.8 trillion budget and post-pandemic recovery package are anything to go by, leaders looking to enshrine the lessons of the pandemic are scaling up their commitment to build back better in 2021.
Top of the agenda is climate change, with the new budget laying the groundwork for EU leaders to agree further ambitious reductions in carbon emissions, with cuts of at least 55 per cent from 1990 levels by 2030.
This new target puts the EU back on the path to reach net zero emissions by 2050, and the bloc is set to present its new plan at a United Nations virtual summit of world leaders on Saturday.
Asset managers are also embracing the green recovery, with the world’s fifth largest asset manager in the world, Fidelity International, saying it will “close the gaps” in its climate change initiatives, in order to reach net zero operational emissions by 2040.
“I think it is time for capitalism to look at itself and go through one of its periodic reinventions. And I think we as a global asset manager should be at the centre of that reinvention,” said Fidelity’s CEO, Anne Richards.
Sustainable investment group Mirova has also rebuffed claims that there is a “green bubble” in the market, instead renewing its commitments by signing up to become a “mission-led” company and B Corp.
Investors are flooding into ESG at an unprecedented pace. In November, ESG equity funds garnered higher inflows over the month than the total amount raised during the five years to January 2020.
However, most institutional investors believe that the market is underestimating the long-term impacts of the pandemic, with Covid-19 relief packages expiring and the risk of negative interest rates hanging over markets in 2021.
Madeleine Taylor
Editor, Institutional Asset Manager