Green capital of the world

Institutional Asset Manager 15/01/21

With an end to the pandemic potentially in sight as vaccination programmes continue to be rolled out, governments and businesses are shaping their economic and financial priorities for a post-coronavirus world.

The verdict is almost unanimous: the future is green.

President Elect Joe Biden promises to spend USD2 trillion cleaning up the US electricity supply after he takes office next week, while 50 countries, including the UK, pledged this week to protect a third of their land and seas.

“Don’t forget that the coronavirus pandemic was the product of an imbalance in man’s relationship with the natural world,” warned Prime Minister Boris Johnson at the One Planet Summit this week.

Asset managers have more than enough reason to get on board with the push for greener investment. ESG funds attracted more new capital from investors last year than any other strategy, and have helped active managers hold their ground against the rise of passive investing.

At the same time, the pandemic has increased the rewards for sustainable investors and businesses, with the ‘social premium’ for investing in companies with good or improving social practices rising in 2020.

On the environmental front, new investment themes are coming to the fore. ‘Natural capital’ investing is starting to take off as three asset managers – HSBC Pollination Climate Asset Management, Lombard Odier and Mirova – formed a USD10 billion alliance aimed at protecting the world’s natural resources, such as forests and rivers.

The present push for green growth is meeting with cynicism in some quarters. Climate activist Greta Thunberg tweeted at the launch of the climate and biodiversity summit this week: “LIVE from #OnePlanetSummit in Paris: Bla bla nature, Bla bla important, Bla bla ambitious, Bla bla green investments…”

But institutional asset managers are taking an increasingly active stance on climate-related issues. Shareholders at financial institutions have accused banks of not honouring their public commitments to sustainability, with HSBC hit this week by a resolution from institutional investors including Amundi, Man Group, and Brunel Pension Partnership over the banking group’s coal financing.

Madeleine Taylor
Editor, Institutional Asset Manager



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