The financial world has been experiencing a noteworthy transformation, with “sustainable investment” garnering a significant amount of attention. This conscientious investment philosophy, which involves considering environmental and social issues, has seen a marked rise in popularity.
Both sustainable investments and ESG assets have been trending upward, as documented by the Global Sustainable Investment Alliance. In 2020, sustainable and ESG investments achieved a considerable 15% growth, pushing the total to an impressive $35 trillion. This represents about a third of all professionally managed assets in the five primary global markets. Assuming a moderated growth rate of 15%—just a third of the pace seen in the past five years, the industry’s assets are projected to exceed $50 trillion by 2025.
While both sustainable and ESG investing consider environmental and social factors, sustainable investing places a greater emphasis on making a positive impact and aligning investments with certain values, while ESG investing is more focused on how these factors impact the financial performance and risk profile of investments. Despite the marked growth and increased sophistication of sustainability data, as well as societal pressure for ethical business practices, a vital component is being overlooked: the end client.
As the sustainable and ESG investing landscape transforms, the voice of the end client is alarmingly absent from the discourse, mainly due to limited access and a lack of tools enabling meaningful participation.
