Given the election results, South Florida-based ESG firms like Raymond James are going to be more relied upon than ever: According to its website, “Through sustainable investing, not only can investors aim to make a positive impact on society and the environment, they can potentially improve the risk/return characteristics of their portfolios by factoring environmental, social and governance (ESG) criteria into their investment decisions.”
Its mission and that of other ESG firms will undoubtedly see success during the Biden administration, according to Nigel Green, the founder and CEO of deVere Group, one of the world’s largest independent financial advisory organizations. Green predicted earlier this year that ESG investing would become a “megatrend” of the decade shown by the increase in those looking for these investments. It’s an observation further supported by a deVere survey that showed that “more than a quarter of all clients are currently considering or are already actively engaged in responsible, impactful and sustainable investing.”
Green anticipates more growth in ESG investing for several reasons. First, the Biden campaign’s emphasis on “values that have an inherent synergy with ESG-orientated investments,” promising change on issues such as climate change, social justice, equality, diversity, human rights and corporate transparency and accountability. A few examples include Biden’s promise to have the country re-enter the Paris Agreement and transition to renewable energy.
“Second,” Green says, “it is probable that U.S. rules surrounding ESG investing and corporate disclosures will now come into line with those of Europe—something Trump fiercely opposed. If the rules on ESG investing are matched and agreed upon, and an international standard and framework brought in, we can expect further institutional investment piling into the ESG sector.”
ESG investing is already growing. CNBC recently reported that audit firm Deloitte’s data showed that while 48% of global investors applied ESG criteria to at least a quarter of their investments, 75% did so in 2019. Deloitte also predicts that U.S. investors will have half their investments in ESG.
Also boosting ESG investments? Changing demographics.
“The biggest-ever generational transfer of wealth—likely to be around $60 trillion—from baby boomers to millennials (who are statistically more likely to seek responsible investment options), is to take place in the next couple of years,” Green says. “As such, ESG investing is set to grow exponentially in the 2020s. Biden has bold plans that perfectly square with ESG investments—an already burgeoning market. We can expect the boom to intensify further.”
