After completing the EVORA transaction, Polestar has been on an ESG high. However, it looks like we are not the only ones, according to a new Financial Times article and PwC study. The article did a good job summarising the PwC study, and I will include a few important bullet points below:
What is happening in the ESG market?
The study by PwC and FT article suggests that “demand for sustainable investments is outstripping supply, as nearly nine in 10 institutional investors believe that asset managers should be more proactive in developing new ESG product but fewer than half of asset managers (45 per cent) were planning to launch new ESG funds.”
The study found that “ESG demand is all over the world, for example the study states that 81 per cent of institutional investors in the US plan to increase their allocations to ESG products over the next two years — almost on par with Europe, which leads the rest of the world in ESG investment, where 84 per cent said they planned to do so.”
What is causing this inequality within the market? The study suggests that “one factor influencing this outcome is compliance costs. The study states that “35 per cent of those surveyed said compliance costs had increased by 10-20 per cent since they started to include ESG.”
What is the outcome for ESG investing?
The PwC survey found “six in 10 institutional investors were recording higher returns on their ESG investments compared with non-ESG investments and that more than half had noted that ESG integration had taken less than three years to deliver those higher returns. “
According to Tom Kuh, the head of ESG strategy at Morningstar Indexes, it is because ESG bring additional information and analysis to investment decision making.
ESG is a trend that we have noticed with our clients in the consulting, technology, and business services industries.
If you want to get in touch about anything ESG related, don’t hesitate to do so. With the rapid demand in this space, this could be a good time to explore your options for raising funding or securing a valuable exit. Like always, if you have any interest, please reach out!