No longer optional: Shifting to a more sustainable investment model

Recent months have seen a flurry of articles demonstrating that many sustainable (ESG) investments have outperformed their unsustainable non-ESG rivals during the intense market-downturn caused by COVID-19.

BlackRock – one of the world’s largest investment managers – and MCSI – a leading investment research firm – are amongst those who have published robust analyses illustrating a positive link between sustainability and market performance. Key snippets from BlackRock’s recent ‘Sustainable Investing: Resilience amid Uncertainty’ report, include:

“Although sustainable ETFs [exchange traded funds] comprise just 1% of the total ETF industry, they have had an outsized influence on overall industry inflows. Meanwhile, traditional money market funds experienced outflows of 10% for the month of March, while sustainable options benefited from inflows of 12%”

“We believe that we are still in the early stages of a persistent and long-lasting shift toward sustainability – the full effects of which are not yet included in market prices, given the long transition. This is a transformation that we expect to see through the current pandemic, recovery, and long after” [1]

Of course, not all investment classes have seen the same correlation, but the general message is clear: sustainable investments make for more resilient investments.

Add to this the emphasis being placed by leading businesses and investors on a COVID-19 recovery that ‘builds back better’ [2] – and the case for a sustainable investment strategy has never been stronger.

Mix-in the society’s other persistent, growing, existential threats – inequality, labour exploitation, resource depletion, climate change and ecosystem collapse – and shifting to a more sustainable investment model is, surely, no longer optional.

So-what for commercial real estate and infrastructure investors?

Clearly, all businesses will be evaluating how they have fared during COVID-19 and what strategic changes are required to survive and/or thrive in the new world. Sustainability must be a significant part of this conversation.

We are sustainability (ESG) strategy advisors working with many leading real estate and infrastructure investors to embed sustainability into their business. For us, it’s the G in ESG that’s key: Governance. Governance processes must enable comprehensive identification, assessment and monitoring of present and emerging material risks and opportunities. Get the governance right, and the E and S (environment and social) naturally follow [3].

Of course, we tailor our solution to the client. For those starting out on their sustainability journey or looking for a more significant overhaul of their current approach, we work with them to build a comprehensive sustainability strategy, from scratch. Whereas, for clients already equipped with a strong framework, we enhance and update; not reinvent.

For all clients, we make sure that sustainability ambitions are aligned to [and where appropriate inform] strategic business objectives. We also seek to integrate sustainability within existing investment processes – in order that it becomes business as usual, as soon as possible.

Get in touch with the EVORA Sustainability (ESG) Strategy team today.

[1] Sustainable Investing: Resilience amid Uncertainty, BlackRock 2020

[2] Through the Prince of Wales’s Corporate Leaders Group (CLG), over 200 leading businesses and investors have lobbied the UK government for a COVID-19 recovery plan that yields a more inclusive, stronger and resilient UK economy.

[3] …broadly!