3 min read
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” 
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’  – 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 .
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.
 Sustainable Investing: Resilience amid Uncertainty, BlackRock 2020
 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.