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More ESG investments in 2024

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As thousands of delegates get ready to attend the biggest conference in Dubai addressing climate challenges, a survey found that a great number of investors plan to increase their allocations to environmental, social, and governance (ESG) assets next year.

The survey of more than 800 polled from deVere Group, a leading independent financial advisory and fintech, found that 56% of investors plan to increase their ESG-orientated investments in 2024.

The findings were published as more than 70,000 political and business leaders, diplomats, financiers, and activists are flying to Dubai to talk about ways to avoid environmental disaster due to climate change at COP28, the annual international climate summit convened by the U.N.

The United Nations Climate Change Conference or Conference of the Parties, more commonly referred to as COP28, will be the 28th conference, held from November 30 to December 12, at the Expo City, Dubai.

“The surge in ESG-oriented investments is not just a statistical blip; it mirrors a fundamental shift in investor mindset,” said deVere Group CEO and Founder Nigel Green, explaining the results of the survey.

“People are increasingly drawn to ESG investments for a multitude of reasons, spanning ethical considerations to financial prudence.”

Green said investors are increasingly aware that their capital can be a force for positive change, with ESG investments allowing them to channel funds towards companies that actively contribute to a sustainable and socially responsible future.

Financially astute

“Far from being a sacrifice for moral high ground, ESG investments are proving to be financially astute,” he said.

“Numerous studies suggest that companies with high ESG scores tend to outperform the market; and Reuters has reported that ESG positive funds outperformed globally over five years.”

“Companies with robust ESG practices are better equipped to navigate regulatory changes, reputational risks, and operational challenges. Investors are, therefore, drawn to ESG investments as a means of fortifying their portfolios against unforeseen risks,” noted the deVere CEO.

He said that for four consecutive quarters, markets have seen outflows from ESG funds in both the US and Europe, and elsewhere, amid rising energy prices and political backlash.

“Awareness among investors about ESG has been increasing in recent years.  But we should work harder to ensure it is consistently at the heart of investment decision-making,” said Green.

“Climate change will be a critical determinant in long-term financial returns, and the highest net economic benefit is reducing the impact of climate change.”

He concluded that the deVere survey reflects a broader shift in investor consciousness – a realisation that investing in a sustainable future is not only ethical, but also a savvy financial strategy.

“As we navigate the complexities of the contemporary investment landscape and an intensifying climate crisis, ESG-focused investments emerge not only as a path to profitability, but as a commitment to building a better world.”