Environmental, social and governance (ESG) investing looks set to continue gaining traction, as ESG factors increasingly merge into mainstream investment strategies, new research suggests.

ESG investing has grown substantially across the world over the past few years, with investors becoming increasingly keen to learn where their money is going and whether it is having a positive impact. A survey conducted by CoreData has revealed that 73% of UK fund buyers now expect all investment funds to incorporate ESG factors within their strategies in the next five years4.

Pandemic a key driver

Additional findings suggest the pandemic has accelerated this momentum, with eight out of ten UK fund investors saying it has increased their focus on ESG. Commenting on the survey, founder and principal of CoreData, Andrew Inwood, said, “The pandemic has helped reset humanity’s moral compass and encouraged people to favour investments aligned with their beliefs and values.”

COP26 could highlight ESG investing

As for the most important ESG concerns, separate research5 has shown that environmental issues top the list, particularly pollution and waste, and climate change. The trend towards ESG investing is likely to be further heightened in the run-up to the 26th UN Climate Change Conference of the Parties (COP26) which is being hosted by the UK in Glasgow this November.

The election of President Biden and his commitment to an ambitious new climate regime could also raise the profile of both COP26 and climate change issues in general. As a result, ESG investing is likely to remain firmly in the spotlight.

4CoreData, 2021, 5BlackRock, 2020

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