There is an urgent need for sustainable investing

The practice of environmental, social, and corporate governance (ESG) investing began in the 1960s, when investors chose to exclude stocks or entire industries from their portfolios based on business activities such as tobacco production.

Today, ESG investing is growing fast among both institutional and retail investors as they prioritise ethical practices that consider environmental, social and governance issues with real and quantifiable impacts over the long term – for firms, people, and the communities in which they do business.
 

Rising demand for sustainability

Assets in dedicated sustainable investing strategies have grown at a rapid pace in recent years, and this trend is showing no signs of slowing down.

Morningstar, an investment research company, notes that the European sustainable fund market reached a milestone in the third quarter of 2020, with almost £800 billion (nearly R17 trillion) of assets under management, an impressive feat when viewed against the backdrop of the global pandemic.

Regulators and governments have also been driving this growth by expanding their focus on incorporating sustainability into investment information and decision-making.
 

Key factors driving interest in ESG investment 

The 3 primary drivers of ESG investment are:

  • a change in global focus,
  • a shift to socially conscious investors, and
  • a rise in evolving data and analytics.

Banks are already integrating sustainability into their core businesses by incorporating ESG practices into risk management processes, product design, purpose statements and long-term strategies.

At Nedbank we have always been committed to making decisions that respect the environment and its limits, placing societal good above short-term profits. In 2019, we stood out as the only South African bank that took an unequivocal policy decision to stop funding ‘dirty energy’ amid mounting concern about climate change and environmental damage.

Our Commercial Banking division also has a range of sustainability-focused funding, including clean energy, water and sanitation and recycling. These have been designed to take into consideration the nuances of investment, such as customised tenor to achieve cashflow neutrality.
 

If ESG investment is overlooked

A lack of investment in sustainability, coupled with the pandemic, has had dire consequences, including rising poverty, increasing famine and rampant social decay. This emphasises the sobering reality that investment in sustainable business and operations is the responsibility of every business owner.

There is no doubt that the future will present its own set of challenges and opportunities, but we are prepared to partner with business owners towards a productive and sustainable future.

If you need a tailor-made business finance solution or cash to invest in sustainability ventures, set up an appointment for a call with one of our Commercial Banking experts today.