Trends in Sustainable Investing

The COVID-19 pandemic has presented unexpected challenges across all business and societal sectors. In the wake of the pandemic, a newfound focus on sustainable and equitable solutions for economic recovery has reshaped how we think about investing. Sustainability in investing has become a dominant trend, and a prominent Environmental, Social, and Governance (ESG) investment firm has recently released its fourth annual Sustainability Trends Report.

The Sustainability Trends Report

Compiled by Generation Investment Management, the investment firm co-founded by former United States Vice President Al Gore, the Sustainability Trends Report was published in summer 2020. The report draws on more than 190 sources in uncovering the shifts and trends influencing businesses and investors toward more equitable and safer investment solutions. The fourth annual report is timely, as it reflects the challenges governments and businesses faces as they work toward economic recovery post-pandemic.

In the report, political and societal realities have confronted business and government leaders. To ensure a healthier, safer, and more equitable business environment, the report calls for three major initiatives:

1. Development on the government level of green recovery, or investment and industrial policies that ensure a sustainable transition toward economic recovery.
2. Building inclusivity and sustainability into long-term business decisions, ensuring that all business stakeholders are represented and that their interests are being protected.
3. Focusing on investment in long-term value creation and sustainability by directing capital toward the business entities demonstrating the ESG principles.

Trends Revealed in the Sustainability Report

The Sustainability Trends Report highlights emerging trends in a wide range of industrial and business sectors. The sectors include healthcare, energy, finance, development, transportation, and consumers. Many of the trends are related to greenhouse gas emissions as a response to growing climate crises. Other trends are responses to the severe economic downturns created by widespread pandemic lockdown orders. Some of the key trends identified in the report include:

• Weaknesses in healthcare delivery are paving the way for advanced and inclusive options such as telemedicine. With access to healthcare difficult for many under-represented populations, healthcare businesses are redirecting their efforts to developing direct-to-consumer delivery models.
• ESG investment continues to grow in acceptance, yet more focus is needed on integrating this investment strategy with rating methodologies. As of now, ESG investment data lags behind real-world impacts in the wake of climate change and the pandemic. Recalibrating data collection and analysis to make more sustainable investment choices can spur economic recovery.
• Investments in electric vehicles have taken on a new urgency as the global public has shunned public transportation during the COVID crisis. With transport accounting for over 20% of global greenhouse gas emissions, shifting to greener transportation technologies provides better options while slashing negative environmental impacts.
• Smart buildings are achieving mainstream adoption as technologies have matured. With a goal of net-zero carbon emissions, forward-thinking development and construction projects aim to reduce environmental impacts and meet or exceed ambitions set forth in the Paris Agreement.
• Consumer preferences and habits have shifted due to restrictions imposed by the coronavirus pandemic. Among the trends revealed are a growing need for strengthening of global supply chains, reduction in non-sustainable materials in goods manufacture/packaging, and less reliance on long-distance transportation of consumer goods in favor of local/regional production.

Sustainable business development and investing continue to shape decisions on both corporate and government levels. ESG investing has demonstrated great value, providing a firm foundation for sustainable, equitable, and inclusive options for everyone.