For a long time, sustainable capital investments were merely an afterthought in investors’ minds. But now, things have fundamentally changed: The issue of climate protection dominated the latest meeting of the G20, with China and the USA – the world’s two largest economies – ratifying the Paris Agreement. This agreement aims to limit the increase in the global average temperature to well below 2°C above pre-industrial levels. Major investors such as Allianz or Munich Re are investing billions in infrastructure projects and renewable energies, while at the same time withdrawing investments from industries that pollute. Even the Rockefeller dynasty, which was founded on the oil business, is breaking away from investing in companies that work with fossil fuels. Instead, they are focusing on renewable energy. Blackrock, the world’s largest investment management corporation, has also prioritized sustainability and impact investing with their new BSF Impact World Equity Fund and other measures. Sustainable investments have already proven themselves to be generally more successful, or at least equal in value, over the longer term.
The investment potential in this area in the years ahead will be enormous. It offers considerable opportunities for private as well as institutional investors. Another key factor that supports this potential is the current low-interest rate environment, which makes financing infrastructure measures highly favorable for national governments. It is compelling pension funds, insurers and employee benefit schemes to look around for new areas of investment. Sustainable projects can also benefit from this. However, those investors who don’t just want to turn to special funds, but who would instead like to take a more active role through direct investments should seek the advice of specialists.
This is because assessing forms of investment and stakes in companies with respect to sustainability is a very complex task which is often underestimated. Upon closer inspection, it’s not uncommon to find problematic areas that were overlooked at first glance, but that are incompatible with making a responsible investment. In doing so, I believe that careful due diligence and foresight is equally important as the systematic controlling and reporting of an investment. This is the only way to ensure that investments in sustainability also achieve sustainable success.
Jens Spudy is executive partner of Spudy Invest: www.spudy-invest.com