Ultra-wealthy individuals are ratcheting up their allocations to climate-friendly investment strategies in anticipation of both higher returns and a hotter planet.
A survey of private investors with average assets of $833 million across more than 30 countries showed that 70% see the shift toward net-zero carbon emissions as “the greatest commercial opportunity of our age.” The survey, compiled by Campden Wealth on behalf of Barclays Private Bank and think tank GIST Initiatives Ltd., also found that roughly a quarter of respondents plan to avoid companies that contribute to climate change.
“Sustainable investing is gaining steam among ultra-high net-worth investors,” said Rebecca Gooch, senior director of research at Campden Wealth, a family-owned group that functions as an industry association for the ultra-rich. “Given that single family offices alone manage more than $6 trillion in assets worldwide, this is helping to propel the industry forward at a time when sustainable solutions are needed most.”
The market for environmental, social and governance investing will make up more than a third of the $140 trillion in global assets by 2025, according to Bloomberg Intelligence. That exponential growth has fed anxiety around puffed-up ESG claims, also known as greenwashing. Campden Wealth’s survey showed 76% are worried about holding greenwashed assets.
The Rise of ESG Investing
Demand for ESG assets coincides with evidence of planetary overheating. The latest assessment by the United Nations’ Intergovernmental Panel on Climate Change found that the average global temperature will have risen by 1.5 degrees Celsius from pre-industrial levels as early as 2028. In its worst-case scenario, the IPCC predicts the temperature could rise close to 5 degrees by the end of the century, representing a total climate catastrophe.
In its survey, Campden Wealth found that only half the respondents think it’s possible to keep the global average temperature increase below 2 degrees Celsius. If warming exceeds that level, scientists predict that the planet would face mass extinctions of species with large parts of the Earth uninhabitable.
This article was provided by Bloomberg News.
