(The author is editor-at-large for finance and markets at Reuters News. Any views expressed here are his own)
LONDON, June 4 (Reuters) – The notion that a devastating pandemic made rich investors more introspective, warm-hearted and willing to save the planet seems a bit fanciful – but some surveys suggest that may be partly what happened.
Whether it’s because they are swamped in gigantic windfall savings even greater than before or that a new generation is more attuned to green or sustainable investments is less than clear.
Relatively young punters – depending on how you read the age profile of reddit speculators or crypto enthusiasts – appear just as happy to bet their spare cash on joke tokens or bombed out stocks on Wall St. So surveys may not tell the whole story.
But an annual poll of 3,800 investors in 15 countries conducted by UBS Global Wealth Management and released this week found there was some sort of epiphany among respondents – all of whom had more than $1 million in investable assets.
The survey showed 68% want to make more of a difference in the world, nearly half plan to give more to charity, almost 60% are more interested in investing sustainably and even 58% said the pandemic made them “more spiritual”.
Breaking it down, UBS claims these trends were largely driven by a younger cohort and more women than men – with almost 80% of “younger” investors valuing making a difference in the world versus 51% of those over 50. A narrow majority of women polled plan to give more to charity versus only 42% of men.
“For now – investors are focused on something deeper: a search for meaning, a sense of purpose and a desire to contribute more to the world around them,” UBS said of the findings that it says counter predictions of another “roaring Twenties” ahead.
Cynics could cast some doubt on all of it of course.
Some might reasonably argue that rick folk with more than a million dollars to invest already have the luxury to think laterally for a bit and give more.
Answers on “making a difference”, “finding a purpose” or becoming more “spiritual” could mean any numbers of things – and not all of them necessarily good for the planet or society.
One answer does go some way to squaring the seemingly righteous turn of the young wealthy in this survey with what Amundi’s investments chief Pascal Blanque dubbed on Thursday as the “game-ification of investing” by crypto or online gamblers.
More than 80% of the UBS survey ticked the box that said “The pandemic made me realise life is short” – perhaps a nod to the serial YOLO investing memes that trumpet ‘you only live once’.
ESG TO SDG
A more positive take is that this reflects the evolving mega trend in investments badged for environment, social and governance (ESG) scores and greater willingness of younger generations to use their investment decisions to tackle climate change and inequality.
Willem Sels, HSBC’s Global Chief Investment Officer for Private Banking and Wealth Management, said the desire for more sustainble investments is very clear from his business.
But he said that may be less about a change of hearts and minds per se than identifying a huge growth opportunity in green infrastructure and also being hyper aware of what companies are going to be resilient to the shocks we’ve just seen.
“These sorts of investments just did better in the selloff we saw last year,” he said.
And that’s hardly a sudden realisation – the trend being well under way before the pandemic and merely catalysed by it if anything. So much so that Bank of America’s latest monthly funds survey already has ESG investment as the 3rd most crowded trade.
Jefferies this week attempted to scale the global size of the ESG investment universe to more than $100 trillion, by using the assets under management of the more than 3000 signatories to the United Nations’ Principles for Responsible Investment. The number of those signatories more than doubled in just five years.
So what’s next for the newly concerned rich?
The Jefferies report reckoned ESG scoring will soon just be the industry standard and fully integrated into all capital markets by 2024. There will be no differentiation or commercial advantage in there for asset managers, it reckons.
The next step, it says, is investing to boost patchy progress over the last six years in the UN’s 17 Sustainble Development Goals – ranging from elimination of poverty and hunger or reducing inequality to climate action, clean water and sustainable cities and oceans.
“There will be a significant commercial opportunity for asset management firms to develop products that invest in and support the evolution of SDG-aligned companies and countries,” it said, adding only 0.2% of 8,550 firms in MSCI’s all-country index are “strongly aligned” to SDGs based on MSCI’s revenue-alignment methodology.
There’s money to be made in virtue yet.
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