Almost nine in 10 (85%) investors view global warming and the effects of climate change as the greatest long-term threat to our planet and are moving investments as a result.
The research of over 2,000 UK investors by OnePlanetCapital, a new sustainability driven investment house, found the overwhelming majority are concerned about the effects of climate change, including environmental threats such as rising temperatures, more frequent and severe flooding and increased deforestation.
Consequently, and to improve the flow of finance into businesses helping to tackle climate change, over one in 10 (12%) investors are planning to move investments to societal, corporate governance or environmental (ESG) related funds this year. A further 17% plan to move investments in 2022 or later.
Three in 10 (28%) investors are considering higher risk/higher return investments that tackle climate change, and 70% of investors would even avoid investing in a business with a negative environmental impact.
With a tenth of (9%) investors overall currently holding ESG investments, this surge of non-sustainability driven investors moving funds to investments tackling issues such as climate change, will see the ESG market alone double in size in 2021.
The study ranked the following long-term threats to our planet felt among investors:
- Global warming and the effects of climate change, including environmental threats – 85%
- Overpopulation – 34%
- Future pandemics – 30%
- National/global failure to understand and act preventatively on these risks – 29%
- Decline of natural resources – 29%
- War – 25%
- Natural disasters – 23%
- Covid-19 – 18%
- Geo-politics – 13%
- Advent of powerful, uncontrolled new technology – 12%
- Slowed growth in developed countries – 6%
Matthew Jellicoe, co-founder of OnePlanetCapital, commented: “Global warming is a detrimental threat to our planet and it’s very clear this sentiment is felt among investors. Sustainability and tackling climate change is becoming part of the investment mainstream and the market will double in size in 2021 as a result. Investors are becoming increasingly aware of businesses that do, and do not, have a positive environmental impact and willing to take on more risk to ensure their investments reflect their views.
“We know now that investment performance does not need to be sacrificed in order to tackle the environmental problems of the day. UK sustainable funds are likely to outperform the market over the short, medium and long term, creating greater growth opportunities financially for investors.
“Climate change is in the mindset of both the current and next generation of investors. The importance of investing in sustainable funds is felt equally among millennials as it is over 55s. 77% of 18-35 year olds and 35-54 year olds hold sustainability in high regard when investing, as does 71% of over 55s. We have an opportunity here to emerge from Covid-19 with a much greener, and more sustainable economy.
“We only have one planet and it’s time to make a difference for our collective future. We set up One Planet Capital to offer a very focused early stage portfolio of investments, designed specifically to support businesses that are tackling climate change.”
Earlier this year, OnePlanetCapital launched a specialist sustainability EIS Fund to invest in businesses tackling climate change.
The new OnePlanetCapital Sustainable EIS Fund is focused on targeting investments that will tackle climate change and supporting businesses with a positive environmental impact. It aims to deliver industry leading returns whilst only backing companies and projects that will genuinely benefit the environmental prospects of the UK and the wider planet.