According to research published by Campden Wealth, Global Impact Solutions Today (GIST), and Barclays Private Bank today, the average portfolio allocation for leading private wealth holders and family offices invested in ESG funds is almost double, rising from 20% in 2019 to 35% by 2025.
Data for Investing for Global Impact: Power for Good, now in its seventh year, was obtained from more than 300 respondents from 41 countries, with an average net value of $876 million and a total net value of $264 billion.
The proportion of rich investors who assign more than 20 percent of their portfolio to impact investments is expected to rise from 27 percent to 39 percent as early as next year, and the quarter (27 percent) is estimated to assign more than 50 percent over the next five years. As such, the average portfolio allocation for investment effect among these investors is expected to increase from 20% in 2019 to 35% by 2025.
There has never been a better time to fast-track investment for sustainable progress and smart innovation to generate a profound impact on people and the planet.
Driving this uplift is a 38% conviction that they have a duty to make the planet a better place. 24 per cent agree that this strategy can lead to better returns and risk profiles, and 26 per cent are looking to prove that family wealth will deliver positive results around the world.
Although 53% of these rich investors state that Europe is leading the world in carbon-neutral policies, 86% want governments to do more. At the same time, 81% understand the role of private capital in combating climate change. With this in mind, 39% would like to know the carbon footprint of their portfolio to inform their investment.
Covid-19 has made individuals profoundly conscious of the world around them, with 69% of respondents reporting that it has influenced their investment and economic outlook. Almost half (49 per cent) believe that investment will not return to normal even after the crisis subsides, and 22 per cent believe that the demand for investment effect is about to begin.
66 per cent suggest that they are likely to expand their risk evaluation to include more ESG considerations, while 64 per cent insist that the recession will force a deeper reconsideration of shareholder capitalism, and 69 per cent accept that the way businesses behave during the recession will decide their investment attractiveness afterwards.
Healthcare ranked the second most common health effect sector, and a remarkable 84% claim that they expect to increase their investment in health care over the coming year, which exceeds all other sectors.
Rebecca Gooch, Director of Research at Campden Wealth: “Globally, more than $30 trn is now being invested sustainably and this trend towards responsible investment is increasingly catching up within the private wealth group. A large proportion of wealth holders are now engaged and there are expectations, especially after covid-19, of a significant increase in their investment over the coming years.”
Gamil de Chadarevian, Founder of GIST, said: “There has never been a better time to accelerate investment for sustainable development and smart innovation that will have a profound effect on people and the world.”
Damian Payiatakis, Head of Sustainable and Impact Investment, Barclays Private Bank, said: “Investors are being challenged to navigate the lives of their families and investments safely through the 2020 disruption, and that means they are having more conversations about the future-how their family’s wealth will represent more of their values and the role they want to play in society.”
“Families are contemplating the effect of their capital and are gradually taking action, by making more effort to resolve our urgent global societal and environmental problems. We see that investors who want to make this change are searching for guidance on how to manage the rapidly changing field and access high-quality opportunities that can produce financial and positive outcomes.”