07 May 2021 – A global regulatory framework for environmental, social and governance (ESG) investing is urgently required. Nigel Green, CEO, and founder of the de Vere Group, says that the time for ESG regulation is now. The de Vere Group is one of the world’s largest independent financial advisory and fintech organisations.
The call to action from Green, comes as major financial institutions are handling a massive uptick of inflows into the ESG sector but at the same time facing accusations of inconsistency in their approach to sustainable impactful investments.
According to Green, environmental, social and governance investing is this decade’s ultimate investment megatrend – and it has been accelerated since the pandemic began.
“There has been a dramatic increase of inflows into the sector from both retail and institutional investors as it has become clearer than ever that human health is reliant upon healthy ecosystems; that we need to ensure the sustainability of supply chains; and that those companies with robust corporate governance and good business practice fare better in difficult times and are ultimately best-positioned for the future,” says Green.
“The trend is unlikely to slow down in a post-pandemic world. Millennials, who are statistically more likely to seek responsible investment options, are set to become the major beneficiaries of the largest inter-generational transfer of wealth – an estimated USD30-trillion over the next few years,” Green adds.
Recent research reveals that the majority of environmental, social and governance investments have outperformed their non-sustainable counterparts over the last year and have had lower volatility. This will only serve to attract more investors.
Given the continuing and increasing demand, Green says that the regulatory landscape must reflect the situation.
“Regulators need to catch-up. Initiatives that began in the European Union (EU) are now spreading worldwide, but much more needs to be done, at a faster pace and with a joined-up approach. There remains a startling lack of consistency in definitions and data. Considering the momentum of the sector, the time is now for the establishment of a global regulatory framework for ESG investing,” says Green.
This, he says, will provide greater protections for those investors who are looking for profits with purpose. It will also help to reduce ‘greenwashing’, which is where an investment or company gives an inaccurate impression over its green, socially responsible, or corporate credentials.
“A robust standardised regulatory framework would make the sector even more attractive, which will then help investors reach their financial goals whilst proactively protecting people and the planet,” says Green.
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