A shining light on the horizon as we tentatively head out of lockdown is Environmental, Social and Governance (ESG) investing which has seen growth in these unprecedented times.
ESG funds have traditionally been seen in those companies deemed ‘quality’ like healthcare and technology. The ones with strong cashflows leading to greater profitability rather than the ‘dirtier’ sectors such as oil and airlines. Picking investments based on principles as well as profits seems to have paid off if you look at the sectors that have seen either a boom or bust in the pandemic.
Investing in responsible companies, who typically have more sustainable business models, and who are more likely to be ready to adapt to long-term challenges (such as climate change) would seem to be the way forward. And that’s something we’re really excited about.
Looking forward, where might we see the biggest growth in ESG for 2021?
A one-place of work policy went out of the window in 2020. We were all told to ‘Stay at home’ and that message continues (at least until June 2021). Working remotely – at home, in the spare room or the garden shed opens up risk of cyber-attacks when you’re off the company network. It wasn’t’ just working that went to the web – online sales increased 46%, socialising moved from coffee shops and the pub to Zoom, cash ceased to be king. With all of this extra online activity, the threat of criminal behaviour becomes ever more sophisticated. Investment in Cybersecurity is required to provide continued protection for all of us.
Continuing on from the cybersecurity issue. If we’re all online more, where are we storing all the data that we’re producing? For many the cloud is this mystical space that people might not really understand but can see the value off. If individuals and organisations are producing more data, harnessing the cloud for data storage, access to apps and other software, then growth is almost certain. One prediction is that cloud usage is going to grow 17.5% annually to 2025. With the reduced energy consumption, waste and carbon emissions from cloud storage and a commitment to further energy efficiency (e.g. like Amazon powering their data centres by wind and solar energy) it’s another hot topic for ESG.
With the UK aiming to bring all greenhouse gas emissions to net zero by 2050, there should be a renewed focus on renewable energy like wind and solar and interest in newer technologies (e.g. hydrogen); as costs decline and public support increases. This shift already seems to be happening as there is more focus on being a Sustainable business and with consumers shifting their spending to more ethical and environmentally friendly organisations. You only have to look at the growth of B Corp companies to see this in action, edie report that these organisations grow 28 times faster than the national average.
With the announcement that the UK will ban sales of petrol and diesel cars by 2030 in a bid to achieve zero emissions, there has been much interest in their electric vehicle (EV) alternatives. So much so, Elon Musk of Tesla, beat Amazon’s Jeff Bezos to become the world’s richest person for a short time in 2020. It’s not just the vehicles themselves that will see investment, the whole supply chain from robotics, artificial intelligence and energy storage to the infrastructure required to serve EV should see growth.
If we didn’t know it before the coronavirus pandemic, biotechs really will play a huge part in keeping the economy and the people in it moving. Alongside their work in providing vaccines for zoonotic diseases, they are also hugely innovative in the field of genetics and working on solving the world’s health problems. Hopefully more investment in biotechs will avoid another global pandemic any time soon.
Why are we so excited about the growth of ESG investing? Well, we’ve been working in the field of environment and sustainability recruitment since 1993 so it’s our core market. More investment, as organisations try to resolve environmental challenges, means more jobs across the sector. It’s a ‘win win; for the environment and people looking to work in purpose-driven companies. And we’re here to match the two.
Allen & York – providing Sustainable Recruitment Solutions since 1993.