Environmental, Sustainable and Governance investing (ESG’s)

ESG Investing continues to break records and has attracted nearly 233 billion in assets over the first quarter of 2021 (Morningstar.co.uk, 08/02/2021), which is almost double the figure for 2019.

Three key areas a predicted to see growth within ESG:

1. Green Bonds 

a) These are fixed-income instruments explicitly designed to support specific climate-related or environmental projects.

b) Between Q1 2020 and Q2 2021, the issuing of green bonds quadrupled to approximately £95billion (the highest since market inception) (Refinitiv 23/04/2021) globally as the climate continues to climb the investor agenda. 

c) This is in addition to the announcement back in the Spring Budget, that Chancellor Rishi Sunak that in summer 2021 the UK will issue its first sovereign green bond. The green bond – or green gilt – will be followed by a further issuance later in the year, with issuance totalling a minimum of £15bn for the financial year (Climatebonds.net 10/03/2021).

2. Solar PV insllations 

a) A solar photovoltaic (PV for short) system is more commonly known as a solar power system designed to supply usable power by converting sunlight (or solar cells) directly into electricity.  

b) Solar PV installations are set to rise approximately 28% over the next two years (Bloomberg NEF 01/03/2021). 

c) These projects have received governmental backing in their bid to help corporations and insurance companies achieve their ESG sustainability goals.

3. Transition Finance

a) Transition Finance are an umbrella term for a range of financial tools designed for ‘big carbon polluters’ to support adopting greener alternatives. 

b) Transition Finance has been hailed as essential in helping high carbon companies transition towards net-zero emissions. It is, of course, a vital part of the battle against climate change, and the trend is expected to accelerate (Investment Executive 08/01/2021).

c) Without transition bonds, interests rates will likely increase if the sustainability targets aren’t met. So the incentive from a monetary perspective is clear, coupled with the obvious PR benefits.

 

If you have any questions about how you can best take advantage of some of the new schemes, or likewise can be prepared for some of the upcoming changes, please get in touch at [email protected] or by calling us at +44 (0)1444 715200

DISCLAIMER: This article is for general information and is not intended to address your particular requirements. No individual or company should act upon such information without receiving appropriate professional advice.