by Stephan Pouyat, Global Head of Capital Markets and Funds Services, Euroclear
ESG, millennials, local market opportunities
The other big factor, I believe, is shifting investor demographics – and in particular the increasing influence of women and millennials.
Women are now a powerful force in the investment world. At an event organised by InvestmentNews in London late last year, one panellist said women now control up to half of Britain’s wealth and most have an avid interest in ESG strategies.
Several studies have shown that a large proportion of millennials also look to combine investing their money with ‘doing good’. The latest global investment study from Schroders showed the 18 to 35-year old group was likely to stay invested in a positive ESG investment for longer than older investors.
Growing awareness of the effects of man-made environmental impact, concern over ethical sourcing, and a variety of social and governance factors – all combine with the search for sustainable long-term returns to suggest ESG investing is rapidly going mainstream.
The same cannot be said of impact investing, which is the younger and smaller cousin of ESG investing. However, like ESG, it is firmly on the rise.
Impact investing is defined as ‘investing to generate a measurable, beneficial social or environmental impact alongside a financial return’. It is the bridge between philanthropy and market-rate capital.
The Global Impact Investing Network (GIIN), a non-profit in this area, tracked almost 8,000 related deals in 2016, involving USD 22 billion.
In its latest annual survey it said fund managers “see significant interest from most investor types, especially foundations, family offices and banks, and growing interest from sovereign wealth funds, pension funds and insurance companies.”
The survey also found that around 60% of impact investors studied were either tracking the UN’s Sustainable Development Goals (SDGs) in their investments or were planning to in the near future.
This brings me back to my last blog, which looked at the impact international investors are increasingly having on emerging economies by targeting the SDGs.
All the numbers point in one direction: there is a mounting pool of long-term capital waiting for the right opportunities in the developing world. But markets that are potential recipients must have the right processes in place to manage the investment flows and the investor actions that follow.
As a key conduit within the investment ecosystem, Euroclear continues to work with many of these countries to help them structure their tax and regulatory systems to meet the needs of international investors. And that is an important part of making the UN’s development goals a reality.
It's a brave new world for sure.
As Global Head of Capital Markets and Funds Services at Euroclear, Stephan Pouyat cares passionately about aligning the financial sector with moves to accelerate development among the world's emerging economies.