Sustainable investments have become necessary: ​​“According to the forecast, it will represent 10% of the assets invested in funds at the global level”

Responsible investments appeared timidly in the financial markets in the 90s, their development was very slow, but these investments nevertheless progressed fairly systematically. In recent years, we’ve seen real enthusiasm for this type of product on the part of investors. The COVID-19 crisis, and the resulting restrictions, have encouraged a certain awareness of the challenges of these settings. “Since the first inventory, we have seen real enthusiasm for these products. This is how the French market as a whole doubled in 2021. This is the market for seeded funds and impact funds. This type of investment takes more and more space in listed investments. We now consider this asset class as a new building block. in building portfoliosexplains Romain Avice, director of SRI at DNCA Investments.

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2021, a record year

In the investment market, managers then resort to avoiding companies that behave badly. Building investment products attempts to commit to respecting the Sustainable Development Goals (SDGs) of the United Nations. “In 2021, the global market received the largest amount of flows ever recorded in socially responsible investments. It is $650 billion of new flows that reached this category of investments in 2021 at the global level. The projections are that from now on, it should That socially responsible investing account for 10% of the assets invested in funds worldwide”notes Roger Debas, head of Belgian distribution at Nordea AM.

This good progress can be explained by a broader offering and better adoption of these sustainable products by distributors and end investors. Not only the choices of institutional investors are concerned here, but also the personal interests of individual investors. In Belgium too, we see that the ESG investment market has become an investment category in itself. “At the end of 2020, there were €100 billion invested in SRI funds. This amount is expected to reach €150 billion by the end of 2021. Today, the fund’s offering in Belgium consists of 55% other than SRI standard funds and 45% of SRI funds. SRI. However, the amounts raised in these SRI funds represent only 10% of the Belgian market. We note that the supply is constantly expanding, and today, we are seeing a large number of new funds appearing on this market.”notes Nicholas Crochet, founder and CEO of Funds for Good.

Ecological footprint, a critical point

Among the investors who tend to this type of investment, there is no real difference in terms of age groups. However, concerns vary depending on the age of the investors. In fact, younger investors are more concerned with the environment. Also, consideration of the environmental footprint of investments is becoming increasingly important in the selection of investments. Young people are becoming more aware of environmental and climate impacts through climate rallies and speeches by Greta Thunberg.

This is the easiest topic to bring up to issuers of mutual funds. We can say that today, SRI or ESG has really become an additional dimension in asset management. This dimension is integrated into the selection of securities in the portfolio. It is an integral part of company valuation and risk calculation. Thus any additional financial deviation by a company is severely punished by the markets. We saw this again recently in the case of the French company Orpea, which runs nursing homes. For companies subject to sanctions, the path to renewing the state of trust is particularly long. The lack of social responsibility and respect for certain standards is now paying a heavy price for companies. This is a dimension that can no longer be ignored: neither by companies, nor by managers, nor by investors!

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