Sustainable investment opportunities, long confined to private equity and debt markets, are starting to make their way into listed equity, says Deutsche Asset Management.
Listed sustainable investments have historically been confined to renewable energy, energy efficiency and healthcare, according to Deutsche Asset Management (DWS) head of ESG thematic research Michael Lewis.
Speaking to InvestorDaily, Mr Lewis said that could be changing – pointing to a report last year by the Business & Sustainable Development Commission.
"The report identified 12 sectors that will create opportunities under the Sustainable Development Goals. Healthcare, sustainable agriculture and sustainable transportation, for example. The report found these kind of investments can boost GDP globally by 10 per cent per annum," he said.
Up to this point, responsible investment has been confined to two or three sectors (primarily renewable energy) or it has resided in relatively inaccessible private equity deals, Mr Lewis said.
"It's broadening out. It's a lot better than it was 10 years ago when it was just renewable energy. The investment opportunity is starting to spread to other sectors," he said.
Water management solutions and more efficient transport are a particular focus, he said.
"We're at early stages. But it is wider, and that may reduce the risk of bubbles," Mr Lewis said.
"I think that was what hurt renewable energy/solar in 2005-06 because you were getting a lot of money going into one sector. This may well be a slightly healthier environment. You can never say that bubbles are not going to be created, but maybe it reduces that risk."
DWS is part of a working group that is examining the physical risks of climate change on investment portfolios, and attempting to map the risks to investors.
While much of the work DWS does is downside protection, Mr Lewis said, the company is also examining microfinance and clean tech companies in China.
"There's capital moving to encourage good behaviours by corporations," he said.
The ifa Excellence Awards are back in 2021 and nominations are now open! This prestigious accolade recognises exceptional professionals within the financial advice industry, shining a light on the outstanding achievements from the nation's best and brightest. If this sounds like you or someone you know, then nominate today for the ifa Excellence Awards 2021!
A private global asset manager has announced the launch of small-cap fund in Australia. ...