Investor engagement will be “more influential than regulation” in 2021 as issues previously confined to the activist minority are taken up by long-term shareholders who want to drive greater action on sustainability challenges.
“We expect a crescendo of asset owners’ voices calling for companies and investors to provide better sustainability data – alongside clear and measurable energy transition plans – to strengthen their investment decision-making and better assess risks in line with their fiduciary responsibility. This, not regulators, will fast track disclosures and new commitments in 2021,” the global asset manager said in a report on the latest ESG trends.
Impact investing is also set to take off, with the next wave of growth likely to be driven by investors looking to identify and address challenges in climate and inequality – a phenomenon that will “define and differentiate” sustainable investing for years to come.
We expect to see increased targeted investment in the areas of climate, resource scarcity, diversity, food and agriculture, and healthcare, among others, as society rebuilds post-pandemic and investors seek return opportunities through solutions to these large-scale challenges,” UBS said.
Key markets that UBS expects to ramp up include plant-based meats and electric vehicles, with adoption coming “sooner than expected” and near-complete decarbonisation of the transportation sector possible by 2040.
“Our forecast is that electric vehicles will account for 40 per cent of global new car sales by 2030. Although many industry players think that is too high, we think it could be too low. Rapidly decreasing technology costs, a benign global regulatory environment, government funds and the rising cost of carbon emissions will lead to a fully electric future, not only for cars and trucks,” UBS said.
