Markets are at an ‘ESG inflection point’, offering opportunities for investors, says LGIM CIO Sonja Laud
We now know that the world risks a grim future even if the global economy is decarbonised rapidly, according to a landmark report on climate change. The assessment of the Intergovernmental Panel on Climate Change is clear: inaction is simply not an option for policymakers, companies and investors.
But the paper not only emphasises risks such as devastating weather events. It also points towards huge opportunities for those willing to act today to have a positive impact for decades - and generations - to come.
The insight from teams across LGIM indicates that markets are at an ESG inflection point. With the pricing of ESG factors still patchy, partly due to the availability and quality of data, there are clear advantages for investors with the capabilities to take forward-looking, strategic views of companies, sectors and markets. At the same time, accelerating long-term trends continue to present potent investment opportunities, from climate solutions to data as an asset and digitisation.
Indeed, is it any wonder that more and more end investors are demanding that analysis of criteria like climate risk become part-and-parcel of the investment process?
The experience of COVID-19 has intensified such demands, as the pandemic has reminded us all of the value of early, meaningful action to head off looming threats.
This article was funded by LGIM
