-
Five insights from leading sustainable investors

Five insights from leading sustainable investors

As part of a new series supporting the 2021 edition of ‘Investing for Global Impact: A Power for Good’, we introduce the report and five insights from leading sustainable investors. For more information about the series, please click the links at the bottom of the page.

Investors are increasingly recognising the impact their portfolios have, both positive and negative, on people and the planet, as well as the returns they generate.

Far from being a fad, we believe the shift towards sustainable investing will endure, reflecting both an obligation and an opportunity for the world’s most influential investors.

Investing for Global Impact - report out now

Against this backdrop, we’re delighted to present the 2021 edition of ‘Investing for Global Impact: A Power for Good’ (download your copy), which this year surveyed more than 300 leading investors with an average portfolio of $833 million. Produced by Campden Wealth on behalf of Global Impact Solutions Today (GIST) and Barclays Private Bank, the report provides unique insights into the attitudes and actions of the world’s wealthiest individuals, families, family offices, and their foundations when it comes to generating positive impact with their capital.

In addition to revealing why and how these investors have made their portfolios more sustainable, it showcases the themes and approaches currently attracting the most inflows. The report provides valuable insights for anyone interested in sustainable investing, whether looking to start or eager to compare their experience against other knowledgeable peers.

Below are five takeaways which showcase the unique perspectives of the report’s respondents at the forefront of this movement, as well as questions to reflect on for your own portfolio:

1. Their portfolios are becoming sustainable faster than they’d expected

Each year, we ask leading investors about the proportion of their portfolios that are currently allocated to sustainable investments, and how they expect that to evolve in the future.

In the 2020 report, respondents indicated that this averaged 20% of their portfolio and expected sustainable investments to account for, on average, 22% of their portfolios by the start of 2021. But when surveyed this year for the 2021 edition, the current percentage reported is already much higher at 36%1.

Looking ahead, by the end of 2021, they expect the proportion of their portfolio invested sustainably to increase to 41% on average, rising further to 47% in 2022, and to 54% by 2027.

Amidst the global pandemic, respondents have significantly accelerated their portfolio allocations to sustainable investing. Evidence from the report indicates the trend could further accelerate as the recovery continues and the industry grows.

Proportion of respondent's total investment portfolio / budget / AUM which was allocted to impact investing

All respondents involved in impact investing. Figures may not add up to 100% due to rounding.
Source: Campden Wealth / GIST / Barclays Private Bank, Investing for Global Impact 2021.

For your reflection

What percentage of your portfolio is invested sustainably today? How much would you like this to increase, and by when?

2. They use multiple sustainable investing approaches

I regard social impact investing as a real opportunity and one we should embrace with enthusiasm, with energy and indeed with excitement. Let’s see what we can do by 2030 and beyond to leave this planet – which is in some distress at the moment – in better shape for the generations that are going to come behind us. (…) social investing can have direct beneficial impact for social groups and for environmental change.

Enda Kenny

Former Taoiseach of Ireland, from Investing for Global Impact: A Power for Good 2021

While many commentators and investors continue to use terminology around sustainable investing haphazardly, the leading investors in this space understand and use various approaches to help them achieve their desired aims. From ethical to responsible to impact investing, each strategy offers different implications and outcomes to help investors achieve their motivation to do good.

For example, 33% of respondents surveyed use an ethical approach across all of their investments, by avoiding or negatively screening companies or industries based on religious beliefs, personal / family views, or social values. And in total, 80% use it across at least some of their investments. (25% majority, 22% some).

Compare this with responsible investing, which integrates environmental, social and governance (ESG) considerations into investment decisions. Here, 96% use this approach on at least part of their portfolio. (30% all, 38% majority, 28% some).

Finally, there’s ‘impact investing’, where investors intentionally aim to address a particular social or environmental challenge by targeting a specific outcome alongside a financial return. Here, the greatest proportion of respondents said they use this approach with only some of their investments (41%), although again only a small proportion (6%) said they don’t use this approach at all.

For your reflection

What sustainable investing approaches do you currently use? Or think would suit you? Are you confident they reflect and can deliver on your aims and motivations?

3. Their investments reflect current health and wellbeing trends

The UN’s Sustainable Development Goals (SDGs), established in 2015, form a blueprint towards greater prosperity, inclusivity, and equality. Respondents were asked how their investments aligned with SDGs.

Perhaps unsurprisingly in light of the pandemic, the top answer was ‘good health and wellbeing’, with some 72% pointing to this SDG. Environmental themes also featured prominently, with 53% of respondents citing ‘clean water and sanitation’, ‘affordable and clean energy’, and ‘climate action’. Following the UN’s Climate Change Conference (COP26) in November, we would expect interest in climate-related investments to intensify further. 

The top five impact themes, aligned to the UN's SDGs that respondents target

All respondents involved in impact investing. Figures may not add up to 100% as multiple answers were permitted.
Source: Campden Wealth / GIST / Barclays Private Bank, Investing for Global Impact 2021.

For your reflection

Of the 17 SDGs, which themes resonate with your interests and do you believe can generate attractive returns? Do you want to follow the money or take a contrarian view, in areas like the ocean economy or biodiversity, where there may be less of a crowd?

4. Climate change is front-of-mind but they have differing views on addressing it

Investors are increasingly seeking to play a role in combatting climate breakdown, either by backing solutions or avoiding investments that exacerbate the problem.

Four-in-five investors surveyed factor climate change into their decisions and 30% of all respondents said they are actively targeting investments that support the transition to a low-carbon economy. Seven-in-ten agree that transitioning to a net zero economy is the greatest commercial opportunity of our age.

At the same time, only 25% of respondents knew the carbon footprint of their portfolio, highlighting an ‘information gap’. As well, investors were nearly equally divided about investing in fossil fuel companies (53% against vs 47% for), with multiple rationales provided.

Primary reason respondents gave for addressing climate change

All respondents involved in impact investing. Figures may not add up to 100% due to rounding.
Source: Campden Wealth / GIST / Barclays Private Bank, Investing for Global Impact 2021.

I think what we need to really get the job done of zero carbon emissions by 2050 is to have everybody involved. That means we’ve got to encourage existing industries, that might have a bad reputation, to change, and enlarge the tent and make sure that we don’t make good the enemy of perfect. We’ve got to have our eyes on the prize for 2050, zero emissions, and that means a change of narrative towards solutions.

The Edge

U2 guitarist, from Investing for Global Impact: A Power for Good 2021

For your reflection

Do you know the climate risks your portfolio faces? Or where to find investment opportunities? What ambition have you set to ‘green’ your portfolio?

5. They see purpose and profit co-existing

Eighty per cent of respondents believe that sustainable investing does not require compromising on investment returns. Most (48%) believe it’s not necessary to give up returns for impact, but that an investor could make an active and personal choice to target lower returns or take on additional risk. Others simply either see no trade-off (24%) or no relationship (8%) between impact and financial returns.

The vast majority (79%) of respondents reported their 2020 sustainable investment returns had either met (60%) or exceeded (19%) expectations. Particularly positive were the most experienced sustainable investors. Those who consider it to be their primary investment approach reported returns exceeding their expectations at double the baseline average (38%). This may indicate that as respondents have gained more experience of sustainable investing, they have been able to select higher-quality sustainable investments.

Whether respondents' 2020 impact investment returns met their expectations

All respondents involved in impact investing. Figures may not add up to 100% due to rounding.
Source: Campden Wealth / GIST / Barclays Private Bank, Investing for Global Impact 2021.

The most important indicator [for the success of a company] is not profit, it’s value. Profit is the past, companies must be forward thinking. It is possible to be extremely profitable today but create very little value in the future (…) For our stakeholders, we pursue the triple bottom line. This includes economic sustainability through the principle of share value. We see profit as a means, not an end, and it is equally shared amongst all the stakeholders to build long-term relationships and value over time.

Dr Andrea Illy

Chairman, Illycaffé SpA, from Investing for Global Impact: A Power for Good 2021

For your reflection

Are you still holding onto old notions of returns and impact? What additional knowledge or experience of sustainable investments would help you make better decisions?

The experts' view

Our experts share regional and audience insights from the 2021 findings.

Charities

Charities are increasingly looking beyond traditional ethical screening to proactively target positive social and environmental outcomes. Impact investing is growing rapidly, offering new and exciting opportunities for charities to use their investments to generate real and lasting change.

Ian Chesham

Director of Charities and Not-for-Profits at Barclays Private Bank

Family Offices

Family offices continue to actively embrace impact investing, with more than three-quarters of respondents investing in this way. The report revealed a growing preference for private market deals, together with increased focus on early-stage companies. Family offices are particularly well-placed to catalyse solutions and pioneer change by funding new innovations to address global challenges over a long time horizon.

Effie Datson

Global Head of Family Office at Barclays Private Bank

 

 

Europe

European investors remain at the forefront of sustainable investing. Within this group, more than a quarter are adopting impact investing as their primary strategy and almost half are investing for impact across multiple asset classes. They are also amongst the most environmentally conscious investors, with 47% seeing climate change as highly relevant to their portfolios, as compared to 24% for North America and 41% for the global average.

Gérald Mathieu

Head of Barclays Private Bank Europe and the Middle East

Asia

Investors in the Asia-Pacific region typically are at an earlier stage in their sustainable investing journeys than their global peers, with just 9% reporting impact investing as their primary strategy. However, those that are active in the space are allocating a significantly larger proportion of their portfolios towards it than the global average, with 54% of respondents investing more than half of their portfolios in impact strategies.

Evonne Tan

Head of Barclays Private Bank Singapore

What now?

This overview provides just a selection of the insights contained in the report. Each chapter provides further details from these leading investors on their strategies, portfolios and performance, together with in-depth case studies and discussions with experts and innovators.

We’ll be releasing a series of articles based on the report to help investors learn how to make their portfolios more sustainable in both purpose and profit.

""

Investing for Global Impact

The global appetite for sustainable investing is growing at a phenomenal pace. Find out how investors are influencing tomorrow in the 2021 ‘Investing for Global Impact’ report.

""

Download the Investing for Global Impact Report

Unique insight into the motivations and experiences of some of the world’s leading individual investors, families, family offices, and foundations when it comes to investing sustainably.

Investments can fall as well as rise in value. Your capital or the income generated from your investment may be at risk.

This communication:

Has been prepared by Barclays Private Bank and is provided for information purposes only
Is not research nor a product of the Barclays Research department. Any views expressed in this communication may differ from those of the Barclays Research department
All opinions and estimates are given as of the date of this communication and are subject to change. Barclays Private Bank is not obliged to inform recipients of this communication of any change to such opinions or estimates

Is general in nature and does not take into account any specific investment objectives, financial situation or particular needs of any particular person
Does not constitute an offer, an invitation or a recommendation to enter into any product or service and does not constitute investment advice, solicitation to buy or sell securities and/or a personal recommendation. Any entry into any product or service requires Barclays’ subsequent formal agreement which will be subject to internal approvals and execution of binding documents

Is confidential and is for the benefit of the recipient. No part of it may be reproduced, distributed or transmitted without the prior written permission of Barclays Private Bank
Has not been reviewed or approved by any regulatory authority.

Any past or simulated past performance including back-testing, modelling or scenario analysis, or future projections contained in this communication is no indication as to future performance. No representation is made as to the accuracy of the assumptions made in this communication, or completeness of, any modelling, scenario analysis or back-testing. The value of any investment may also fluctuate as a result of market changes.

Barclays is a full service bank. In the normal course of offering products and services, Barclays may act in several capacities and simultaneously, giving rise to potential conflicts of interest which may impact the performance of the products.

Where information in this communication has been obtained from third party sources, we believe those sources to be reliable but we do not guarantee the information’s accuracy and you should note that it may be incomplete or condensed.

Neither Barclays nor any of its directors, officers, employees, representatives or agents, accepts any liability whatsoever for any direct, indirect or consequential losses (in contract, tort or otherwise) arising from the use of this communication or its contents or reliance on the information contained herein, except to the extent this would be prohibited by law or regulation. Law or regulation in certain countries may restrict the manner of distribution of this communication and the availability of the products and services, and persons who come into possession of this publication are required to inform themselves of and observe such restrictions.

You have sole responsibility for the management of your tax and legal affairs including making any applicable filings and payments and complying with any applicable laws and regulations. We have not and will not provide you with tax or legal advice and recommend that you obtain independent tax and legal advice tailored to your individual circumstances.

THIS COMMUNICATION IS PROVIDED FOR INFORMATION PURPOSES ONLY AND IS SUBJECT TO CHANGE. IT IS INDICATIVE ONLY AND IS NOT BINDING.