# Where next for sustainable investing?
Author:  Pal Sinha, Barnali 
Author URL: https://financedigest.com/author/pal-sinha-barnali
Published: 2021-06-29
Category: INVESTING
Category URL: https://financedigest.com/category/investing
Meta Title: The Rise of Sustainable Investing: What's Next Beyond
Meta Description: Discover the growing momentum behind sustainable investing post-pandemic, with big names embracing ESG and global policies shaping the future.
URL: https://financedigest.com/where-next-for-sustainable-investinghtml

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**_By Jessica Robinson_**

Markets are currently abuzz with talk of sustainable investing and all things related to ESG (environmental, social and governance). However, while the concept has actually been around for some time, it is only in the last few [years that sustainable investing](https://www.financedigest.com/cepsa-to-nearly-double-investments-over-next-3-years-as-profit-soars.html "Cepsa to nearly double investments over next 3 years as profit soars") was gaining any significant traction.

Then the COVID-pandemic hit and, as it rippled across the world, many proponents feared the worse for [sustainable investing’s](https://www.financedigest.com/closing-the-sustainable-investment-gap.html "Closing the sustainable investment gap") trajectory, as governments, regulators and investors switched attention to short term recovery measures. But the worst did not happen, in fact quite the opposite. The buzz about sustainable [investing has continued](https://www.financedigest.com/ils-investment-returns-continue-to-outperform-according-to-aon-insurance-linked-securities-report.html "ILS investment returns continue to outperform, according to Aon insurance-linked securities report") to grow louder, as we are increasingly aware of how interconnected we are, but also the glaring inequalities we face. So, what does this mean for us now, as we look beyond the pandemic?  Where next for [sustainable investing](https://www.financedigest.com/creating-sustainable-value-through-responsible-investment.html "Creating sustainable value through responsible investment")?

**Jumping on board**

Even as recent as five years ago, the mainstream investment community was [largely](https://www.financedigest.com/large-investment-success-for-basingstoke-cybersecurity-start-up.html "Large investment success for Basingstoke cybersecurity start-up") disengaged from discussions about sustainable investing. These [conversations remained firmly within niche corners of the industry](https://www.financedigest.com/cavai-and-azerion-deliver-industry-first-with-conversational-in-stream-video.html "Cavai and Azerion deliver industry first with conversational in-stream video"). This is shifting dramatically, with most big investors now believing sustainable [investing to be good risk management](https://www.financedigest.com/plastic-antibody-developer-strengthens-board-following-further-investment-from-mercia-fund-management.html "“Plastic antibody” developer strengthens board following further investment from Mercia Fund Management"), leveraging the practice to help manage risk in uncertain times. For sure, 2020 has been somewhat of a game changer in this regard because it turns out that [companies that manage sustainability](https://www.financedigest.com/italys-eni-sets-up-sustainable-transport-services-company.html "Italy’s Eni sets up sustainable transport services company") risks better, manage other risks better as well.

It helps also that some [big names are getting more vocal about sustainable](https://www.financedigest.com/big-brands-set-to-miss-plastic-sustainability-targets.html "Big brands set to miss plastic sustainability targets") investing. Perhaps a pivotal moment happened in early 2020, when Larry Fink in his annual letter famously stated that Blackrock would [put sustainability at the centre of its investment](https://www.financedigest.com/10-ways-to-put-together-a-killer-investment-pitch.html "10 WAYS TO PUT TOGETHER A KILLER INVESTMENT PITCH") strategy. With all this momentum underway, we are going to see investors strengthening their ESG commitments and demand for [sustainable and green products](https://www.financedigest.com/5-ways-to-sustain-productivity-when-the-clocks-go-back.html "5 ways to sustain productivity when the clocks go back") growing at a rapid pace.

**The role of policy and regulation**

There is a great deal happening on the global policy agenda too which is shaping the [way many investors](https://www.financedigest.com/5-ways-that-start-ups-can-attract-investors.html "5 Ways That Start-Ups Can Attract Investors") are thinking about sustainability. The Paris Agreement on Climate Change gave us a global carbon budget, and we are seeing widespread [commitments being made by corporates and investors alike to achieving the Sustainable](https://www.financedigest.com/green-cloud-one-way-your-company-can-commit-to-sustainability.html "Green Cloud: one way your company can commit to sustainability") Development Goals. All this bodes well – and let’s face it, now we have the US back at the table, things are certainly looking up.

On the regulatory front, the European Union is leading the charge, with its Sustainable Finance Action [Plan a sea change](https://www.financedigest.com/exclusive-olympics-paris-2024-plans-games-relay-changes-fewer-torches-source.html "EXCLUSIVE-Olympics-Paris 2024 plans Games relay changes, fewer torches-source") for investors. These include new requirements to disclose the sustainability credentials of funds, and [regulations aimed](https://www.financedigest.com/activision-aims-to-help-uk-regulator-better-understand-our-industry.html "Activision aims to help UK regulator ‘better understand our industry’") at boosting transparency and combatting greenwashing. The EU is certainly out front on sustainable finance regulation but countries around the [world are watching closely on its success in implementation and are likely to follow suit in the months and years to come](https://www.financedigest.com/whats-coming-next-in-the-clearing-and-settlement-world.html "What’s coming next in the clearing and settlement world?").

**A broad church?**

The sustainable [investing universe is wide and ESG](https://www.financedigest.com/explainer-what-is-the-s-in-esg-investing.html "Explainer-What is the ‘S’ in ESG investing?") is a broad church. However, as we look to the future certain themes and issues will gain more attention than others. For example, climate change will remain a [top priority for many investors](https://www.financedigest.com/top-ten-biggest-mistakes-by-novice-investors-and-how-to-avoid-them.html "TOP TEN BIGGEST MISTAKES BY NOVICE INVESTORS – AND HOW TO AVOID THEM"). With COP26 scheduled for the end of the year, the [summit is expected to see new and improved climate](https://www.financedigest.com/eu-to-urge-big-polluters-to-toughen-climate-pledges-by-cop27-summit-draft.html "EU to urge big polluters to toughen climate pledges by COP27 summit – draft") commitments, with companies and investors stepping up. This action is also being spurred on by a number of momentous events hitting [Big Oil](https://www.financedigest.com/big-oil-doubles-profits-in-blockbuster-2022.html "Big Oil doubles profits in blockbuster 2022") in the last couple of months, with three global fossil fuel giants suffering embarrassing rebukes over their lack of climate change action. Investors are taking note and are increasingly willing to force companies to reduce their carbon dioxide emissions quickly.

Interestingly, the pandemic has shone a spotlight on social issues, [pushing many investors](https://www.financedigest.com/investors-flee-uk-bonds-pushing-gilts-to-huge-monthly-loss.html "Investors flee UK bonds, pushing gilts to huge monthly loss") to reconsider the management of social risks within their portfolios. This elevation of the ‘S’ in ESG is likely to continue. At the same time, the Black Lives Matter movement is [bringing into sharper focus the lack of meaningful progress on racial equality and progressive investors](https://www.financedigest.com/worlds-best-islands-bring-holidaymakers-and-investors-flocking-to-the-philippines.html "‘World’s best islands’ bring holidaymakers and investors flocking to the Philippines") are considering what action they can take. Diversity will continue to matter.

Take, for example, the growth and traction of gender-lens investing – an approach that integrates gender-based factors into [investment strategy](https://www.financedigest.com/investing-in-a-first-party-data-strategy-can-save-the-day-for-retailers.html "Investing in a first-party data strategy can save the day for retailers"), process and analysis, in order to deliver positive benefits to women and girls. It is a growing sector and attention is not only coming from sustainable and impact investors. The evidence is stacking up as research continues to demonstrate the compelling case for [gender diversity](https://www.financedigest.com/breaking-down-venture-capitals-gender-and-diversity-barriers.html "Breaking down Venture Capital’s gender and diversity barriers") in the workforce, for overall economic growth, as well as improvements in innovation and productivity.

**Still some** [challenges to overcome](https://www.financedigest.com/disadvantages-key-challenges-to-overcome-when-working-from-home.html "Disadvantages – key challenges to overcome when working from home")

There are still [challenges to overcome](https://www.financedigest.com/how-to-overcome-the-challenges-faced-by-women-in-business-4.html "How to overcome the challenges faced by women in business") to embed sustainable investing as the ‘new norm’. Disclosure and ESG data remain thorny issues, with concern that data is still fragmented, disclosure is inconsistent, and the lack of standardization holds [investors back](https://www.financedigest.com/glencore-courts-120-teck-investors-for-bid-backing-as-spinoff-vote-looms-source.html "Glencore courts 120 Teck investors for bid backing as spinoff vote looms -source"). We still have some way to go on the regulatory front too – while the EU has been a front runner with its sustainable finance agenda, there are some delays as well as ongoing heated debates.

Despite these challenges, we have many reasons for optimism. Perhaps one of the most exciting developments is how retail investors are waking up to the sustainable [investing trend](https://www.financedigest.com/top-5-investment-trends-to-watch-this-summer.html "Top 5 Investment Trends to Watch this Summer"). Interestingly, research tells us that a lot of this drive is coming from women as well as younger generations. For certain, new audiences and new conversations are to be had.

![](https://prod.superblogcdn.com/site_cuid_cm5qst7v3003gwirgwqtxn8i8/images/picture8-450x494-1736838258006-compressed.jpg)

**Jessica Robinson is a leading expert on sustainable finance and responsible investing, and author of** [**Financial Feminism: A Woman’s Guide to Investing for a Sustainable Future**](https://moxiefuture.com/financial-feminism-book/) **.** **Find out more at** [**moxiefuture.com**](https://moxiefuture.com/)


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