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More investors believe sustainable investments 'deliver higher returns'

Kumutha Ramanathan
·Contributor
·2-min read
Wind farms
Wind farms are key part of renewable energy mix on offer. Photo: Getty

An increasing number of investors believe that sustainable investments lead to higher returns, according to a new study from Block-Builders.net that was released on Tuesday.

It found that 44% of knowledgeable or expert investors fall into this category, with those in Asia and America particularly enthusiastic about social and green investments. German and European investors are lagging behind, it added.

"More and more investors are coming round to the idea that sustainability and returns are not mutually exclusive," said Block-Builders analyst Raphael Lulay. "Despite recent gains for these assets, we may still be at the beginning of a long term investment trend.”

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The study also found that 37% of financial experts did not want to include sustainable environmental, social and corporate governance (ESG) investments in their portfolios in 2007, while only 4.1% are equally hesitant in 2020.

Further data reflects this growing interest.

According to the Block-Builders.net survey, interest in “sustainable stocks” reached a 12-month high on Google in 2020. The Google trend score, which indicates the relative search volume, reached a maximum trend score of 100 based on this search result.

This nascent trend is also seen on the trading floor.

Sustainable investments in the form of funds and shares have been among the recent leaders on various indices. Over the last 12 months, the Global Clean Energy ETF (ICLN) rose by 68.8%. The MSCI World Socially Responsible ETF (UC44.L) also gained 4.9% in value - all in a period during which the DAX (^GDAXI) has declined by around 6.8%, said the study.

The news comes as the European Central Bank said it plans to review its strategy and adopt more sustainable investment practices. According to ECB policymaker Olli Rehn in an interview on Monday, the bloc needs to take into account growing global challenges, such as climate change and the need for sustainable economic development.

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