Green
5 Drivers Behind the Sustainable Investing Shift
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5 Drivers Behind the Sustainable Investing Shift
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Against all odds, sustainable investing in the U.S. smashed records in 2020.
Estimated net flows reached $20.9 billion in the first six months alone—that’s nearly equal to the amount of new money invested in all of 2019.
What is driving the shift to sustainable investing? This visual dashboard from Raconteur explains five key drivers, from generational shifts to investors’ preferred strategies.
DRIVER #1:
Millennial Investors and Personal Beliefs
Interest in sustainable investing is booming across the general population. However, there’s a clear generational trend, as well.
While the portion of each group that is “very interested” in sustainable investing has shot up since 2015, this share is significantly higher for millennials.
| Year | General Population | Millennials |
|---|---|---|
| 2015 | 19% | 28% |
| 2017 | 23% | 38% |
| 2019 | 49% | 70% |
Another correlated trend emerges with this.
These days, investors are more likely to follow their conscience. Acccording to a recent report by Schroders, the majority of investors will not budge on investing against their beliefs, even if returns were theoretically higher.
| Level of Investment Knowledge | |||
|---|---|---|---|
| Would you invest against your personal beliefs? | Beginner | Intermediate | Expert |
| Yes, if returns are higher | 18% | 20% | 29% |
| No, I would not invest against my beliefs. | 82% | 80% | 71% |
DRIVER #2:
Top Themes of Interest
Powered by these personal beliefs, which categories are attracting investors? It turns out many investors are very interested in including environment-related themes into their portfolios:
- Plastic reduction: 46%
- Climate change: 46%
- Community development: 42%
- Circular economy: 39%
- Sustainable Development Goals: 36%
- Multicultural diversity: 30%
- Gender diversity: 30%
- Faith-based values: 24%
However, these aren’t the only considerations. Other themes that fit into broader ESG categories such as gender diversity or faith-based values make an appearance, too.
DRIVER #3:
Which Investor Groups are Driving Interest?
Now, we turn our attention to the specific groups that are responsible for the growing momentum towards sustainable investing. This may be surprising to some, but it is institutional investors that are leading the pack by far:
| Group | Share of Group |
|---|---|
| Institutional investors | 85% |
| Institutional consultants | 39% |
| Internal stakeholders | 30% |
| High net worth (HNW) investors | 19% |
| Politicians or regulators | 13% |
| Industry trade bodies | 6% |
This also disproves a common myth that millennials are the only ones interested in the sector. Institutional investors equally want to see a double bottom line: an ROI on their money, while also making the world a more sustainable place.
DRIVER #4:
Sources of Information
So where are institutional investors sourcing their information around sustainable investing? Sharing their ideas in like-minded communities, such as webinars and conferences emerged as the preference for nearly two-thirds of those surveyed in this group.
But how do investors know that their investment is truly sustainable? For this, 34% of global investors feel that third-party labels from independent organizations help lend credibility, and confirm that the chosen investment in question is indeed carried out in a responsible manner.
As more and more institutional investors are digital natives, a significant share of them are also beginning to use social media to influence their decision-making process—and some even rely on it as their key source of research.
DRIVER #5:
Sustainable Investing Strategies
We’ve left the best for last—armed with this knowledge and confidence, which sustainable investing strategies are the most attractive? Here’s how organizations are approaching ESG:
- Sustainability integration: 52%
- Negative screening: 50%
- Shareholder engagement: 31%
- Impact investing: 19%
- Positive screening: 12%
- Thematic investing: 5%
While negative screening—avoiding investments in “sin” stocks such as tobacco or fossil fuels—is still a popular strategy, actively integrating sustainability into one’s portfolio is emerging more front and center.
The Overall Trend of Sustainable Investing
The data makes clear that institutional investors are the main driving forces behind sustainable investment for the time being. But as millennials accumulate wealth, their values may naturally lead them towards more sustainable investment.
Another important point to note is that sustainable investing has been resilient to change. In fact, despite the COVID-induced stock selloff in early 2020, ESG leaders exceeded expectations.
While these drivers evolve over time, it’s clear that sustainable investing is more than having its moment in the spotlight—it’s here to stay.
Environment
The Biggest Carbon Emitters, By Sector
The manufacturing and construction sector contributed to 6.3 billion tonnes of global greenhouse gas emissions in 2019.
The Biggest Carbon Emitters, By Sector
It’s no secret that greenhouse gas emissions need to decrease drastically in order to fight the effects of climate change.
As countries across the globe ramp up efforts to reduce global warming, every industry needs to do its part. So who’s lagging and who’s leading?
Although often less discussed, the manufacturing and construction sector is a large contributor to global greenhouse gas emissions.
The above graphic from Northstar Clean Technologies takes a look at the biggest contributors by sector in relation to greenhouse gas emissions.
Breakdown Of Emissions
The manufacturing and construction sector is a growing one, and as population and infrastructure expand, it’s vital that we take all actionable paths to reduce emissions.
Manufacturing and construction contributed to 6.3 billion tonnes of global greenhouse gas emissions in 2019. Let’s look at the breakdown of greenhouse gas emissions by sector over the years from Our World In Data.
In 2019 electricity and heat were the biggest carbon emitters, while transport came in second place.
Manufacturing and construction overtook the agriculture sector in 2007 to become the third largest contributor to global greenhouse gas emissions.
Building a Solution
One solution to reducing the impact of the manufacturing and construction sector is to repurpose materials. This reduces emissions and waste while also being both energy and cost-efficient.
Take a material like asphalt shingles as an example. This product is found on the roofs of approximately 75% of single-family detached homes in the U.S. and Canada.
In 2018, 86% of total asphalt shingles waste was dumped in landfills where they do not decompose or biodegrade. Reusing and recycling existing materials like asphalt shingles is a vital step in reducing greenhouse gas emissions in the industry.
Northstar Clean Technologies repurposes the three primary components of asphalt shingles which are then recycled back into the market.
By reprocessing asphalt shingles into three primary components, Northstar’s clean technology has been shown to reduce CO₂ emissions by 60% compared to virgin production of liquid asphalt.
Click to learn how Northstar Clean Technologies is becoming one of the top material recovery providers in North America.
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Mapped: Carbon Dioxide Emissions Around the World
This graphic maps out carbon emissions around the world and where they come from, using data from the European Commission.
Creator Program
Mapped: Carbon Dioxide Emissions Around the World
According to Our World in Data, the global population emits about 34 billion tonnes of carbon dioxide (CO₂) each year.
Where does all this CO₂ come from? This graphic by Adam Symington maps out carbon emissions around the world, using 2018 data from the European Commission that tracks tonnes of CO₂ per 0.1 degree grid (roughly 11 square kilometers).
This type of visualization allows us to clearly see not just population centers, but flight paths, shipping lanes, and high production areas. Let’s take a closer look at some of these concentrated (and brightly lit) regions on the map.
China, India, and the Indian Ocean
As the two most populated countries and economic forces, China and India are both significant emitters of CO₂. China in particular accounts for about 27% of global CO₂ emissions.
And looking at the oceans, we see how much shipping adds to emissions, with many shipping lanes east of China clearly outlined as well as the major Indian Ocean lane between the Strait of Malacca and the Suez Canal.
The United States and Central America
The United States is one of the world’s biggest carbon emitters. While other countries like Qatar and Saudi Arabia technically have higher emissions per capita, their overall emissions are relatively low due to smaller populations.
Across the U.S., the most brightly lit areas are major population centers like the Boston-Washington corridor, the Bay Area, and the Great Lakes. But also lit up are many of the interconnecting highways linking all these population centers, even in the less-populated middle of the country.
With so much traffic in and out of the U.S., the oceans become a murky mix of shipping and flight paths. To the south, very clearly visible is the major concentration of people around Mexico City and the traffic flowing through the Panama Canal.
South America’s Network of Emissions
Like the other regions, some of South America’s most populated areas are also the biggest emitters, such as São Paulo and Rio in Brazil and Buenos Aires in Argentina. This map also highlights the continent’s rough terrain, with most of the population and highway emissions limited to the coasts.
However, the cities aren’t the only big emitters in the region. There are clear lines intersecting the Amazon forest in many sections where cities and roads were constructed, including the economic hub city of Manaus along the Amazon River. Likewise, the oceans have many major shipping lanes highlighted, particularly East of Brazil.
Europe and North Africa
Germany is one of Europe’s biggest carbon emitters—in 2021, the country generated almost 644 million tonnes of CO₂.
Also making an impression are Italy (which is the second-highest CO₂ emitter after Germany) and the UK, as well the significant amount of trade along the English Channel.
Compared to the intricate network of cities, towns, and bustling highways spanning Europe, across the Mediterranean are far clearer and simpler lines of activity in Northern Africa. Two major exceptions are in the Middle-East, where Egypt’s Nile River and Suez Canal are massively lit up, as well as Israel on the east of the sea.
But a more significant (albeit murkier) picture is drawn by the massive amounts of shipping and flight paths illuminating the Atlantic and Mediterranean at large.
Net Zero by 2050
To mitigate the negative effects of climate change, countries around the world have made commitments to reach net-zero emissions.
Imagining the global map of emissions with these commitments in action requires a complete transformation of energy production, consumption habits, transportation infrastructure, and more. And even then, a future generated map wouldn’t be fully dark, as “net-zero” is not equivalent to zero emissions but a balance of emissions and removal.
How might this map of global emissions look in the near and distant future? And what other interesting insights can you generate by browsing the world this way?
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