Connect with us

Green

5 Drivers Behind the Sustainable Investing Shift

Published

on

View the full-resolution version of this infographic.

Five Sustainable Investing Drivers 1200px

5 Drivers Behind the Sustainable Investing Shift

View the high resolution infographic by clicking here.

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.

YearGeneral PopulationMillennials
201519%28%
201723%38%
201949%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?BeginnerIntermediateExpert
Yes, if returns are higher18%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:

GroupShare of Group
Institutional investors85%
Institutional consultants39%
Internal stakeholders30%
High net worth (HNW) investors19%
Politicians or regulators13%
Industry trade bodies6%

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.

Click for Comments

Environment

The Most Polluted Cities in the U.S.

What are the most polluted cities in the U.S. according to data from the American Lung Association’s 2024 State of the Air Report?

Published

on

Teaser image for an infographic showing the most polluted cities in the U.S. according to the American Lung Association's 2024 State of the Air report.

Published

on

The following content is sponsored by National Public Utilities Council

The Most Polluted U.S. Cities in 2024

According to the World Health Organization, air pollution is responsible for 7 million deaths annually, and could cost the global economy between $18–25 trillion by 2060 in annual welfare costs, or roughly 4–6% of world GDP.

And with predictions that 7 in 10 people will make their homes in urban centers by mid-century, cities are fast becoming one of the frontlines in the global effort to clear the air.

In this visualization, we use 2024 data from the State of the Air report from the American Lung Association to show the most polluted cities in the United States.

What is Air Pollution?

Air pollution is a complex mixture of gases, particles, and liquid droplets and can have a variety of sources, including wildfires and cookstoves in rural areas, and road dust and diesel exhaust in cities. 

There are a few kinds of air pollution that are especially bad for human health, including ozone and carbon monoxide, but here we’re concerned with fine particulate matter that is smaller than 2.5 microns, or PM2.5 for short. 

The reason for the focus is because at that small size, particulate matter can penetrate the bloodstream and cause all manner of havoc, including cardiovascular disease, lung cancer, and chronic pulmonary disease. 

The American Lung Association has set an annual average guideline of 9 µg/m³ for PM2.5, however, the World Health Organization has set a much more stringent limit of 5 µg/m³.

The 21 Worst Polluted Cities in the U.S.

Here are the top 21 most polluted cities in the U.S., according to their annual average PM2.5 concentrations:

RankCity, StateAnnual average concentration, 2020-2022 (µg/m3)
1Bakersfield, CA18.8
2Visalia, CA18.4
3Fresno, CA17.5
4Eugene, OR14.7
5Bay Area, CA14.3
6Los Angeles, CA14.0
7Sacramento, CA13.8
8Medford, OR13.5
9Phoenix, AZ12.4
10Fairbanks, AK12.2
11Indianapolis, IN11.9
12Yakima, WA11.8
13Detroit, MI11.7
T14Chico, CA11.6
T14Spokane, WA11.6
15Houston, TX11.4
16El Centro, CA11.1
17Reno, NV11.0
18Pittsburgh, PA10.9
T19Kansas City, KS10.8
T19Las Vegas, NV10.8

Note: The American Lung Association uses Core Based Statistical Areas in its city and county rankings, which have been shortened here to the area’s principal city, or metro area in the case of the Bay Area, CA.

Six of the top seven cities are in California, and four in the state’s Central Valley, a 450-mile flat valley that runs parallel to the Pacific coast, and bordered by the Coast and Sierra Nevada mountain ranges. As a result, when pollution from the big population centers on the coast is carried inland by the wind—cities #5 and #6 on the list—it tends to get trapped in the valley. 

Bakersfield (#1), Visalia (#2), and Fresno (#3) are located at the drier and hotter southern end of the valley, which is worse for air quality. The top three local sources of PM2.5 emissions in 2023 were farms (20%), forest management / agricultural waste burning (20%), and road dust (14%). 

Benefit to Economy

While the health impacts are generally well understood, less well known are the economic impacts.

Low air quality negatively affects worker productivity, increases absenteeism, and adds both direct and indirect health care costs. But the flip side of that equation is that improving air quality has measurable impacts to the wider economy. The EPA published a study that calculated the economic benefits of each metric ton of particulate matter that didn’t end up in the atmosphere, broken down by sector. 

SectorBenefits per metric ton
Residential Woodstoves$429,220
Refineries$333,938
Industrial Boilers$174,229
Oil and Natural Gas Transmission$125,227
Electricity Generating Units$124,319
Oil and Natural Gas$88,838

At the same time, the EPA recently updated a cost-benefit analysis of the Clean Air Act, the main piece of federal legislation governing air quality, and found that between 1990 and 2020 it cost the economy roughly $65 billion, but also provided $2 trillion in benefits

Benefit to Business

But that’s at the macroeconomic level, so what about for individual businesses?

For one, employees like to breathe clean air and will choose to work somewhere else, given a choice. A 2022 Deloitte case study revealed that nearly 70% of highly-skilled workers said air quality was a significant factor in choosing which city to live and work in.

At the same time, air quality can impact employer-sponsored health care premiums, by reducing the overall health of the risk pool. And since insurance premiums averaged $7,590 per year in 2022 for a single employee, and rose to $21,931 for a family, that can add up fast. 

Consumers are also putting their purchase decisions through a green lens, while ESG, triple-bottom-line, and impact investing are putting the environment front and center for many investors.

And if the carrot isn’t enough for some businesses, there is the stick. The EPA recently gave vehicle engine manufacturer Cummins nearly two billion reasons to help improve air quality, in a settlement the agency is calling “the largest civil penalty in the history of the Clean Air Act and the second largest environmental penalty ever.”

Visual Capitalist Logo

Learn how the National Public Utilities Council is working toward the future of sustainable electricity.

Click for Comments

You may also like

Appian-Capital

Subscribe

Continue Reading
Voronoi, the app by Visual Capitalist. Where data tells the story. Download on App Store or Google Play

Subscribe

Popular