JP Morgan says Covid-19 could prove to be a major turning point for ESG investing.
In a new report, the bank have polled investors from 50 global institutions, with a total of $12.9 trillion AUM, on how they expect COVID-19 will impact the future of ESG investing. 55% of those polled said that the virus would have a positive to very positive impact on ESG investing momentum over the next three years.
ESG investments may soon represent 44% of global AUM with total assets expected to reach $45 trillion this year. In 2018, Europe and the US accounted for 90% of the ESG market.
Jean-Xavier Hecker & Hugo Dubourg Co-Heads of Sustainability & ESG Research at the bank say, “While ‘tipping-point’ has been used to characterize this market for almost as long as it has existed, we do believe a substantial shift is under way: stakeholders are increasingly pricing in sustainability preferences, which should lead to a reconciliation of ‘sustainable’ and ‘financial’ materiality over the long-term”
The report says that in terms of asset classes, equity dominates and represents around half of total ESG AUMs, but the green bond market is burgeoning and sustainability is quickly spreading to other asset classes.