Institutional investors, such as financial companies and funds, have been fostering ESG-driven investing, a new study by KPMG and CREATE-Research which focuses on capital markets in general and sustainable investing in particular reveals.
One of the reasons for this relies on a pragmatic view of the market, that is, the possibility of an immediate return rather than just long-term.
In the context of an increasing realization that finance must give something back to society as well as making profit, despite the slowness of change in the capital market industry, the trends pointed out by the researchers involved in the study sound encouraging to experts’ hears.
However, this does not come without limitations. For instance, just 15% of funds have embedded ESG factors (i.e. Environment, Sustainability and Governance) in their strategy not to mention that their short-terminism has prevented to properly price the risk involved in sustainability projects. They are two of the main constraints which risk undermining the sustainable growth of the sector in the future.
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