10 Sep Sustainability plans to accelerate in a post-pandemic world
No one had predicted the impact of the Covid-19 pandemic and resulting health crisis facing our society. Regarded now as one of the greatest challenges of our time, Covid-19 has also accelerated one particular opportunity for investors, the movement towards sustainability.
Over the years, environmental, green and sustainable funds have clearly shown their potential of contributing and adding value to a business. During the pandemic, many of these funds showed resilience and outperformed their counterparts as markets experienced significant disruption in the earlier periods. More now than ever, investors are looking at long term investment plans and assessing the potential risk and implications of each fund.
Recent data present a clear picture that the crisis has raised the profile of responsible finance and this is down to several key factors: its social role for a business, its implication of long-term risk management, the potential to add further value and its alignment with increased dominant political plans.
The progression of integrating sustainability into wider investment plans is dependent on the finance industry capitalising the current trends and this requires working closely with governments. Financial industrial services will need to focus on creating clearer standards that eliminate cases of greenwashing and focus on delivering support and subsidies towards ESG plans.
In contrast to the economic crisis of 2008, the financial industry is in a much better position to adapt and transform to meet the changing shapes of society. The transformation of the financial industry will not happen independently, it will require support from the government and collaboration with industry, and thankfully it seems that both political and economic authorities are aware that further emphasis needs to be placed on investing in a sustainable economy.
Clean, green energy, sustainability, a circular economy among many others are areas of sustainable finance that are being pushed by many. To maintain momentum, governments must provide further capital into the economy via the financial industry and ensure interests are closely aligned with the goals of public authorities.
More and more people are calling for clear measures for public assistance and the significant stimulus plans that will inevitably be required for the next few years. If we want to transform our economy and move it towards a low-carbon industry, government stimulus plans and private sector lending must follow a similar set of criteria. What this translates into is the financial industry needs to show a clear contribution to projects that have a positive social impact.
For Europe, this means a common ground needs to be established for green assets by developing a regional environmental and social rating system that focuses on the business impact on climate and biodiversity. The drive for sustainability also needs to be driven from the individual perspective, especially as people’s awareness of the advantages of sustainability is on the rise.
In today’s world we need a clear and decisive plan for sustainability. The post-pandemic world will require sustainable finance more than ever and historical investments have shown the opportunities available to those that utilise these areas. For the opportunity to be translated into action, political willpower and dependence on the financial sector will be required.