Sustainable development and finance

Sustainable development becomes a reality for the world of finance.

Indeed, a growing amount of money is invested in environmental funds. For example, in Europe according to Watson Wyatt, a investment consultants, 15.2 % of net investments in equity funds were invested into environmental funds during the first seven months of 2007, against 2.6 per cent during the whole of 2006.

This accelerating trend is due to the fact that asset managers take into account environmental and corporate governance issues in their investment decisions.

These funds ($ 4000 bn) are invested, on the long term, in companies which are committed in the sustainable development path. Asset managers are helped by extra financial rating agencies ( like Vigeo) which give a rating to a company for its commitment in environmental, human resources,…..

New financial products have been launched like “green” fixed income, real estate funds and funds trading in carbon credits. Some hedge funds invest in carbon credits.

This kind of investment will increase due to the fact that performances are better than stock market indices over long periods. If finance begin to believe that sustainable development a key issue for the future, it could be a good news for the planet..

Antoine

Financial Times, Investors jump on environmental wagon by Kate Burgess, published June 3 2008

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Posted in corporate sustainability

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