“Gamechanger” climate bill spurs ESG investments

The passing of a $430 billion bill by the U.S. Senate to assist the fight against climate change has sparked renewed interest in investors to increase their exposure to environmental, social and governance (ESG) investments.

According to Nigel Green, chief executive of deVere Group, the “game-changing” bill, set to reduce carbon emissions and move customers to cleaner energy among other measures, cements ESG as an investment megatrend and key avenue of building long-term wealth.

“The legislation… will shift the world’s largest economy forever towards a greener future,” Green said.

“Global ESG assets are on track to exceed $53 trillion by 2025, according to Bloomberg Intelligence, representing more than a third of all assets under management.

“Now, due to the momentum that will be created from this landmark bill, we expect ESG assets to take an even greater proportion of the $140.5 trillion in projected total assets under management.”

Green said the heavy regulatory scrutiny and numbers behind the performance of ESG investments against benchmarks and other standards can soothe any worries investors may have.

“From a risk management point of view, including these companies in your portfolio is, clearly, a sensible decision to take,” he said.

“A seismic shift has occurred in corporate behaviour. How companies approach ESG factors and the value they place on them compared to other considerations has already changed forever.

“Investors and the wider public need unambiguous information about how firms are contributing to greenhouse gas emissions, and how they are managing – or not – environmental challenges internally. This can only happen through compulsory disclosure in the public domain.”

The bill, known as the Inflation Reduction Act, will go to the U.S. House of Representatives for a vote and is expected to pass.