by Barbara Novick, Vice Chairman, Brian Deese, Global Head of Sustainable Investing, Tom Clark, Co-Head of Public Policy for the Americas, Carey Evans, Global Public Policy Group, Allison Lessne, BlackRock Sustainable Investing and Winnie Pun, Head of Public Policy, Asia-Pacific
Interest in “sustainable Investing” – incorporating various environmental, social, and governance (“ESG”) related concerns or objectives into investment decisions – has soared in the past several years. By one measure, assets under management (AUM) in ESG mutual funds and exchange-traded funds (ETFs) globally has grown from $453B in 2013 to $760B in 2018, with estimates of continued significant growth in the coming decade.1 These figures do not even include the growing private funds investing directly in sustainable infrastructure and other assets.
As investor interest in sustainable investment products has increased, the area has rightly taken on greater focus for policymakers and a broad set of stakeholders as well. Two policy considerations quickly come to the fore. First, a well-regulated sustainable finance ecosystem is needed to support broader sustainability-related policy initiatives at the global level, most pointedly to mobilize the massive amount of capital needed to address climate change. Second, and by no means unrelated, is the concern that robust standards exist to mitigate the risk of “greenwashing” – the risk that either through confusing or outright misleading investment approaches, asset owners cannot make informed choices about the actual sustainability characteristics of their investments.
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