A Green Recovery

Lockdown has changed everything for us as a society. It has also provided our environment with some much needed respite, from all the human activities causing it enormous damage. Whilst economic shutdown, or anything remotely close, isn’t a viable solution to the problems that we are creating for our environment, it has given many of us time to pause for thought and for reflection. Over the past few months we have seen clear evidence that this ‘great pause’ has translated into a notable uptick in demand for sustainable funds, which saw record relative inflows during Q1 2020.

Gone are the concerns that performance needs to be sacrificed in order to invest in responsibly managed businesses and gone are the assumptions that the investment universe isn’t large enough. The events of the past few months have given many of us a wakeup call; with a demand for higher social and environmental standards and more accountability from our governments and companies.

The momentum and commitment from governments across the world to stimulate economic growth through capital allocation to sustainable infrastructure and green investments is an environmental positive. A ‘green recovery’ is being touted by governments as a way to kick-start economic growth in a post-lockdown world and we have already seen clear evidence of spending in this area. The European Central Bank has allocated 25% of the EUR750 billion recovery package to sustainable spending. Boris Johnson has detailed plans of the UK’s green recovery strategy, including the decarbonisation of the UK’s most emitting sectors, increasing the manufacture of low-carbon goods and the creation of green enterprise zones. Whilst the UK and Europe are ahead of other parts of the world, the importance that is being placed on these sectors looks to be the direction of travel for many countries worldwide.

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