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April 12, 2022

Russia-Ukraine crisis impacting on ESG investment

By Patrick Brusnahan

Nearly four in ten (39%) of investors predict a re-evaluation of ESG approach due to recent geopolitical events, including the conflict between Russia and Ukraine.

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While some have already made changes, either in-house or via asset management partners, others are reinforcing their ESG approach.

As a result, emerging market country exposures, controversial weapons and fossil fuel firms are coming under scrutiny.

What else is changing bar Ukraine, Russia and ESG?

This is according to a snap poll from investment consultancy bfinance on institutional investors’ responses to pressing news.

The poll also showed that nearly half of investors has direct exposure to Russia before Q1, of which 45% have either fully exited or are in the process of doing so, as some have been obstructed.

Four in five investors were concerned that inflation and rising rates will be problematic for medium-term investment objectives.

Furthermore, illiquid strategies are growing in popularity with 46% stating they expected to increase exposure to infrastructure in the next year.

Kathryn Saklatvala, head of investment content at bfinance, said: “We are very grateful indeed to the senior investors who contributed their insights a few days ago for this report. To some extent, the asset allocation changes we are seeing here represent a continuation of some longer-term shifts, such as the shift in favour of illiquid strategies and real assets.

“Yet investors’ concerns about inflation and rising rates—which come through in these statistics—are giving greater impetus to these trends. It is particularly interesting to see the large minority of respondents for whom geopolitical developments are prompting a change in ESG approach. This has chiefly been focused on topics such as weapons manufacturers, energy companies and country exclusions. Even among those that indicated that the conflict would not affected their ESG approach, many said that it had illustrated the importance of having a robust approach here. Indeed, we saw cases where ESG-oriented investors had significantly reduced or eliminated Russia exposure ahead of 2022, which benefited performance in Q1.”

Free Report
img

How attractive are current investment opportunities in Europe?

Europe has been identified as one of the most favorable regions for investors, seeing high investment activity in the past year. Most of these investments have been through Debt Offering, valued at close to $700 billion. The region has provided attractive investments in a diverse set of companies. Companies who tend to major themes such Digital Media, Cloud, Artificial Intelligence, E-commerce, and Big Data are recording the highest number of deals, with Digital Media recording close to 2,000 deals. However, GlobalData’s whitepaper offers a full view of the market, analyzing less successful or attractive points of investment as well, examining statistics on Equity Offering investments and PE/VC deals. Understand how government agencies for economies around the world use GlobalData Explorer to:  
  • Track the M&A and Capital Raising volumes into their target market
  • Identify the top sectors in the target market attracting the investments
  • For any investment segment, identify the top Investors inside and outside the target economy that are already investing in the Segment
  • Assess and showcase the growth potential for various Industries in the target economy
Don’t miss out on key market insights that can help optimize your next investment – read the report now.
by GlobalData
Enter your details here to receive your free Report.

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