Hub for Sustainable Finance Sustainable finance

Today we are witnessing a profound change in the way investors factor in sustainable investing themes – hear from our opinion leaders on what they think the ten pivotal debates could be in 2021.

The COVID-19 pandemic has inflicted one of the worst crises of our lifetimes for public health, individuals, businesses and society. Amid the crisis, our recent conversations with asset owners, investors and clients have underlined the increasing interest in financing the transition to a low-carbon economy, supporting sustainable and inclusive growth, and improving portfolio risk management in the face of 21st century challenges. 

Pivotal political processes and developments such as COP 26 on a global level, or the new US administra­tion’s approach to climate issues, will help focus the minds of policymakers, standard setters, investors, and the innovators of the private sector. 

And as our ten trends show, we expect much more to come.

We believe that by considering sustain­ability factors, risks and opportunities, investors can enhance the resilience of their portfolios without compromising risk-adjusted returns.

More influential than regulation in 2021

We expect asset owners to call for companies and investors to provide better sustainability data – alongside clear and measurable energy transition plans. This will fast track disclosures and commitments in 2021.

The next wave of growth

Investors increasingly factor in environmental, social and governance considerations. Next is for investors to focus on the opportunities in identifying and addressing sustainability objectives in areas from climate to inequality to healthcare.

Adoption sooner than expected

We believe the transportation sector can be almost fully decarbonized by 2040. Many industry players think that our forecast for electric vehicles having a 40% share of global new car sales by 2030 is too high; we think it could be too low.

From aspiration to company targets

As more nations set zero emission goals for the middle of the century, we think it will be critical to slow and eventually stop new investment in the fossil economy, and to channel more investment towards essential adaption measures.

The opportunity for re-invention

Rather than view the energy transition as an existential risk to the oil majors, and they as the problem, we could regard it as a potential opportunity for them to become part of the solution. The energy transition may require USD 1.1 trillion of investment per year – inconceivable without current firms.

The destructive potential of prejudice

Diversity and inclusion could become critical issues in determining economic success or failure in the decade ahead. 2021 could see great advances in starting to close the data gap to measure diversity.

Coming, ready or not

We forecast the global plant-based meat market to reach USD 51 billion by 2025 in our base case, implying a 3x increase in penetration from 2019 levels.

The transformation of capital allocation

2021 will likely be the year when investors and financiers mainstream climate transition analysis. Within five years some central banks may look to set capital charges for carbon – this would have a profound impact on the cost of capital for polluters.

Insights from new lenses

The major index providers and market-data firms are racing to build or buy sustainability offerings. Demand for sustainability data could drive the size of the related data and services market to over USD 5 billion in the next five years.

The convergence of standards underestimated

The arms race in competing standards has ended in a truce – and collaboration – called for by investors and regulators. Better quality, decision-relevant and comparable sustainability data are around the corner.