Private capital essential to fight climate change, wealthiest individuals say

Private capital is an essential factor in fighting climate change, along with government action, charities and corporations, according to the majority of high-net-worth individuals.

That is according to a research report produced by Campden Wealth on behalf of Global Impact Solutions Today (GIST) and Barclays Private Bank. It found 86 per cent of high-net-worth individuals, family offices and foundations believe their private capital will be essential in addressing climate change.

Some 70 per cent are viewing the transition to a global net-zero emissions economy as “the greatest commercial opportunity of our age”.

Meanwhile, almost 80 per cent think pandemic stimulus packages should prioritise green investment and the transition to a low carbon economy.

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The 2021 Investing for Global Impact: A Power for Good is the eighth edition of the report, which provides insight into the attitudes and actions of the world’s wealthiest individuals, families, family offices and their foundations.

The majority said climate change plays a role in their investment decisions, and 67 per cent said they would like their family portfolio to meet the requirements of the 2 degrees scenario of the Paris Agreement.

However, only 50 per cent believe that it is possible to keep global average temperature increase below 2 degrees.

Sustainable investing

"Sustainable investing is gaining steam among ultra-high-net-worth investors, and Covid-19 has only acted as an accelerate to that. While many want to use their wealth to combat the climate crisis, they also recognise that the rapidly expanding 'green industry' is an incredible investment opportunity," said Dr Rebecca Gooch, senior director of research at Campden Wealth.

“Sustainable investment returns are now successfully competing against those of traditional investments, and evidence of their effectiveness at tackling global challenges is becoming increasingly hard-hitting. In turn, a growing number of private investors are opting in. Given that single family offices alone manage more than $6 trillion (€5 trillion) in assets worldwide, this is helping to propel the industry forward at a time when sustainable solutions are needed most.”

Sustainable investing is expected to continue to expand, with the Covid-19 pandemic focusing attention on the sector. Almost two-thirds of respondents said the pandemic had made investing more appealing,and among those who were already active in the sector, they expect it will account for almost half their portfolios by next year and 54 per cent by 2027.