Partner Insight: ESG is critical element for real asset investors

clock • 1 min read
Partner Insight: ESG is critical element for real asset investors

Real asset investors continue to favour environmental, social and governance factors, especially sustainability in real estate, according to Aviva Investors’ Real Assets Study 2024.

Aviva Investors' Real Assets Study 2024 found global investors managing over £20 billion in assets place a strong emphasis on ESG and sustainability factors when it comes to picking their investments. Most of those polled integrate ESG or sustainability into their decisions and consider it a critical and decisive element in their investment choices.

When assessing the most salient features to consider when investing in sustainable real assets, investors highlighted the opportunities to generate financial returns, alongside other ESG factors. The dominant factors driving allocations to sustainable real assets were "attractive opportunities", as cited by more than a quarter of those polled in the survey. This perceived return potential received greater attention than any other factor, including the need to satisfy external regulatory pressures.

Investors plan to raise exposure

The survey asked where respondents "had exposure [to sustainable real assets] but planned to raise it," and the response was overwhelmingly positive across regions. Between 25% and 50% of respondents expressed plans to raise their exposure in various areas. Interestingly, the nascent area of nature-based solutions saw the highest score in this area, followed by private debt financing with a sustainability or renewable focus.

Investors have different objectives they are seeking to achieve from their real asset allocations. For those wanting to optimise ESG impact, the most popular theme cited was decarbonisation, through assets that might help address energy efficiency and carbon emissions or meet net-zero targets. Improving the state of natural capital and biodiversity outcomes also gathered wide support from an impact perspective.

Through a return lens, respondents expect to achieve the highest financial rewards from investing in emerging technologies. Return expectations are also overwhelmingly positive for energy efficiency and decarbonisation solutions, and supported widely across all regions.

Click here to access the exclusive guide.

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