The ultra-wealthy feel the—and their money—can help fight climate change, according to a new survey.
An overwhelming majority of ultra-high-net-worth families said investing their private capital is essential in addressing the pressing issues of climate change, according to the report “Investing for Global Impact: A Power for Good,” which was conducted for Barclays Private Bank, Global Impact Solutions Today and Campden Wealth.
Eight-six percent of the more than 300 global private wealth holders, family offices and foundations that were included in the survey said their wealth, along with action from governments, charities and corporations, is needed to reduce the effects of climate change. The participants had an average of $833 million in assets.
The majority (80%) of wealth holders said climate change is a relevant factor in the decisions they make for their investment portfolios. Sixty-seven percent said they would like their family portfolio to meet the requirements of the Paris Agreement, which has a goal of reducing temperature increases this century to 2 degrees Celsius below pre-industrial levels.
However, only 50% of respondents said they think that is a reachable goal. Nearly 90% said governments should do more to meet the Paris Agreement and 71% believe developed countries, in particular, should be increasing their financial commitment to solutions to avoid climate change.
“It is only through positive, collective action today that we can save our planet and civilization tomorrow,” Gamil de Chadarevian, founder of Global Impact Solutions Today, said in a statement. “To generate the required sustainable, transformational, and inclusive paradigm shift, we need a holistic vision and a systemic strategy.”
Investing with climate change risk in mind also can benefit the investor. According to the survey, 70% of respondents agreed the transition to net zero has become “the greatest commercial opportunity of our age” because it represents a chance to benefit from the companies and innovations addressing climate change. Thirty percent said they are targeting investments that directly support a transition to a low carbon economy, and 24% said they avoid companies that contribute to climate change.
“While many want to use their wealth to combat the climate crisis, they also recognize that the rapidly expanding ‘green industry’ is an incredible investment opportunity.” Rebecca Gooch, senior director of research at Campden Wealth, said in a statement. “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.”
The survey said sustainable investing is expected to continue expanding within portfolios. Among those respondents who are already active in sustainable investing, they said they expect it will account for an average of 47% of their portfolios by 2022 and 54% by 2027.
“As private wealth holders make these portfolio transitions, 76% are concerned about making an investment that has been greenwashed,” meaning it is not truly an environmentally positive project. The survey said, 59% of respondents would be reassured by robust measurement and reporting; 55% by being able to trust the project’s leadership, and 45% by a company’s or fund’s track record of past impact delivery.
The two things most respondents agreed on was that there is lack of information around the financial strength and the impact record for available sustainable projects.