Research shows green trend gathering momentum among the wealthy
This year’s edition of the World Wealth Report has confirmed that sustainable investment by high net worth individuals is on the rise even though most are uninterested.
According to the report, 12% of high net worth investors, worth a total of $40.7 trillion (€26 trillion), allocated money to the sector last year. Around 14% of ultra-high net worth investors provide backing to the cause.
Middle East investors are keen on the theme, due to their interest in energy production and water conservation. The best known local initiative is Masdar, backed by the Abu Dhabi royal family, which is developing an eco-city in the desert where 100,000 people will live.
Some 20% of wealthy Middle East investors back sustainability, compared with 17% in Europe. North American investors lag the field at 5%.
A spokesman for Merrill Lynch confirmed investment had risen, but said comparison with the previous year was not available. According to the previous report, 8% of high net worth investors and 9% in the ultra-high net worth category backed socially responsible strategies.
Half the interested investors believed clean energy would provide attractive returns. Concern over climate change was another factor. North America was the only region where social responsibility was the main driver.
In the three years to last November, wind energy investments rose in value by more than 300%. Merrill led the $6.5bn listing of Iberdrola Renovables, the world’s largest clean energy company, last year.
According to data provider New Energy Finance, private equity and venture capital investment in clean energy surged 34% to $9.8bn last year. The total fell back to $2.4bn in the first quarter of this year but industry estimates suggest it surged to between $4bn and $5bn in the second quarter.
According to the World Wealth Report: “Given the greater freedom with which individuals can allocate their assets, venture capital has flowed largely from wealthy private clients.”
A sharp growth of interest in sustainability has been documented by Wealth Bulletin, which has ranked 40 eco-rich investors in Europe, with Zac and Ben Goldsmith heading the list.
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