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Institutional Investors Are Making Room for Sustainable Investments - Report
Traders Magazine Online News, November 22, 2018
Bright Harbor Advisors, LLC (Bright Harbor) released the 2018 Bright Harbor Global Limited Partner Sustainable Investing Report (Report), which looks at the current perspective of global institutional investors on sustainable investing and primarily focused on the alternatives investments asset class. The Report is based on data collected from institutional investors from primarily Western Europe and North America with a combined equity allocation exceeding $500 billion.
The Report sought to understand investors’ views on returns, strategies and sectors with a particular focus on how institutions are set up to tackle the sustainable investment decision-making process and where they are in building out their capabilities.
Key takeaways:
- Institutional investors are taking sustainable investing seriously in terms of investment mandates and internal resource allocations.
- 81 percent have some type of sustainability, impact, or ESG mandate as part of their formal investment policy.
- Close to 1/3 of respondents have someone on their team dedicated to the space.
- In addition, almost 20 percent of investors have sustainable private fund managers in a dedicated investment bucket.
- Investors see water and wastewater treatment as the most compelling sustainable opportunity above solar, sustainable food production and wind, among others.
- Growth equity is the most favored investment strategy over both infrastructure and venture capital.
- A majority of respondents (67 percent) require measurement of impact necessary to make sustainable investments.
- More than 2/3 of respondents do not make investments in carbon strategies concurrent with Sustainable investment strategies.
“Institutional investors clearly consider sustainable investing in the private alternatives markets as more than a passing trend,” said Ian Schuler, managing partner of Bright Harbor Advisors. “Close to 1/3 of respondents allocate team resources to the space and the large majority have established an investment mandate for sustainable investment strategies.”
“This is an important Report that confirms the growing interest of institutional investors in seeking sustainable investments that meet the return criteria of their investment mandates,” said Rob Day, general partner at Spring Lane Capital, the private equity firm. “Institutional investors are becoming more sophisticated about how they approach sustainable investing. It’s instructive that they are now looking beyond some of the more saturated sustainable investing sectors like solar and wind where returns are more compressed in favor of areas like water and wastewater treatment that present some of today’s most compelling investment opportunities.”
About this survey
To garner a global perspective from institutional investors on Sustainable Investing from the private equity industry including key opportunities and constraints for global investors, Bright Harbor Advisors conducted the 2018 Sustainable Investing Survey, collecting data from 72 institutional investors surveyed who are primarily North American (82 percent) and Western European (14 percent) with a combined private equity allocation exceeding $500 billion and with 82 percent managing greater than $1 billion of AUM. Consulting and advisory firms make up the largest portion of the survey respondents (22 percent), followed by fund- of- funds (15 percent), followed by endowments (13 percent) and asset managers (11 percent).
About Bright Harbor Advisors
Bright Harbor Advisors is a management owned private equity advisory firm with offices in New York, Denver and Los Angeles, providing research-driven private markets advice to general partners and limited partners worldwide through its team of dedicated professionals.
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