The theme for Earth Day 2023, “Invest in Our Planet,” comes at a challenging time for sustainable investing. The ESG movement is facing significant political pressure, while market turmoil and the recent banking crisis have limited funding to climate startups.
Despite these headwinds, there has been innovation and positive momentum in several key areas of sustainable investment. Water investing, biodiversity conservation and natural disaster recovery are emerging as promising trends as we build a more sustainable economy. In this piece, we’ll explore these trends further and provide tips for fund marketers on how to effectively market sustainable strategies.
One of the most pressing challenges facing the world today is the looming water crisis. Demand for freshwater is expected to exceed supply by 40% by 2030, a problem already manifesting in drought-stricken areas like California and Mississippi. The private sector has taken on an increasingly pivotal role in addressing these issues, with firms such as Gregory FCA client Sciens Water investing in solutions to failing water infrastructure across America.
For marketers promoting water-related investment products, it’s crucial to emphasize the urgency of this crisis and highlight real-time examples like the failing water infrastructure in Jackson, Mississippi, while positioning thought leaders as experts on potential solutions. For example, Sciens Water Partner Alexander Loucopoulos has been quoted in national outlets like Newsweek and The Wall Street Journal on how investors can help address the inherent issues in the U.S. water system.
Another area of emerging opportunity in the sustainable investment space is biodiversity conservation. BloombergNEF estimates that the global economy could suffer a loss of $2.7 trillion within seven years due to biodiversity loss, making it a critical issue for investors to address. Fund managers offering biodiversity strategies have already expanded their asset base by 15% in just two months, as investors increasingly recognize this area’s importance.
However, education is crucial when it comes to entering new sub-sectors like this one, and index and fund managers with strategies in the space need to develop thoughtful content explaining why investors should care before they invest significant capital. Gregory FCA client Qontigo was ahead of the curve on this front. Even before recent surges in assets under management for biodiversity funds, Qontigo provided blog content on how investors can help protect our planet’s biological diversity through smart investing decisions.
Natural disaster recovery
Not a week goes by that we don’t see the devastating impacts of natural disasters covered in mainstream and local news. Just this month, Fort Lauderdale, Florida, was inundated with over 25 inches of rain in 12 hours — more rain than the city typically sees in a month. Additionally, entire towns in Mississippi and Arkansas have been completely destroyed by tornadoes in the last month and residents face a long, tough road to recovery. While assistance is available to these communities through FEMA and other federal agencies, investors are realizing the important role that the private sector can play in reducing the impacts of natural disasters.
The Procure Disaster Recovery Strategy ETF (FIXT) tracks a portfolio of companies involved in recovering from natural disasters such as hurricanes, wildfires, floods and earthquakes. It’s essential to keep investors in natural-disaster-related strategies informed about the severity of disasters. Gregory FCA client ProcureAM, for example, distributes a monthly newsletter to help investors better understand both the economic and environmental implications of these events.
While the sustainable investment movement may face challenges from various fronts, there are still promising areas of opportunity for investors. The urgency of the water crisis, importance of biodiversity conservation and need for natural disaster recovery all present opportunities for investment with potential positive impact on the planet. However, effective marketing strategies that educate investors on these issues and highlight credible experts in each field will be crucial to successfully leveraging these trends. By investing in our planet today, we can create a more sustainable tomorrow.
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