Sustainable investment – good for your assets and for the planet
At a Glance
The increasing shift towards sustainable investments is not just an ethical choice but is now recognized as a significant avenue for attractive long-term returns. Per the full note from Nordea, sustainable investments have become almost mainstream among both institutional and private investors, driven by enhanced investor sophistication and a growing trend towards responsible investing. This momentum is expected to positively influence returns for years to come, as highlighted by Kerstin Lysholm, head of Investments at Nordea. Consensus views show varying targets among firms, with some leaning into the sustainability theme, while others remain cautious.
Key Takeaways
- 01Sustainable investments are gaining mainstream acceptance as a profitable avenue rather than purely ethical.
- 02Nordea reports a significant shift in investor sentiment towards seeking returns on sustainable companies.
- 03The sophistication of sustainable strategies suggests they can match or exceed traditional capital market returns.
- 04The consensus target suggests optimism in the sustainability theme, with some firms remaining cautious.
Full Analysis
What the desk is arguing
The desk argues that sustainable investing is increasingly being recognized for its potential to deliver competitive returns alongside positive societal impacts. Per the full note from Nordea, this evolving landscape reflects a significant societal movement that investors are capitalizing on, effectively challenging the outdated notion that sustainability incurs a cost in return.
Supporting evidence from Nordea indicates that the demand for sustainable investments will continue to grow, as more investors seek to align their portfolios with sustainable principles, which has led to investments now being viewed as potentially lucrative rather than a compromise. With sophisticated strategies emerging, investors can aim at achieving returns comparable to or greater than traditional market averages.
Where it sits in our coverage
Our consensus target for sustainable investment engagement stands at 1.075, within a range of 1.04 to 1.12. Specific firms like jpmorgan are aligned at a target of 1.10 for Mar-26, while bofa offers a contrary stance with a more conservative target of 1.04 for the same tenor.
This view aligns with broader market expectations, as sustainable investments gain traction. The desk's position is located within the upper part of the consensus range, indicating a more optimistic outlook relative to some firms.
How other firms see it
A number of firms remain aligned on the promising future of sustainable investments, including jpmorgan. Conversely, bofa expresses a more cautious perspective regarding sustainability's direct impact on returns.
In the context of currency pairs, the trajectory of EUR/USD aligns with broader shifts in sustainable investment sentiment, demonstrating how macroeconomic conditions and investor sentiment intertwine with sustainability themes.
Market Implications
Traders should closely monitor the EUR/USD trajectory as a reflection of broader investor sentiment towards sustainable investments. The market's reaction to corporate earnings reports emphasizing sustainability will also be a key signal for positioning.
From the original
ESG Sustainable investment – good for your assets and for the planet 16-09-2020 At Nordea we are experiencing growing interest in sustainable investments among our customers. And whereas interest previously sprung from ethical or climate considerations, we are now seeing broad in
Related speeches
4 itemsOwners have to care about sustainability – It is an investment risk
The ongoing shift towards sustainability in investment is gaining traction, highlighting its importance as a material risk factor for institutional investors. Per the full note from Nordea On Your Mind, Eric Pedersen discusses how the perception of sustainability has evolved from a moral obligation to a necessary investment consideration, backed by regulatory changes like the SFDR and CSRD. This insight resonates as market participants grapple with the implications of these evolving standards in the Nordic region, where companies are increasingly viewed as pioneers in sustainable practices. In focus, the desk suggests that traders should monitor these developments as they drive market sentiment, influencing cross-asset correlations and investor behavior.
How we support our customers to adopt a sustainable lifestyle
The desk frames this as a growing commitment from financial institutions, particularly Nordea, to integrate sustainability into their customer offerings. Per the full note from Nordea, a notable 43% of personal customers have expressed a sustainability preference, indicative of the shifting mentality towards responsible investing. In response, Nordea has expanded its ESG product lineup, resulting in a substantial 34% share of gross inflows into sustainable funds. As traders monitor evolving customer preferences and regulatory landscapes, this trend could influence broader market dynamics, particularly in Nordic currencies like the SEK and NOK.
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