When investing, it is critical to follow the flow of money
In 2020, green investments rose to $35.3-trillion U.S. amongst the world’s five biggest financial markets, the United States, Europe, Australasia, Japan and Canada. That sum represented a 48 per cent increase over two years. [1.]
When investing, it is critical to follow the flow of money. If you follow the flow of money going to certain areas, it is most likely that investment is going up, or outperforming others. If you follow the flow of money out of investment areas, it is most likely that investment will go down, or underperform compared to other investments.
Over the past couple of years, we’ve seen many large institutional investment firms, moving away from Oil and Gas, often into ESG/SRI strategies. The Ontario Teachers Plan, University of Toronto Endowment Funds, and Quebec Pension Fund are leaders in Canada in their moves, and are likely to be followed by many others. Globally we’ve seen players such as the New York Pension fund and many big banks such as UBS begin to reduce their exposure to Oil and Gas. These trends will likely continue, and accelerate, meaning continuing to hold investments that are being dropped in the industry, will both increase risk and decrease returns in portfolios.