UK: Development finance companies’ increasing focus on ESG will make the sector more attractive for pension funds and institutional investors, according to new research from investment manager Downing LLP.
Downing commissioned independent research company PureProfile to interview 50 UK pension funds, who collectively control around £125.5 billion in assets under management using an online methodology during June 2022. It found that 86 per cent agree the increased focus on ESG will mean more institutional investment in the sector.
Pension funds are already seeing a much bigger focus on ESG by property development finance companies and three out of four (76 per cent) expect the trend to increase over the next three years. Around 20 per cent of respondents expect it to increase dramatically.
That feeds into a growing willingness by defined benefit pension funds and institutional investors to invest in illiquid assets because of the premium yield they can offer. Downing’s research found 70 per cent of pension funds expect this trend to increase over the next three years, with 24 per cent forecasting a dramatic increase.
Parik Chandra, partner and head of specialist lending at Downing LLP said: “ESG is increasingly a key factor in decision making for property development finance companies, as well as pension funds and institutional investors. The increased focus on ESG by property developers helps them raise finance and is good news for pension funds and institutional investors who have ESG targets to address.”
Downing is an investment manager established in London in 1986. It manages £1.7 billion of assets under a broad range of investment mandates across funds, investment trusts and tax-efficient products. Its key investment areas are renewable energy, infrastructure, property and healthcare.
