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Sustainable investments are booming: Private investors are increasingly focusing on the future!
Private investors are increasingly investing in sustainable investments, while institutional investors remain cautious. Market study shows 13% growth.
Sustainable investments are booming: Private investors are increasingly focusing on the future!
In Switzerland, the trend towards sustainable investments is accelerating, especially among private individuals. A market study by Swiss Sustainable Finance (SSF) shows that the total volume of sustainability-related investments at the end of 2024 was 1,881 billion francs, which corresponds to growth of 13 percent compared to the previous year. While private investors are increasingly investing in this area, the reluctance of institutional investors remains noticeable. CEO Sabine Döbeli emphasizes that sustainability-related investments are back on track for growth after two weaker years. Accordingly, the share of private investors in the total volume rose from 28 to 33 percent, with investments increasing from 468 to 619 billion francs.
In contrast, growth among institutional investors was more moderate. They only invested from 1,192 to 1,262 billion francs, which corresponds to an increase of 5.8 percent. The general development of the financial markets was around 8 percent. This makes the significant growth in the areas of sustainable investments and the increasing proportion of private investors all the more remarkable. However, the SSF study does not distinguish between market-driven growth and actual inflows into sustainable investments.
Reasons for growth
The growing demand from private investors is perceived by banks and asset managers as a key factor in the increase in sustainable investments. The competitive advantage that sustainable investments offer is also driving the trend. In addition to these aspects, 73 percent of institutional investors state that their long-term investment strategy is a key reason for their sustainable investments.
Climate-focused investments increased by 33 percent during the reporting period, impact investments increased by 27 percent and thematic sustainability investments increased by 16 percent. Another trend is the increasing importance of commitment, which includes actively influencing companies regarding sustainability. Interest in alternative asset classes is also growing, with private equity up 22 percent, private debt up 17 percent and hedge fund strategies up an impressive 43 percent, despite only making up around 1 percent of the total allocation.
Challenges for sustainable investments
Uncertainty remains regarding the performance of sustainable investments. The question of whether sustainable investments perform better than non-ESG-compliant investments and whether they can meet investors' return expectations remains relevant. However, pressure from third parties may encourage some investors to still invest in this area, despite the challenges that exist.
The market for sustainable investments is therefore showing dynamic growth, while at the same time there are a variety of challenges that must continue to concern decision-makers.