Institutional investors are increasingly turning their attention towards renewable energy and sustainable investments, with private assets like private equity, private credit, and real estate emerging as attractive avenues for such endeavors, according to a survey by Schroders PLC. Over the next two years, approximately two-thirds of respondents believe private assets provide the best opportunities for participating in the energy transition, leading 35% of them to plan increased allocations to private assets during that period. This preference for private assets is attributed to the belief that they offer deeper diversification, as stated by 65% of the 770 allocators surveyed, who collectively hold $34.7 trillion in assets. While some institutions have been cautious about private equity and real estate due to various factors, renewables appear to be a notable exception, with private equity emerging as a key driver in delivering sustainability for a significant portion of respondents.
Despite ongoing concerns related to inflation and geopolitical instability, the survey suggests that many investors are attracted to private assets as a way to navigate the evolving macroeconomic landscape and enhance portfolio resilience. Over the next two years, private equity is expected to play an even more prominent role in sustainability efforts, increasing from its current major role for 39% of respondents to 48%. Similarly, private credit and real estate are anticipated to have a greater impact, with the survey projecting rises from 27% to 33% and from 25% to 38%, respectively. This trend towards private assets underscores the growing appetite among institutional investors for sustainable and renewable investments as they actively seek ways to participate in the energy transition.
https://www.ai-cio.com/news/for-energy-transition-investing-allocators-eye-private-assets/