The life insurance company OneLife, which offers Socially Responsible Investment (SRI) funds, put the subject of sustainability at the forefront of its Investment Forum held on October 17 in Brussels. Anthony Lorrain, Chief Investment Officer, discusses this issue with several fund companies at the conference he hosted.
Get stories like this straight to your smartphone with the Born2Invest app. The mobile application collects the latest finance headlines making sure that you’re always up to date, no matter where you are.
What is the point of SRI funds?
Ethical investments were first developed on exclusion criteria aimed at excluding companies that do not meet Environmental, Social and Governance (ESG) criteria, such as activities related to alcohol, tobacco or weapons.
The methods have since evolved. The Best-in-class approach is a type of ESG selection that favors the companies with the highest non-financial ratings within their sector of activity, without favoring or excluding a sector from the stock market index used as a starting point.
More recently we have seen the emergence of Impact investing, which has taken sustainability a step further by integrating a consideration of contribution, with the question: What positive impact will my investment have?
This investment strategy seeks to generate synergies between social, environmental and societal impact on the one hand, and neutral or positive financial return on the other. Companies can be assessed on what they are doing explicitly to address climate and social issues and the magnitude and materiality of their impact.
Are sustainability and financial performance compatible?
SRI is based on the conviction that taking ESG factors into account ensures the financial performance of the sums invested in the medium and long term, taking into account a better understanding of potential risks and disputes and better management, which together ultimately have a real impact on the performance of a company and therefore of investment funds.
Finally, the past has shown us that socially responsible investment is resilient in a context of financial and economic crisis.
Are there any limitations to the model?
To date, many questions can be raised with conflicting answers to some of them. For example, is it normal to be able to offer an SRI fund with exposure to the oil sector that is deemed to be responsible for environmental damage? Transparency and harmonization of European labels seem essential in order to make this type of asset more accessible to end investors.
SRI – a growing sector
The number of investment fund managers that integrate SRI and ESG factors into their investment criteria is now booming. This subject is of course closely followed by the banking and insurance sectors.
DISCLAIMER: This article was written by a third party contributor and does not reflect the opinion of Born2Invest, its management, staff or its associates. Please review our disclaimer for more information.
This article may include forward-looking statements. These forward-looking statements generally are identified by the words “believe,” “project,” “estimate,” “become,” “plan,” “will,” and similar expressions. These forward-looking statements involve known and unknown risks as well as uncertainties, including those discussed in the following cautionary statements and elsewhere in this article and on this site. Although the Company may believe that its expectations are based on reasonable assumptions, the actual results that the Company may achieve may differ materially from any forward-looking statements, which reflect the opinions of the management of the Company only as of the date hereof. Additionally, please make sure to read these important disclosures.
First published in PAPERJAM, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
Although we made reasonable efforts to provide accurate translations, some parts may be incorrect. Born2Invest assumes no responsibility for errors, omissions or ambiguities in the translations provided on this website. Any person or entity relying on translated content does so at their own risk. Born2Invest is not responsible for losses caused by such reliance on the accuracy or reliability of translated information. If you wish to report an error or inaccuracy in the translation, we encourage you to contact us.
Historic boom for Lysogene biotech to the U.S. market
The shares of Lysogene, a biopharmaceutical company, has risen by more than 50% thanks to the granted "Fast Track" designation...
Crowdfunding in Mexico: the financial alternative of 2020
Crowdfunding in Mexico has been handled in a less obvious way for hundreds of years. Crowdfunding refers to any capital...
Aena appeals against the CNMC’s imposition of further fare reductions on airlines
The CNMC has approved the Resolution on the supervision of airport tariffs applicable by Aena in the year 2020, in...
Victim lost $5000 in a false Nubank employee scam
A 46-year-old assistant approached the Judiciary Police Central of Americana on February 18, reporting that he lost more than $5.000...
Kafo Jiginew and the EIB loan agreement estimates at $10.8 billion
The signing of a loan agreement for $10.8 billion between "Kafo Jiginew" and the European Investment Bank. It was chaired...