The mutual fund industry was already in the midst of a transformation before the appearance of the coronavirus. The health crisis has acted as an accelerator in this shift towards ESG investments. To analyze the integration of these principles in companies, Invertia, El Español, has organized an event with Natixis IM about the future of sustainable investments.
After a first stage in which ESG investments were carried out by discarding those companies that promoted a vision with harmful values, now the value of ESG investments is mostly based on the positive impact they generate.
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Companies that can have a positive impact on society are now in the focus of investors
We are in a “phase in which we are looking for the companies that are best prepared to generate a positive impact on society,” said Sophie del Campo, general manager for Iberia, Latin America and US Offshore for Natixis Investment Managers, during her speech.
This leaves behind the old debate about whether sustainable investment was more or less profitable than traditional investment. Currently, there is no point in having a discussion on those terms, as it has been shown that ESG investment projects compete on equal terms with traditional ones.
These sustainable investments are intended to generate a positive impact beyond the timing of the investment. Juan Luis García Alejo, CEO of Andbank Wealth Management SGIIC, stressed that “with this long-term vision, ESG investments are a winning horse. They are capable of showing these positive effects.” For this reason, he estimated that in the coming months, all portfolios will have incorporated ESG criteria in investment decisions.
In this context, the coronavirus has served to drive this transition. Ignacio Perea Fernández-Pacheco, Investment Director of Tressis SV, drew attention to this: “In previous years the focus was on the environment. And the COVID has focused on the social sphere, employment, and inclusive growth. This has been the biggest boost from the social side.”
In other words, the focus is on each of the acronyms of the concept of sustainable investment (ESG). “The industry has focused on the E for environment, but now the S for social and the G for governance will be key,” analyzed Carlos Garay Gómez-Arroyo, head of SRI at Sabadell Urquijo Gestión.
What is the ESG investor like?
Contrary to what one might think, the profile of the investor who is guided by sustainability-related securities is quite broad. It is not limited to institutional investors, such as a large investment fund or an insurance company.
“Since the emergence of the Sustainable Development Goals (SDAs) it is a very open profile. It’s not a niche thing at all. It’s good for any client that is looking for the pairing of values and profitability,” explained Garcia.
Companies in the sector are making a special effort to teach the client this type of investment as an equally valid portfolio form. That aims to correct the situation of previous years when “the end client did not know that this type of product existed,” as Garay pointed out.
It is precisely for this reason that the panelists agreed on the importance of transmitting the possibilities of ESG projects to the end customer. It is essential to see how “sustainable investment is brought closer to the end customer.” Therefore, Perea wanted to emphasize the importance of “showing the customer what is the positive impact that occurs in the environment. To achieve this, it is possible to resort to systems such as carbon footprint, which allows to show the transformative effect.
The importance of measuring
To do this, it becomes necessary to be able to establish mechanisms to measure the impact. “It is a visual way of showing it to the client and it will also have a positive impact on society,” emphasized Del Campo. In that way, a comparison can be made between the effects of sustainable investments and traditional ones.
The speakers have agreed on the importance of establishing a “common language”, which will make it possible to lay the foundations on which to homogenize concepts and ways of evaluating so that all the actors involved have the same standards when it comes to evaluation.
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First published in EL ESPANOL, a third-party contributor translated and adapted the article from the original. In case of discrepancy, the original will prevail.
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