Sustainable investing is changing from a pure investment approach to a comprehensive investment process. At the same time, institutional investors face various hurdles. Above all, productive strategic solution-oriented concepts are offered by the Scandinavian countries.
The Nordic Investment Manager Forum is now in its sixth year. From 16 to 18 October, the lectures and discussions in the three cities of Zurich, Munich and Luxembourg will entirely focus on ESG. Among the most important topics will be the challenges of integrating ESG factors such as environment, social affairs and corporate governance into the investment process of institutional investors.
The central issue is a fundamental dilemma in the industry: a rapidly growing number of investors are asking for their money to have a positive effect, but what exactly does green or sustainable investment mean? One obstacle in this context is the lack of standards for defining sustainability.
The issue of impact investing and sustainable development goals (SDGs) also raises questions: For example, how can the 17 global sustainability goals and impact assessments be meaningfully integrated into existing processes and go beyond mere reporting? Another challenge is the question of how far institutional investors and asset managers should go with regard to the climate debate and which criteria should be used to make decisions and which strategies are appropriate. And finally, how ESG approaches can be meaningfully integrated into non-traditional asset classes.
Many years of experience in the North
Some market participants are looking north in search of solutions. The Nordic countries are pioneers when it comes to sustainability - and have been for over 30 years. ESG is an integral part of the investment process and, like salt, it is an essential part of the soup. There is no other region where the normative focus has been implemented to such an extent in the market and with such different types of investors. We have observed that the relevant Nordic asset holders are very interested in the subject of ESG. Most of the major players are now also investigating more complex risk integration factors in their investments and exerting pressure on their external managers in other parts of the world.
The pioneering role of the Nordic states with regard to sustainability is also reflected in politics. Women's right to vote, the creation of equal opportunities for all and the fight against bribery were guaranteed from early on. It is therefore hardly surprising that the ideal of a sustainable and responsible future has been passed on to companies to promote innovative solutions. Another factor for the early adaptation of socially responsible investments in Scandinavia could be people's relationship to nature and the harsh winters that lead to community interests prevailing over individual needs.
Leading the country rankings
In Denmark, the largest institutional investors have defined individual guidelines for responsible investing. What is new is that the integration of ESG factors is carried out in different asset classes and that the relevant functions in the companies are more closely integrated. There is also a stronger involvement at the management level.
A recent study by the Danish Sustainable Investment Forum (Dansif) among the top 50 institutional investors in Denmark confirms this development. According to this study, ESG integration is increasingly taking place across several asset classes and with a higher participation at top management level. It is not coincidental that the Scandinavian countries are at the top of the ESG country rankings in the area of "Climate Change and Energy." The ESG country report of the sustainability rating agency ISS 2019 is based on 100 quantitative and qualitative criteria.
Thomas Justen is head of Wholesale Business DACH, Jyske Capital A/S. His colleague Claus Grøn Therp, senior portfolio manager equities, will be presenting Equities Low Volatility - a sustainable investment story? at this year's edition of the Nordic Investment Managers Forum, which takes place October 16 in Zurich, 17 in Munich and 18 in Luxembourg. Therp has been with Jyske Capital since 2013, and is responsible for managing a global low volatility equity fund investing in equities with low volatility and companies with high quality.
For full details about the NIMF speakers from groups including DNB AM, Jyske Capital (Jyske Bank), Storebrand AM and Sparinvest, visit www.nimf.lu