To spark a conversation about this important matter we, too, focused on this area during our 2018 customer events.
The FT Advisor reported on 3 January that “the global sustainable retail investment market is estimated to have grown to US$22.9 trillion at the start of 2016, up 25 per cent from 2014, while the share of retail assets in total sustainable investment in Canada, Europe and the United States is estimated to have increased from 13 per cent to 26 per cent during the same period.”
We also see growing interest by the media to cover the topic to curb readers’ interest and increase knowledge about industry developments. Financial Times also released a special report focusing on financial sustainability earlier in December stating that “Central banks are under ‘green’ pressure to be catalysts of change”.
Needless to say, the sustainability trend is taking on a transformative form. You could say that sustainability investments are no longer a trend but a necessity to add to any portfolio.
How to integrate ESG investments
At Danske Bank, we integrate sustainability by focussing on environmental, social and governance (ESG) factors, which are used to determine the sustainability impact of the companies we invest in, lend to and procure from.
Danske Bank International’s Head of Investment Solutions, Peter Lundgaard, explains that in order to provide investment solutions with competitive and long-term performance, ESG needs to move from the sideline into the core of the investment process.
During our events, Mr. Lundgaard introduced Danske Bank’s ESG Inside process that makes integrating sustainable investing more effective as the process permeates advice, products and processes. This does not mean that we exclude the analysis of financial information but ensures that all material factors are considered when making investment decisions.
We believe that our ESG Inside process and sustainable products are key to creating long-term value for customers, investors and society.
The process of analysing internal processes is a complex one and many companies are at the start of their work when it comes to reporting data behind their operations. This is why it’s important for big market players to wield their power and demand more data regarding business practices.
How to start ESG investing
Following many devastating reports about climate change, we can only see the pressure regarding sustainability processes and products become greater in 2019 and the demand of impact investing increasing. By investing in Impact funds, you’ll support the important work of companies that are committed to solving environmental and climate related problems.
There are many alternatives for sustainable investing, whether they be with bonds, funds or other investment products. Individual investors should consult their financial advisor on the opportunities and use tools like Climetric, which ranks funds on their climate impact. You can also use your influence within different communities and forums you are engaged with to encourage investments that enable companies and people to work towards a more sustainable environment and society.
The publication is not an offer or solicitation of any offer to purchase or sell any financial instrument. While reasonable care has been taken to ensure that its contents are not untrue or misleading, no representation is made as to its accuracy or completeness and no liability is accepted for any loss arising from reliance on it