Institutional investors are becoming more sustainable
Rankings as driver for stock market listed firms
The estimated size of the global market for Responsible Investing (RI) was €7,6 billion in 2010 (EUROSIF). Some more key facts: Europe owns 66% of the global RI assets, USA 28% and Canada 5%. European RI assets are for 92% owned by institutional investors and the top 5 countries in Responsible Investing are France, UK, Norway, Netherlands and Italy. But what exactly is RI?
Responsible Investing is aiming at the connection between societal and economic developments. A connection that is getting stronger through issues such as global warming. ISO 26000 formulates it as follows: ‘The responsibility of an organization for the impacts of its decisions and activities on society and the environment’. This makes RI basically a type of charity. The main drivers for RI are risk reduction in the short- and the long-run and increasing expectations towards a company that cares about society and the environment. (see also the UN Principles for Responsible Investing: http://www.unpri.org/principles/ )
An old friend in the financial world: rankings
Responsible Investing seems easy. The only question is: What is responsible and what isn’t? As ever in the financial world raters and researchers play a pivotal role. Research company Sustainalytics for instance monitors trends and best practices in order to assist institutional investors in environmental, social and governance (ESG) considerations into their investment policies and strategies. Rabobank recently organized a meeting on responsible investing in London, where the largest companies in the Netherlands, Belgium and Luxembourg were analyzed on their sustainability programs and received an ESG rating from Sustainalytics.
Case example: Imtech
One of the companies assessed by Sustainalytics is technology giant Imtech. Imtech’s focus for the coming years lies on further growth in green technologies. Their activities vary from green sport stadiums (f.i. London 2012) to efficiency in mobility, hospitals and shipping. Imtech’s sustainability strategy entails three main pillars: reduction of their own carbon footprint, waste management and responsibility for the supply chain. Imtech integrates sustainability into the core of their business models but because concrete targets are still missing and the possible risk regarding labor relations policies, Sustainalytics ranked their ESG performance as slightly above average.
The examples mentioned above underline the increasing relevance of SRI ratings for stock market listed companies. As the graph below demonstrates, UK companies are well represented in the European DJSI. Are they green, do they communicate better or both?
For more information on the effective use of rankings, please contact Jan van der Kaaij, Managing Partner, via jan@between-us.nl or call +31 76 522 28 17.
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