Intelligent CIO APAC Issue 22 - Page 38


‘‘ business

As the pandemic swept across the world , many sustainable investors held their breath , collectively fearful of what it would mean for its impressive trajectory . But the worse did not happen – in fact , it turns out that companies that manage sustainable risks better , manage other risks better as well .
The downturn associated with the pandemic has thrown water in the face of naysayers claiming that sustainable investing would result in lower returns – this is simply not true .
Be aware – the challenges of greenwashing
But it is not all plain sailing . There is increasing concern over the issue of greenwashing which is leading investors down the wrong path in some instances .
Particularly for retail investors , where many are relying on certain labels such as ‘ green ’ or ‘ SDGs ’ or ‘ gender diversity ’ to guide them in the right direction when they make an investment decision .
Jessica Robinson is a leading expert on sustainable finance and responsible investing , and author of Financial Feminism : A Woman ’ s Guide to Investing for a Sustainable Future . Find out more at moxiefuture . com .
The problem is that sometimes these labels are not properly assigned or are maybe stretching the trust . This gives the investor a false sense of comfort , not to mention the damage it does to the reputation of the sustainable investment industry .
The important thing is to be aware of ‘ greenwashing ’ – some companies and funds can do a good job at ‘ greenwashing ’. Corporate marketing and PR efforts can hide a whole host of sins , and this makes the job of sustainable investors even harder .
It requires sustainable investors to do their research , check against third-party sources and undertake thorough due diligence .
Where next ?
What will happen next ? Thankfully it seems that the pandemic has strengthened investors ’ commitment , with demand for sustainable and green products continuing to grow .
As we look ahead , certain themes within the sustainable investing universe will gain more attention . Climate change will remain a top priority for many investors . Coming off the back of COP26 at the end of last year , the summit has driven new and improved climate commitments , with companies and investors following suit .
Diversity has been gaining attention for a few years , but the Black Lives Matter movement has brought into sharper focus the lack of meaningful progress . And of course , the pandemic also shone a spotlight on social issues , pushing many investors to reconsider the management of social risks within their portfolios .
There are still challenges to overcome to embed sustainable investing as the ‘ new norm ’. Disclosure and data remain thorny issues , with concern that data is still fragmented , disclosure is inconsistent , and the lack of standardization holds investors back .
We still have some way to go on the regulatory front too – while the European Union has been a front runner with its sustainable finance agenda , there are some delays as well as on-going debates .
Despite these challenges , we have many reasons for optimism . Perhaps one of the most exciting trends is how retail investors are waking up to the sustainable investing trend . Interestingly , research tells us that a lot of this drive is coming from women as well as younger generations . New audiences and new conversations are to be had . p
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