Why asset owners need a good sustainable investment policy and strategy?
By Kristina Touzenis, Managing Partner BST-Impact and Head of the investRFP Expert Group on Sustainability
| ESG Policy & Strategy
What is a good sustainability strategy and why on earth would you need it? One example is that your are based, or operate, or work with, or invest in, an EU based entity. You may want start asking yourself the following – basic – questions:
1 Has your company adopted a written ESG/Sustainability investment policy/strategy? How you ensure effective engagement with investees so that you do not operate on exclusion but rather on engagement for sustainability based on concrete indicators and goals? Have you thought about the “implicit” strategy you may already have in place?
2 Does your company consider sustainability/ESG as an integral part of your risk management? Are you ready to report meaningfully on Sustainable Finance Disclosure Requirements – including knowing when questions are truly non-applicable or ready to disclose when you are yet to obtain information?
3 Do you have practical and pragmatical indicators on ESG/Sustainability which are linked to your strategy and which truly readies you for reporting on e.g. SFDR and other such regulation? Do your strategy and indicators allow you to capture small progress that your investees make on sustainability issues?
4 Have you committed to a strategy addressing effects – positive and negative – on the societies of your investments? Do you have indicators based on international norms and SDGs which pragmatically aid you in your reporting and in making certain that you do no harm – or if you adhere to “implementing the SDGs” in your reporting you actual do so?
5 Have you considered that by asking these questions of your Asset Manager (perhaps not on ALL AUMs in one go!) you can deduct an implicit sustainability policy/strategywhich may already be rather well developed? And with confidence say „this does not apply to us“ or „we are seeing this as an area to focus on“ once questionnaires start arriving?
Why do asset owners need a good sustainable investment policy and strategy?
Because very soon you will be asked to disclose on these issues. And it will be very good to know if not all, at least some of the answers – and also know why you do not HAVE some of the answers YET – as well as what questions simply do not apply to you.
| ESG Portfolio Screening
Doing an initial screening of your asset managers portfolio, based on their policies and strategies but also looking into their investees actual ESG footprint, based on international standards which are at the basis of the SDGs and WILL BE the BASIS for ANY regulation coming from regional or national regulatory bodies.
Asset owners can start to paint a picture of an implicit sustainability policy/strategywhich may actually be much more elaborate than what is on paper, as well as discover the areas to work on.
Importantly the knowledge this will give you, will allow you to say “this does not apply to me” once massive questionnaires start coming your way, as well as say with confidence where you are focusing on improving”