1 June 2017 | News
What does sustainable investment actually mean? Sustainable investing is a concept that has emerged and changed over time. Initially, the focus was on corporate charity work and what is often termed corporate social responsibility (CSR). From the shareholder perspective the term socially responsible investment (SRI) was used. In 2006, the United Nations set out six principles for responsible investment (PRI), based on ideas of environmental, social and corporate governance (ESG) issues. To date, the UN document has attracted over 1,700 signatories among institutional investors that have undertaken to incorporate ESG considerations into their investments. Sustainable investing has become an essential part of the vocabulary of the financial world, and is rising up the agenda for companies, asset managers, institutional investors and small savers alike.
It is not only the content of the sustainable investment concept, but also the approach, that has been developed and refined over time. Initially, it was mainly about excluding specific products and services that were considered controversial or unethical. However, it was realised at an early stage that even companies operating in a controversial sector could hold a high standard in their internal ESG work. Investors began to analyse these internal efforts and embrace a "best-in-class" strategy. At the same time, ownership was used to actively influence those companies that were not quite achieving when it came to sustainability. Over the years, asset managers and banks instituted separate organisations dealing with ownership and sustainability issues, while investment decisions were still taken by asset managers who instead placed their emphasis on financial considerations. In other words, it was difficult for them to benefit from each other's work since they, in effect, spoke different languages. These days, asset managers are increasingly integrating sustainability issues with financial opportunities and risks. This step may seem natural, but it is nonetheless exciting. And it is precisely in this meeting between sustainability and finance that we at Catella Fonder believe we can generate additional value for our unit holders.
Why is it important to link sustainability with finance?
We probably all accept that the world faces a series of global challenges. Many of us try to do our bit by sorting our trash, using public transport and saving for retirement in sustainable funds. Companies themselves hold many of the important keys to smart and sustainable solutions for both us, as consumers, and the business community. This gives rise to investment opportunities for those who manage it in the right way. For us at Catella Fonder, this adds a new dimension as we select investments for our portfolios and, through seeking out companies with business models powered by sustainability, means that we can identify stocks that provide higher returns over time than the market as a whole.
A deeper understanding of the financial aspects of a company's internal sustainability efforts is also important for companies that do not have sustainability as a direct value driver. Good sustainability can be costly in the short term, and maintaining higher standards in a supply chain, offering training and development opportunities to employees, managing emissions and waste, or switching production to a more environmentally friendly facility can often bring associated costs. These costs put pressure on profitability in the short term, but in the longer term they offer the company benefits in the form of lower staff turnover, access to new markets and improved competitive advantage or, quite simply, the opportunity to continue doing business if regulations call for a change. A short-term investor can easily miss the long-term potential.
We are now taking the next step at Catella Fonder!
The sustainability journey of Catella Fonder started in 2009 when we became a signatory to the UN Principles for Responsible Investment. We have since developed working methods and processes to keep our products clean from companies that violate the UN principles and conventions in the areas of the environment, social aspects and ownership. In the summer of 2016 we expanded our sustainability resources and decided to launch our Sweden fund under a new sustainability flag. We are therefore extremely proud to present the Catella Sverige Aktiv Hållbarhet fund. In-depth analysis of companies is part of Catella Fonder' DNA. By bringing together sustainability and financial analysis we expand our knowledge and our opportunities to identify companies whose profitable growth in underestimated by the market. Returns using our heart and our brain!
Important information
Investments in fund units are associated with risk. Past performance is no guarantee of future returns. The money invested in a fund can increase and decrease in value and it is not certain that you will get back the full amount invested. No consideration is given to inflation. The Catella Balanserad, Catella Credit Opportunity and Catella Hedgefond funds are special funds under the Swedish Alternative Investment Fund Managers Act (SFS 2013:561) (AIFM). Catella Sverige Aktiv Hållbarhet and Catella Småbolagsfond may use derivatives, and the value of the funds may vary significantly over time. The value of Catella Sverige Index may vary significantly over time. Catella Avkastningsfond may use derivatives and may have a larger proportion of the fund invested in bonds and other debt instruments issued by individual national and local authorities and within the EEA than other investment funds, in accordance with Chapter 5, Article 8 of the Swedish Investment Funds Act (SFS 2004:46). Catella Nordic Long Short Equity and Catella Nordic Corporate Bond Flex may use derivatives and may have a greater proportion of the funds invested in bonds and other debt instruments issued by individual national and local authorities and within the EEA than other investment funds. For more details, complete prospectuses, key investor information, and annual and half-yearly reports, please refer to our website at catella.se/fonder alternativt telefon 08-614 25 00.
