1 June 2017, Sweden | News
What are sustainable investments? The concept of Sustainable Investments has evolved and changed over time. Initially, the focus was on company charity work and what is often termed CSR (Corporate Social Responsibility). From the unit holders' point of view, it was SRI (Socially responsible investing). In 2006, the UN presented 6 Principles of Responsible Investment (PRI) based on the concept ESG (Environmental, Social and Governance). To date, UN documents have attracted over 1,700 signatures from institutional investors who commit to incorporating ESG aspects into their investments. Sustainable investments are an obvious part of the financial community's dictionary nowadays and are increasingly on the agenda for companies and fund managers as well as institutional investors and small investors.
It is not just the content of the concept, but also the approach to sustainable investments, which has been developed and refined over time. Initially, it was primarily about excluding specific products and services that were considered controversial or directly unethical. It was realised relatively early on that companies in a disputed industry may also have a high standard in their internal ESG work. Investors began to analyse the internal work and adopt a "best in class" strategy. At the same time, ownership was used to actively influence those companies that were not entirely successful in their sustainability efforts. Over the years, asset managers and banks built up separate organisations for ownership and sustainability issues, while the investment decision was still taken by fund managers who instead prioritised financial aspects. In other words, it became difficult to derive benefit from each other's work, because they were not on the same page. Nowadays, more and more asset managers are integrating sustainability issues with the financial opportunities and risks. This is a natural, but no less exciting step. It is also precisely in the meeting of sustainability and finance that we at Catella Fonder believe that additional value for our unit holders is created.
Why is it important to link sustainability with finance?
We have probably all understood that the world faces a number of global challenges. Many try to contribute by sorting their refuse, using public transport and saving their pension in sustainable funds. Companies have many essential keys to smart and sustainable solutions for both us as consumers and for business. That creates business opportunities for those who manage it correctly. For us at Catella Fonder, it adds a dimension when we choose investments for our portfolios, and by looking for companies whose business model is driven by sustainability, we can find stocks that over time yield a higher return 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 direct value drivers. Good sustainability can cost more than it is worth in the short term. Maintaining a higher standard within the supply chain, offering training and development opportunities to employees, managing emissions and waste, or relocating production to a more environmentally friendly facility can in many cases be associated with expenses. Expenses that weigh on profitability in the short term, but provide a company with long-term benefits in terms of lower staff turnover, access to new markets, increased competitive advantages or simply an opportunity to continue running the business if regulations call for a change. A short-term investor can easily miss the long-term potential.
We are now taking Catella Fonder's next step!
Catella Fonder's sustainability journey began in 2009 when we signed the UN's principles for sustainable investment. We have since developed working methods and processes to keep our products away from companies that violate UN principles and conventions within environmental and social aspects as well as governance. In the summer of 2016, resources linked to sustainability were increased and we set the ambition to launch our Sverigefond under a new sustainability flag. We are therefore extremely proud to present Catella Sverige Aktiv Hållbarhet. In-depth analysis of companies is part of Catella Fonder's DNA. When we link sustainability to financial analysis, we expand our knowledge and our ability to identify companies with profitable growth that are underestimated by the market. Returns with heart and mind!
Catella Sverige Aktiv Hållbarhet.