Global Trustee and Fiduciary Services News and Views Issue 50

Global Trustee and Fiduciary Services News & Views | Issue 50 | 2018 13 Investors and asset managers continue to debate questions like that one, but European regulators in particular are looking to make the consideration of sustainability goals part of the investment and advisory process, something no longer a matter of choice but a pre-requisite for investing. (More about that later . . .) Standards have proved key. All the while institutions have built up products to match Shades of “green” The sustainability journey begins: freedom of choice and aspirational goals For many years now, there has been an increasing drive from both investors and asset managers, as institutional stewards for sustainable finance and impact investing, with a strong focus on Environmental, Social and Governance (ESG) factors. This drive has been evidenced most in Europe. A recent example being Blue Orchard, a global impact investment manager who earlier on this year was granted permission to launch Luxembourg-domiciled UCITS funds. 2 Blue Orchard has a strategy specialising in fostering THE SUSTAINABILITY JOURNEY BEGINS Can the world be transformed for the better? That’s what the United Nations 2030 Agenda for Sustainable Development sets out to achieve. 1 An ambitious, commendable plan. But in the financial services space, does thinking “green” always help to make for a better financial return and/or reduce risks? ESG relates to the practice of having regard to environmental, social and governance factors in decision-making and financial transactions. It looks at the current business practices of a company and uses these to measure a company’s risk based on environmental stewardship, corporate governance and social practices. Sustainable finance is a more recent concept and involves the provision of finance to investments taking into account ESG considerations. There is a focus on awareness and transparency, on the risks which may have an impact on the sustainability of the financial system, and in the position of risk- mitigants through governance or other measures. Impact investing refers to investments made into companies, organisations and funds with the intention to generate a measurable, beneficial social or environmental impact alongside a financial return. Impact investments provide capital to address social and/or environmental issues. inclusive and climate-smart growth in emerging and frontier markets. Evidence supporting preference for more responsible investing in the UK and continental Europe is also evidenced in a recent survey. 3 The survey found that: 47% of European investors have a responsible investing policy in place compared to just 30% of US investors. The most common type of responsible investing methodology was ESG integration into investment strategies (47%). Negative screening, also known as socially responsible investing (SRI), was second at 24%.