In the past years there has been a global boom to invest sustainably, both in the private and institutional sectors. Sustainable investing provides an opportunity to invest by considering environmental, social, and corporate governance (ESG) factors. According to Bloomberg-Green1, solely in 2020 the investment in ESG oriented funds in Europe topped 1,12 trillion euros (approximately US$1,4 trillion). Huge right?
What then motivates to invest sustainably? Based on recent reports and articles (such as MSCI or Millennials Are a Driving Factor in the Growth behind ESG Investments2) younger generations especially women, but growingly also investors from all ages and genders are interested in sustainable investing, because of the growing concern of environmental and social and other related issues and secondly, because there is just more information available nowadays.
Further, the swift in the markets has put a lot of pressure for all the companies to renew their strategies. Companies are judged rather on how they contribute to a more sustainable society than with short-term financial goals.3 “I think we will see lot of new companies that are built on a sustainable thought, that will take market shares in the coming years. And I also think that we will see couple of dinosaurs coming down”, signals Magnus Alfredsson from Proethos.
On the other hand, while private investors are more informed on the opportunities in the markets and on the costs, the challenge is that there are no universal rules to define what are sustainable funds. The questions are, how we as private investors can know whether a fund is sustainable? What should we look at when selecting the funds?
Get your answers in this inspiring Sustainability Unwrapped episode, where Hanna Silvola invites Magnus Alfredsson to explore and chart what we should consider when selecting sustainable funds and what will the future of sustainable investing look like.
Hanna Silvola is an Associate Professor in Accounting at Hanken. Her research interests are in the sustainable investing and in measuring, reporting, and assuring corporate sustainability information in strategic decision-making. See below links to her latest articles and books.
Magnus Alfredsson is the creator of Proethos Fund based in Sweden. Proethos invests in four different areas, all of which play a crucial role in the climate and our future: Renewable energy, Energy efficiency, Sustainable transport and Sustainable lifestyle.
Hanna Silvola’s introduction to the topic.
Magnus Alfredsson’s contribution in this episode.
1. Bloomberg-Green. ESG Fund Assets Hit Record $1,4 Trillion in Europe Last Year. https://www.bloomberg.com/news/articles/2021-06-15/european-esg-funds-hit-record-1-4-trillion-in-assets-last-year
2 MSCI (2020). Swipe to invest: the story behind millennials and ESG investing: https://www.msci.com/documents/10199/07e7a7d3-59c3-4d0b-b0b5-029e8fd3974b; Nasdaq; Millennials Are a Driving Factor in the Growth behind ESG Investments: https://www.nasdaq.com/articles/millennials-are-a-driving-factor-in-the-growth-behind-esg-investments-2021-05-25
3 Blackrock: Sustainability is the future of investing: https://www.blackrock.com/ch/individual/en/insights/sustainable-investment-values-performance
Silvola, H. in Global Compact Network Finland 30.9.2021: Taloudellinen vastuu vai vastuullinen talous?
Silvola, H. & Landau, T. (2019) Vastuullisuudesta ylituottoa sijoituksiin, Alma talent. Also available now in English: Sustainable Investing: Beating the Market with ESG.
Check out also these previous episodes about sustainable investing and ESG:
Host: Hanna Silvola with guest Tiina Landau: How can private investors invest responsibly and sustainably? Moving beyond why!
Host: Niclas Meyer with guest Anna Hyrske: ESG investing, Institutional Investors, and Active Ownership