ESG is redefining investment strategies

Environmental, social, and governance (ESG) has been gaining more and more ground lately at discussions about the sustainability of investments and capital.

Besides, we are currently in an era where financial decisions have an impact that goes beyond profit margins, with initiatives highlighting the vital role of sustainability in forming investments of the future, turning the financial landscape into the vessels for positive global change.

As such, sustainability is at the core of today’s constantly changing financial landscape and it would not be an overstatement to say it is redefining investment strategies.

Firms are under pressure with the sustainable reporting standards, as they try to understand how they should be met while at the same time trying to keep costs down.

Delegates at the 9th International Funds Summit & Expo followed a series of presentations under the unit “Impact Investing and Sustainability”, on its second and final day.

Marios P. Charalambides

Introducing the unit, Marios P. Charalambides, Partner, Head of Financial Services at RSM Cyprus, said ESG is calling on people and businesses to turn words into actions. Leaders, he said, have a responsibility to apply ESG in all their activities, which clearly opens up valuable opportunities and capabilities. Concluding, he said there needs to be a balance between risk, reward and a firm’s reputation.

Florence Bindelle

Florence Bindelle, Secretary General of European Issuers in Belgium, gave a presentation entitled “Aligning ESG goals to the European Sustainable Reporting Standards (ESRS) Framework: Opportunities and Challenges”. She highlighted the need for precise guidance from the European Commission to help bring together local concerns and navigate the dual materiality assessment process.

She strongly urged the European Commission to establish a standardised methodology for assessing the economic impact of environmental issues. Such a methodology, Bindelle added, would simplify meaningful comparisons and allow companies to prepare in advance.

Juanma Revuelta

In his own presentation entitled “Green bonds and EU Funding perspective: LIFE ECODIGESTION 2.0 as best practice”, Juanma Revuelta, CEO of Finnova Foundation in Belgium, presented the main aspects of the LIFE Ecodigestion 2.0. project, which he said was a unique EU programme that focuses solely on financing Ε&Α&Ι proposals aimed at improving the environment and climate.

It consists of a multiannual fiscal framework of €5,432 million and focuses on the environment, nature and biodiversity, the circular economy and quality of life, climate action and the clean energy transition. Since it launched in 1992, it has financed over 5,500 projects, said Revuelta.

Sabrina Fox

Sabrina Fox, Chief Executive Officer of the European Leveraged Finance Association (UK), was up next with her presentation “Solving for ESG in Leveraged Finance Markets”, where she said the Association’s mission was clear: to act as the voice of the investor community for a more transparent, effective and resilient leveraged finance market.

She went on to present the five steps for firms to effectively manage the switch to ESG:

Firstly, they need to do everything that can be done at the given moment in time. They must then proceed with proper planning. The third step is to follow the highest possible standards and fourth – and importantly – keep an open line of communication and understanding. The fifth and final step is to stay dedicated to the goal.

Chiara Chiodo

A presentation by Chiara Chiodo, Policy Advisor at EFAMA | Sustainable Finance, Corporate Governance & Stewardship Brussels, was entitled: “Sustainability and Investment. Overview of the EU legislative journey and main challenges ahead.” She referred to the European Parliament’s proposal last June, which aims at the integrity, transparency, governance and independence of ESG assessments provided in the EU.

This, she said, highlights the main challenges facing the mutual funds industry in implementing the SF framework.

For EFAMA, a key part of its commitment is to ensure that asset managers are enabled to participate in the green transition with proportionate and enforceable regulation, she concluded.

RSM was Platinum Sponsor of the Summit's The Impact Investing and Sustainability stage.