27 Sep 2018

Can we invest ourselves from climate change – and does the customers want that?

The ASAP team and Nordea are working together to inspire change, with focus on partnership and sustainability. That's why we want to present some of Nordeas thoughts on how YOU can live a more sustainable life! The text is written by our partners at Nordea, hope you’ll like it!

Do you want to act more sustainably in your everyday life? Many experts argue that the best way to make a difference is to consider your choices in terms of transport, lifestyle, food and savings. While the last point – savings – might not be generally well known, the impact of investment choices should not be underestimated. Consider that you are actually investing money in companies when you save in funds or for your pension, and, if you want to make a difference, it’s therefore important to avoid companies with poor environmental conduct. As asset managers, this is where we can make a difference and steer capital towards new sustainable business models, while at the same time ensuring that our customers save in sustainable savings solutions.

Nordea Funds has, in its asset management, been working with ESG (Environmental, Social and Governance) issues for over 10 years. We have gathered information about how the companies in which we invest – or wish to invest, act when it comes to these issues. It comes from our desire to obtain the best possible returns for our customers, who have entrusted us with their savings. In our view, companies that understand future challenges today are better positioned for profitability tomorrow. Natural resources are limited, people need decent working conditions, and large corporations need to practice sound business ethics. Poor conduct in this respect can harm a company and, ultimately, its share price – as witnessed several times in the past. And, ailing share prices are not good either for us or our customers.

“Now to the crux of the matter – is investing sustainably profitable?”

When investing in companies, we look at the following from an ESG perspective:

In terms of the environment (E), we look, for instance, at companies’ conduct in terms of minimising water consumption, and their processing of emissions and waste. Companies with poor conduct in this respect today will need to adapt drastically tomorrow, when legal requirements are tightened, or water becomes scarcer. In terms of social factors (S), we can for instance look into the conduct of working conditions at suppliers to large corporations.  Where governance (G) is concerned, we can consider whether there is a risk of corruption and, in that case, how the companies in which we invest deal with the issue.

Now to the crux of the matter – is investing sustainably profitable? The findings of academic studies diverge. One study published in the Journal of Sustainable Finance & Investments state that among 2000 empirical studies 90 percent show that taking ESG-factors in to consideration is just as good, or better than not taking ESG in to consideration.   

We have taken a stance and believe that sustainability, towards a future in which companies address ESG issues, is the right way forward. This is how we ourselves want to invest into the future, and our goal is to make as many people as possible aware of the benefits this affords.

One of our big challenges is therefore to make our customers aware of the fact that sustainable savings is one of the most important choices you can make for a more sustainable everyday life and most likely it will give them just as good, or better returns on their investments.

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