QHow should we focus our messages for sustainable investors?
A
Sustainable investors and analysts are primarily interested in the sustainability issues that have most potential to impact the financial performance … and hence stock price of companies.
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Sometimes such issues will be found in companies' products and their positioning; sometimes they will be found in companies' production processes / execution activities; sometimes they will be found in wider societal and market trends. Companies should focus on these aspects above other aspects - which may have sustainability relevance by may be less financially-material.
QWhat sustainability trends are investors currently focused on? (2020)
A
The same issues as the rest of the world is focused on: COVID-19, climate change, equality (gender and race), biodiversity, plastics and economic recovery.
QHow should presentations to SRI analysts and investors be structured?
A
ESG/SRI investors and analysts want to focus on the sustainability issues that are likely to have most impact on companies' financial performance. To support this, they need to understand the company's core strategy. Accordingly, we recommend the following structure:
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- 5 minutes on the company's core strategy
- 5 minutes on the company's overall approach to sustainability
- 5 minutes each on the three sustainability themes of most financial relevance to the company
- 35 minutes for questions – (for live group meetings) | 20 minutes for questions (for 1-on-1 video meetings)
For more information see Take control of SRI communications
QWhy are asset managers interested in sustainability?
A
For four reasons: Primarily, because their clients (both institutional and retail investors) demand it of them; secondarily because regulators are demanding it (and requiring reporting from asset managers.
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Asset managers are also interested because, for active funds, there can be investment performance advantage in taking sustainability factors into account. Finally, asset managers are sometimes major companies in their own right and therefore have CSR obligation to "do the right thing".
QHow can I tell which of my firm's largest investors are interested in sustainability?
A
It depends how precise you want to be. If you want a rough-and-ready idea, you can use SRI-CONNECT's free-to-access Directory. Typically, if an asset manager has an SRI analyst registered against its profile, then that asset manager is interested in sustainability.
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For a more precise answer - including the identification of individual sustainability funds on your sharehlder register, you will need to engage the specialist investor identification services available from a number of firms listed in this site's Directory
QWhat does SDG stand for? Do investors care about the SDGs?
A
The UN SDGs are the UN Sustainable Development Goals. The 2030 Agenda for Sustainable Development provides "a shared blueprint for peace and prosperity for people and the planet, now and into the future". At its heart are the 17 Sustainable Development Goals (SDGs). Investor interest in the SDGs …
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… has grown significantly in recent years as they provide a useful overarching framework against which investors can demonstrate 'real world impact'. They are also useful guiding parameters for the development of thematic investment funds.
That said, many of the UN SDGs relate to issues that lie outside the influence of listed companies or investors in them.
It is worth companies' highlighing any contributions that they make to the UN SDGs to those investors that show a specific interest in them.
Q(How) are sustainability and corporate governance issues integrated within asset management firms?
A
Sustainability issues are factored into investment decisions in three different ways:
- Not at all … because some asset managers, of course, have made little progress in this respect
- Systematically … as asset managers apply sustainability factors to valuation or portfolio construction via rules-based processes that operate before, after or alongside fundamental investment decision-making
- Fundamentally … in which sustainability analysts work together with their 'mainstream' investment analyst colleagues to make holistic investment decisions that fully integrate sustainability and financial factors using fully integrated processes