8 February 2013

SIRP ends with European roadshow

The Sustainable Investment Research Platform (SIRP) research programme, completed in 2012, has made major contributions to knowledge and awareness of sustainable investments. Mistra now plans to start a new, similar research programme.

In the SIRP (Sustainable Investment Research Platform) programme, some 20 researchers in seven European countries analysed and assessed the importance of sustainable investments — that is, investments in companies and securities that set store by environmental, ethical and/or social factors.

In the past year, Programme Director Lars Hassel has travelled around Europe presenting the results of the research. In October last year he was in Zürich, at the world-leading conference on sustainable investments, where the SIRP workshop was the only academic item in the programme. The conference brought together more than 350 international delegates from such financial service enterprises as banks, insurance companies, accountants and auditors. He has also visited, for example, Paris, Rome and London.

‘We’re tremendously pleased with our “European roadshow”. It’s a great privilege, as academics, to get the chance to present our research to interested practitioners,’ says Lars Hassel, Professor of Accounting and Rector of the Umeå School of Business and Economics.

Quality shortcomings

Researchers in SIRP have produced a long series of scientific articles, but also compiled practical, useful recommendations and guidelines. One project in SIRP, for example, compared environmental work in global property companies.

‘We’ve ranked how advanced the companies are in terms of environmental policy and environmental management. The work is a great practical help to investors when they create a share portfolio.’

One obstacle to anyone who wants to invest sustainably is the scarcity of data. Figures on emissions and other environmental data reported by the companies themselves are often incomplete and sometimes simply wrong, according to Lars Hassel. This is something the SIRP researchers have noticed, and they too have helped to improve the situation.

Market getting wise to sustainability

Since SIRP started in 2006 it has been a thrilling journey, Hassel thinks. Corporate endeavours in environmental issues and human rights are increasingly important in the financial services sector, as elsewhere. Nevertheless, scope for making money by investing in environmentally aware businesses is decreasing.

‘In the past, investments made according to sustainability criteria might provide a certain adjusted excess return. Now we’re seeing a market that has matured and learnt to invest responsibly, so these factors tend to be priced in and you can no longer make regular profits on the basis of generally available information,’ Hassel points out.

More and more, in his view, environmental performance is being assessed on the same terms as more traditional financial factors. Here, the media play a key part. Companies that lack social responsibility are in danger of getting bad publicity, which can damage public confidence — and stockmarket value — in the long term.

‘As an investor managing your portfolio today, you have to weigh up environmental risks just as you assess other risks,’ Hassel concludes.

New research programme broadens the field

Now that SIRP has come to an end, Mistra is planning to fund a new research programme on sustainable asset management. The Stockholm School of Economics has been assigned to submit a programme proposal to Mistra’s Board.

‘We want to start afresh and extend the research area to include a bit more than the financial markets. We hope the new programme, Sustainable Markets, will move the research forward,’ says Fredrik Gunnarsson på Mistra.

Text: Henrik Lundström, Vetenskapsjournalisterna

A longer account of SIRP will be included in Mistra’s Annual Review, to be published in spring 2013.

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