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14 October 2013

Businesses’ turn to see value in sustainable investments

The financial services sector has realised that sustainable asset management is an option that may benefit owners, as well as being environmentally and ethically good. Tonika Hirdman, who long worked in the sector, is now calling for more interest from the business sector — and hoping for new research from Mistra that can foster this trend.

The current financial crisis has caused many of the world’s companies to lose momentum. Tonika Hirdman, one of the pioneers in sustainable asset management, is nonetheless positive.

‘In the financial sector, a great deal has already happened in the past decade. And I’m convinced that it’s possible to change the business sector as well, and get more companies to take environmental and social criteria into account in deciding how to run their operations. This is already under way: many big international companies are going in this direction.’

Early sustainability efforts

Tonika Hirdman has long experience in the area, and helped to develop responsible asset management at Banco Fonder at the beginning of this century.

‘Banco was extremely early in adopting the “active influence” model. We were inspired by how they had started using dialogue and actively inducing companies to adopt sustainability thinking in London financial circles. Some work of this kind was done in the United States as well, but in Sweden hardly anyone was working like that at the time.’

After a few years, Hirdman became Banco’s CEO. When the business was bought out by the big Dutch bank ABN AMRO, she was tasked with heading a broad international initiative in asset management, applying sustainability criteria according to the Banco model.

‘Many others had a negative starting point: penalising firms or sectors that did not perform in terms of sustainability. Instead, we tried to understand the companies’ reality, invest in those with the potential to develop and then stay with and influence them. Today many stakeholders in the financial sector work according to that model, which is encouraging.’

Major potential for reaching businesses

Today, Tonika Hirdman works in Luxembourg, as Director General of Fondation de Luxembourg, a state-founded philanthropic foundation. It helps donors to set up foundations benefiting areas as diverse as community action, environmental issues, culture and education. Many also choose to manage their assets sustainably, which the Fondation helps them to do.

She is now temporarily in Stockholm to evaluate a new research initiative with several other international experts. The idea is that this initiative should build further on ‘Sustainable Investment Research Platform’, the earlier Mistra programme in which researchers from several countries demonstrated the potential for sustainable investments.

‘Mistra has an impressively serious process preceding decisions on new programmes. In this process, as international assessors, we have the job of analysing research needs in an area and the best ways of gearing new initiatives to fill the gaps.’

The results from previous research have very clearly reached the financial sector, but to a lesser extent companies. The aim of the proposed initiative is therefore to expand the research area beyond the financial markets to include the business sector as well.

Swedish companies’ lost lead

Hirdman thinks there is surprisingly little discussion among Swedish firms and in the Confederation of Swedish Enterprise on the value of considering sustainability in business operations.

‘Electrolux and other Swedish companies were long seen as pioneers, but now companies in the rest of the Nordic region, Japan and elsewhere have advanced substantially further. One shortcoming is the lack of business cases that demonstrate the long-term value of investing in sustainability. Here, more research is needed and Mistra, we hope, can provide some of it.

The Stockholm School of Economics has now been commissioned to develop the idea of the new research programme further before Mistra decides on a possible investment.

Text: Andreas Nilsson, Vetenskapsjournalisterna

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