WHAT IS THE CHALLENGE?
More and more actors in financial markets are working to integrate environmental, social and governance questions into their investment processes and decisions.
SIRP has fostered the development and publication of research which, I believe, is not only of assistance to other foundations wishing to pursue the same journey but which also has significant relevance to the broader investment community. The need for a long term perspective in the capital markets is greater than ever.
David Blood, Senior Partner Generation Investment Management
We are performing research about ways that institutional investors can create economic value added through sustainable asset management, and what barriers there are to adopting such practices. Institutional investors have the strength needed to drive companies toward more sustainable development.
Barriers to sustainable development can include uncertainty regarding the financial consequences of sustainable and responsible investment strategies and whether sustainable investing can be expected to provide economic returns. The strict financial nature of fiduciary responsibility and the short-term perspectives in evaluation and bonus systems are also barriers, as is the lack of sustainability data from companies as input to analysts´ recommendations and asset managers´ decisions.
HOW CAN THE PROGRAMME CONTRIBUTE TO FINDING A SOLUTION?
The goal of the programme is to develop guidelines and recommendations for sustainable investing, so that they can be incorporated in asset managers´ responsibilities. We evaluate sustainable portfolios and the restrictions they place on asset managers, and also include bonds, venture capital and real estate as sustainable investment options.
Researchers in the programme are exploring how investors use sustainability information and analyze companies based on economic, social and environmental performance. Particular attention is paid to how pension funds´ fiduciary responsibility can be redefined from a strictly short-term financial perspective to even include long-term responsibility issues.
In parallel, researchers are studying how companies´ profits, and returns for institutional investors, are influenced when they take sustainable development into account in their investment decisions.
The knowledge acquired from these studies is forming a basis for a more developed and cohesive theoretical foundation for sustainable and responsible asset management.
The programme is also developing proposals for guidelines regarding increased accounting and management transparency for individual companies, funds and pension funds among institutional investors.
WHO WILL BENEFIT FROM THE RESULTS?
The knowledge generated within the programme is useful for institutional investors, analysts, those responsible for company oversight, and for companies interested in developing more sustainably.
Amongst investors, the primary target groups are owners and managers of capital. The SIRP programme is expected to contribute to research in the fields of finance, accounting, law, economics, corporate leadership and psychology. In the long run the programme will benefit — in addition to the private sector and decision makers — nature and future generations.