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Responsible Investing

Thursday, June 15, 2017

Responsible Investing

Responsible Investment is a long standing theme that remains an unwavering hot topic in the asset management and pension industry. Undoubtedly, its emphasis is broadening while the terminology associated with it, is swelling - anyone for ethical investing, sustainable investing, triple-bottom-line investing, green investing?…the list goes on. With all these terms, many interchangeable and few universal, it can be a confusing space, so what is Responsible Investing as it stands today? And how are we, or should we be, applying it?

 

The notion of ‘Returns’ take a malleable definition when considered in line with Responsible Investing. Do we view positive returns as being financial or non-financial? Stand alone; can we note carbon reduction or improvements in education to be a positive return? Or can the two, financial and non-financial, be achieved in tandem? Increasingly, this is looking to be possible. The positive impact of key Responsible Investing allocations is becoming the focus over the age old importance of the exclusion list. More and more, investors are requesting a deeper knowledge of not just what is omitted, but more clarity on the types of positive influences the selected companies are having on, for example, health services or climate change. Is it now less about avoiding ‘bad’, but more ensuring sustainability?

 

Essentially, less ‘do no further damage’ (commonly associated with SRI) but ‘do good’ (Impact Investing)?

 

Impact Investing is often noted to be the fastest growing branch of the Responsible Investing umbrella. With an aim to find this golden key balance between investments that are generating real and measurable positive economic and social impact while also bragging a financial return. But, is this truly possible in equal measure? Or must one always ‘choose a side’? Or perhaps more telling, do investors really care?

There is a case to argue, especially by the strictest devotees, that the mainstreaming of the ‘Responsible Investing’ badge through these different avenues is a dangerous space, allowing the term to be a blanket one and diluting its core value. However, is the rebuttal that the wider use of its principles by a diverse mix of asset managers is encouraging not only vital industry wide critique but also diversity of approach and therefore, innovation?

 

CAMRADATA’s Roundtable will seek to find out how investors are interpreting Responsible Investing as a focus today, in addition to the likelihood that this should and will play an increasingly greater role within their portfolios.

 

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