Regulations, policies, reporting, data and guess what- investor´s values are making the difference
EU regulation/taxonomy on sustainable finance, that is put into action regarding climate change mitigation in the beginning of 2022, will have an impact on the responsible investment strategies, plans and actions in the finance sector.
Not only is EU regulation affecting Nordic investors. Globally in 50 largest economies, there are more than 730 policy revisions and +500 existing policy instruments connected to sustainable finance. In addition, reporting is requiring more resources from investors, and on the other hand reporting will bring more transparency into practice. Next to policies, regulations and reporting, large quantity, and quality of ESG data is setting opportunities and challenges in balancing analysis from the responsible investing point of view. The market for ESG data has grown to over 1-billion-dollar business – the information is out there just to be turned from quantity to quality.
The demand and supply for e.g., green bonds, sustainability bonds and ESG funds, are growing rapidly. Alongside with institutional investors, individuals have become more interested in balancing their own values, visions and expectations, and they weigh these factors when investing their money. Investing has even become a part of building one´s personal brand. Next to pure profit-making, ESG factors or the will to invest in solutions or products that are parallel to the goals of sustainable development or one´s ethical believes, are playing even bigger role in investment decision making.
According to a survey covering over 5 000 responds by private investors in Finland, (conducted by Emilia Vähämää and Hanna Silvola Hanken School of Economics, and Professor Bonnie Buchanan, University of Surrey, UK, 2021), millennials are more interested in responsible investing. Moreover, according to the survey, over 60 % of the total number of respondents include ESG factors into analysis. In addition, the survey reveals that from the bucket of ESG themes, investors are focusing on environmental aspects whereas taxation or enhancing diversity of employees were not the key focus areas in decision making process.
How we tackle the ESG jungle?
Based on Finsif´s strategy, a survey taken of the membership, and the vision of the active board working daily with responsible investing scheme, few themes were brought up to be focused on in Finland in 2022: biodiversity, electrification, EU taxonomy/sustainable finance, climate change and net-zero, ESG data and measuring ESG performance. Other current topics drawn interest in Finland are e.g., sustainable food procurement- its role and possibilities, ESG questions linked to alternative investments and government bonds. According to the survey taken of the membership, people would like to participate live meetings instead of online events, and concreate workshops on sustainable investing are requested. Finsif uses hybrid- model in event production if possible, and hands-on workshops are going to be on the agenda -online or live.
More practical tools and clarity for noting the perspectives of sustainable investing are needed. Finsif tackles the challenge by translating its 2021 revised Responsible Investment Guide to English by summer 2022, for helping individuals, institutional investors, asset managers, universities and universities of applied sciences, NGOS and others interested in the topic, to navigate through essentials of ESG and responsible investing.
Nordic knowledge on responsible investing, will be playing increasingly important part of Finsif´s work. Nordic countries have increased the exchange of information on responsible investing during last couple of years and this collaboration is called NordicSIF. The next NordicSIF meeting is held in June 2022 in Reykjavik and is open to all SIF members (Including Finsif members). The NordicSIF collaboration includes for example joint meetings yearly, regular conference calls, inviting other SIF´s members (Denmark, Iceland, Norway and Sweden) to join local events online, assembling newsletters on the current topics and work. In addition to Nordic collaboration, Finsif is a part of The European Sustainable Investment Forum (Eurosif) under an observer status. Being a part of European sustainable investment information flow and networking, Finsif has an opportunity to serve its members by bringing insight to both Finnish and Nordic connections on sustainable investing.
There are lots of fascinating dimensions to be discovered under the theme responsible investing this year.
Have fun, get inspired and most of all, warmest welcome to join our flow to make things better.
Happy and safe year 2022!
Leila Räsänen, Finsif
Finland’s Sustainable Investment Forum (Finsif) is a member based organization, that promotes responsible investment that takes account factors related to environment, society, and corporate governance when considering investment decisions. Finsif was established in 2010 and it has over 80 member organizations. www.finsif.fi