There is no sustainability without stewardship
With sustainability a core topic for the investment community, the impact of Voting and Engagement is ever more apparent.
Investors are increasingly integrating Environmental, Social and Governance (ESG) considerations into investment decisions. These can be implemented in portfolios through either risk-focused negative selection approaches, such as exclusions based on international norms and controversial activities, as well as positive selection approaches. These aim to identify the best ESG performers not only in terms of minimizing risks, but also in terms of ESG opportunities and impact.
The buck does not stop here
Being a truly sustainable investor is not just about identifying and investing in the right issuers. What comes after is just as important. In our view, those who reduce sustainable investing to a binary choice between ‘perfectly sustainable’ and ‘not sustainable’ issuers are missing the point. They are failing in their roles as asset stewards. Such a binary approach is not in line with today’s social, environmental and economic realities.
Indeed, Sustainable investing is also about accompanying issuers in the improvement of their environmental, social and governance practices. Being an investor confers certain rights and bestows influence, in particular through Voting and Engagement. Being an active investor and steward not only influences the behavior of issuers, it helps investors gather data and insights which can improve ESG investment analysis and contribute to alignment with new and future sustainable investment regulation. This sharing of information can be two-way, or even collaborative, among issuers and investors who wish to share information, share best practices, and limit negative ESG impacts.