No Time to Waste With Small Steps

    Stockholm (NordSIP) – Gunnela Hahn, has been interested in making our wonderful world a better place Since she was a school-girl, as she saw great potential for win-win solutions already at that time. “And to do that,” she says, “the economy needed to change.” At university, Hahn studied environmental economics and business administration. For 18 years, she has been working in the financial sector with sustainability in the investments, first at a large insurance company, and for the last decade at the Church of Sweden asset management.

    Become a manager of the planet

    “For me, sustainable investing is to create long-term value in the portfolio. Long-term value creation means that you need to invest for the benefit of society and the planet. Your capital should work in a way that makes all people in society flourish, not like a match that blows up quickly, but like a healthy tree, stable, rich on diversity and thus resilient to crises. To succeed, we need to become planetary managers, since the resources of this planet are our only real assets, from which all potential economic and financial value originates. The well-being of people also depends on the wellness of the planet.”

    Build your policy for long-term impact

    “Firstly, you need to create an investment policy that is clear on what you want to achieve. Secondly, you need to select asset managers that can deliver sustainable returns according to your policy. As an asset owner, you have the power, so make sure you use it well. Ask the asset managers how they build in long-term value creation in their products and processes, and challenge them if you don’t agree. But you too need to have a long-term horizon and give room for the managers to invest for a longer period. Lastly, sustainable investing means there is real impact on the ground, that you invest for a sustainable future. Make sure your policy allows for real impact, throughout the asset classes you choose for your portfolio.”

    Go beyond feel-good and nice-to-have approaches

    “I think the whole concept of sustainable investing, particularly the focus on ESG screening, has been misleading, leaving main-stream business as usual investment managers to believe it is something of a feel-good or nice-to-have approach rather than a way to mitigate real risks and identify the best opportunities for long-term value creation. For instance, instead of seeing climate change as a fundamental game changer of the economy and adjust the investment strategy accordingly, many asset managers just divest a couple of fossil fuel companies and make a carbon footprint analysis that shows they are better than benchmark. Their clients then are to believe they have a climate-friendly portfolio, which is not the case. The risk of this behaviour is that we lose precious time and energy for the necessary transition to a two-degree world.”

    Put on a pair of brand-new glasses

    Also, with the on-going and growing effects of climate change, we face tremendous risks of stranded assets that need to be dealt with right now. Alongside we have an energy revolution and a fast digitalisation that turns around many incumbent industries and business models, such as the utility and car industries. The world has changed, and the asset managers need to put on the new glasses whether you call them sustainable or not.

    Aline Reichenberg Gustafsson, CFA
    Aline Reichenberg Gustafsson, CFA
    Aline Reichenberg Gustafsson, CFA is Editor-in-Chief for NordSIP and Managing Director for Big Green Tree Media. She has 18 years of experience in the asset management industry in Stockholm, London and Geneva, including as a long/short equity hedge fund portfolio manager, and buy-side analyst, but also as CFO and COO in several asset management firms. Aline holds an MBA from Harvard Business School and a License in Economic Sciences from the University of Geneva.

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