Stockholm (NordSIP) – An increasing number of Danish asset managers are honouring the demand for sustainable investment products by developing digital investment solutions on the basis of ESG-screened Exchange Traded Funds (ETFs).
Metoa, a Danish startup, is in the process of developing a digital investment product drawing on selected ESG-screened and passively managed ETF’s, and is readying to launch the product next year. “We want to convert abstract investment decisions into value-based decisions and, in turn, democratize the entire decision-making process,” said founder and CEO Jakob Lage Hansen, according to Økonomisk Ugebrev, a Danish financial publication.
“Our own market research, combined with international analyses, show that it is particularly women and younger people in their 20s who are interested in sustainable investment,” he added.
Metoa’s solution is to build on established ETFs that have withstood ESG screening by MSCI, one of the world’s foremost providers of market data. The imperative is to invest in the companies with the highest ESG ratings on the basis of variegated ESG criteria.
Total AUM for European, ESG-based ETFs has risen to €15 billion divided into 135 unlisted funds, up from €3 billion across 23 funds at the outset of the ‘ESG era’, according to Morningstar research. “It’s no coincidence that our point of departure is ESG-screened ETFs,” Hansen said. “They are an effective investment product where sustainable decisions are already integrated, [in part] because of our careful selection [of funds]. Once we have enough customers, we will look at broadening the initiative.”
The Danish government’s business and entrepreneurship package of 2017 is supposed to introduce more uniform taxation on returns on foreign investment, which includes ETFs, and is scheduled to take effect next year. “The new tax rules should make it easier for individuals to review their investments in ETFs,” Hansen said.
Penstable, another Danish startup, is focused on a digital retirement scheme allowing subscribers to evaluate both returns and impact indicators, and is also targeting ETFs as the basis of its business model. The company is slated to release its model in the next three months.
“We are looking carefully at ETFs with our own screening tool. In practice, our investment universe consists of around 60 ETFs that meet our own sustainability criteria,” said Penstable CEO Niels Fibæk-Jensen.
Penstable is currently working together with an as-yet unnamed Danish pension fund. One of the challenges for the company’s business model will be to get ordinary Danes to develop an interest in how their pension savings are invested and allocated.
“There are about a million pension accounts that can be allocated differently, so our belief is that the debate surrounding, and focus on, sustainable investment, especially among younger people, will create an awareness that it involves people’s own money, and that people are empowered to determine what their savings are invested in,” Fibæk-Jensen said.
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