NordSIP (Stockholm) – The Responsible Investors Alliance (RIA) was founded by members of the financial industry, representing mostly asset owners such as pension foundations in Sweden and in the Netherlands, “to promote and ensure that professionally managed capital is invested responsibly by introducing a standard to independently certifying asset manager policies, processes and reporting”. The initiative was named ESG4Real. NordSIP met with Morgan Zerne (pictured), the Managing Director of RIA Sweden to find out more about this new label, the certification standard, and what the timeframe looks like.
“Our goal”, Zerne starts, “is to gather asset owners and asset managers behind a new standard for Responsible Investments and influence investors to use opportunities and improve risk management related to ESG”. It is important to create an industry standard because, as Zerne points out, “the industry needs to decide what ESG really means”. Those asset managers joining the initiative can help develop this standard, he explains.
“The unique thing about the ESG4Real process is the detailed compliance check, which is a quality check of policies, routines and reporting carried out by an independent certification body selected by the board of RIA International. Also, the ESG4Real process is ISO-certified ensuring transparency and comparability”, Zerne says. The mandatory demands needed for compliance are: exclusion of companies within controversial weapons, norms based screening of 4 selected norms and conventions, ESG analysis through positive screening of 24 selected ESG criteria and active ownership through engagement & demonstrated practices e.g voting.
Zerne points to the fact that there are so many different ESG certifications on different levels presently being used that it is impossible to compare different asset managers and their products. “ESG4Real will introduce a quality ensured, transparent standard to help asset owners choose the products that meet their criteria”, he concludes.
“For asset owners wanting to become a member in RIA the workload is low and mainly involves ensuring that investment policies and processes are in line with ESG4Real principles and documented sufficiently”, Zerne adds.
The work to get the initiative up and running has taken somewhat longer than expected. According to Zerne, many institutions have shown interest but, so far, only one institution has started the actual process. Alecta was the first asset manager to go through the full auditing process, which was completed very recently. This first process has been run in parallel by the certification body (Ricert AB) and Swedac, which is the national accreditation body for Sweden, in order to get the process accredited according to ISO17065.
Members of Responsible Investors Alliance (RIA) fall in two categories, licensed asset owners: so far Sveriges Kommuner och Landsting, Bantorget Finans, Industrifacket Metall, Handelsanställdas Förbund and certified asset managers: so far Alecta pensionsförsärkring. Morgan Zerne stresses the fact that, because ESG4Real was started by asset owners, it is an association through which member institutions together can develop an industry standard and includes the full ESG spectrum. He hopes that more institutions soon will follow suit.
Picture © NordSIP