Stockholm (NordSIP) – As more and more investors seek to understand and navigate the world of sustainable investments, the demand for reliable manuals and guides to assist them in the process continues to increase. On September 24, NordSIP had the privilege of attending the presentation of “Sustainable Investing – A Path to a New Horizon”, a book that collects the views of experienced academics as well as executives from both the corporate as well as the investment world reflecting on the current state of sustainable investing and its future prospects.
The book is edited by Herman Brill, Director of the Office of Investment Management at the United Nations Joint Staff Pension Fund (UNJSPF), Georg Kell (Pictured) Chairman of Arabesque, an ESG Quant fund manager and Andreas Rasche, Professor of Business in Society at the Centre for Sustainability at Copenhagen Business School (CBS). According to Kell, who led the launch presentation, the volume collects views on the changing context of sustainable investing, rethinking sustainable finance and leadership and sustainable investment and the roles of technology and data.
“We aim for this book to be a resource for interested practitioners, but we also aim to produce something that can be used in the classroom,” Rasche commented at the start of the book launch.
In his foreword, Mark Carney, who served as the Governor of the Bank of Canada from 2008 until 2013 and the Governor of the Bank of England from 2013 to 2020, praises the timely relevance of the book. “This book demonstrates steps finance professionals can take to build a virtuous circle of better management of climate risks by banks and insurers, better pricing of transition risks and opportunities by investors, better decisions by policymakers, and ultimately a smoother transition to a net zero-carbon economy for all. It represents an important advance towards building the skills needed to bring us to a new horizon that is both more sustainable and more prosperous.”
The contributors highlight three main insights from the volume. On the one hand, conditions for market success have been changing at an accelerating pace, both in terms of policy, as well as regulation, which impacts both businesses as well as their investors. Next, the book shows that there is an emerging consensus that technology, digitalisation, artificial intelligence and machine learning are key drivers for the future of sustainable investing and are shaping the way ESG factors are used. Lastly, the book also agrees that sustainable investing promotes business resilience. However, because the book was submitted in March 2020, it does not specifically consider the implications of COVID-19.
The book launch counted with contributions from PRI CEO Fiona Reynolds, Metter Morsing, Head of Principles for Responsible Management (PRIME), Martin Reeves, Chairman of BCG Henderson Institute and Omar Selim, Founder and CEO of Arabesque Group.
“It’s a great honour to contribute to this great book. We have learned so much about sustainability. But as fields progress, they also fragment. I see this book as a synthesis of the governance perspective as well as the strategy, investor and the measurement perspective. It’s important to navigate,” says Reeves. “Our contribution is in the field of corporate strategy, which is evolving very fast due to sustainability pressures but also because technology is moving very fast. Our focus is on sustainability and sustainable competitive advantage. They sound the same, but in recent years they have not had very much to do with each other, which are not but should become the same thing. Of course, for truly powerful self-interested sustainable strategies, they need to become the same thing. In recent years businesses have discovered that a successful strategy is dynamic. It needs to be more biological and adaptable. They are serial and more focused on temporary advantage than static. They are more collaborative and going beyond the borders of the company.”
The book goes beyond standard economic theory approaches to sustainable investing and emphasizes that capitalism founded on more real-world (complex) economics and cooperation can strengthen ESG integration. Aimed at both investment professionals and academics, this book gives the reader access to more practitioner-relevant information and it also discusses implementation issues. The reader will gain insights into how “mainstream” financial actors relate to sustainable investing.
“I attempted to convey an investment perspective in my contribution,” Selim says.“My assumption is that finance will be significantly disrupted,” he adds, before explaining that sustainability and AI will be the main sources of this disruption. “Don’t be surprised if the biggest banks in five years are Google, Facebook or Amazon.”
Image courtesy of Georg Kell