Here is some more information on how strategies for sustainable investment work in practice. As previously noted, our fund does this through selected investment managers.
Risks and options
It starts with analysing the opportunities and risks in the field of sustainability. The term used in the financial world is ESG:
- Environmental: the environment
- Social: health and safety
- Governance: good company management
Excluding products
First we look at the products being made – and this is no simple matter. Products can have positive and negative aspects to them. Take petroleum products, for instance. They can be burned (negative) as fuel, but they can also be used to make useful plastics (positive). If the scales are tipped towards the harmful aspects, and there is no prospect of improvement, we exclude companies that make these kinds of products. For companies that only make one type of product, this is easier than for those who have a wide range of products.
Excluding companies
We then have a look at companies that make products or offer services. If there are issues that are not in line with good business practices, we try to engage the management and persuade them to make changes. The voting behaviour in the general meeting of shareholders can also help. If there is no progress in terms of change, we consider selling the shares. We generally give the company a year to make changes.
Including products and companies
After a thorough analysis, we exclude specific products and companies from investments. The opposite is true for companies and products that have a positive impact on the environment. In between, there is always the option of engaging with the company. We do so if we expect that the company is able to make improvements.
More information
If you are particularly interested in the goals for companies and other organisations, look up the 17 UN sustainability goals online. Not all of them apply to us, but they give a good idea of the intentions.