The Sustainable Investment Forum North America 2019 takes place in New York on September 25. As the event drew near, II caught up with Leon Saunders Calvert, Head of Sustainable Investing & Fund Rating at Refinitiv, to discuss how Refinitiv is promoting sustainable finance.
Let’s start with some background on Refinitiv and your role there?
Refinitiv is one of the world’s largest providers of financial markets data and infrastructure, formerly the Financial and Risk business of Thomson Reuters. I head up the Sustainable Investing and Fund Ratings businesses. One of the key assets I am responsible for is our global database of corporate disclosure on Environmental, Social, and Governance (ESG) metrics. We aggregate, normalize, and create analytics to disseminate the data to the institutional finance community, including the world’s largest asset managers and asset owners, many of whom use it at the core of their ESG investment allocation models.
How do you see the investment market changing now that sustainable investments are firmly increasing each year?
There is a maturity taking place in the market in which ESG factors are becoming fundamental to all investment allocation decisions rather than being seen as an alternative asset class. So, yes, sustainable investments are rapidly increasing each year, but more than that, we are starting to see the mainstreaming of sustainable investing where sustainability factors inform the basic institutional investing processes.
The regulatory overhang on the market, the increasing influence of Millennial investors and employees, the need for active fund managers to find sources of competitive advantage to drive alpha, and the general growing awareness of climate challenges and need for related action, all contribute to a growing trend which ensures it is not simply a zeitgeist issue.
What are some of the challenges in promoting sustainable finance?
There is still a general perception that investors need to sacrifice returns to invest in sustainability despite various analytics to the contrary. But broader resistance associated with promoting sustainable investing is decreasing rapidly based on the growing awareness by consumers and investors alike. The challenges instead become the lack of transparency and analytics associated with sustainability related data and benchmarking.
At Refinitiv, we strive to be the industry standard for ESG-related corporate disclosure data. This helps to create transparency and auditability in the space. In our scoring system, we penalize companies for non-disclosure with the view to promoting superior standards of reporting to better inform investors. We want the supply to meet the demand, and drive transparency around what has historically been an opaque area.
What is the importance of events such as the Sustainable Investment Forum for businesses interested in investment?
Driving awareness around sustainable investing continues to be critical, especially as sustainability means so many different things to so many people. Creating a community of leading professionals in the financial markets to enable and facilitate dialogue on how to think about this space, what problems to solve, what order to solve them in, sharing of best practices, and establishing the elements which are clearly in the common good and need to be addressed in unison – all of these extremely valuable. Corporations and the financial community have to fill in some of the holes left by today’s politicians around climate and other critical issues, so the process of knowledge-sharing and outcome focused goal-setting through the Sustainable Investment Forum is something Refinitiv fully supports.