Where once the conversation among investors was almost entirely about returns, there is now growing interest in what sits behind investments. We caught up with Vanessa Stevens, Senior Sustainability Analyst at Craigs Investment Partners, who shared her observations on sustainable investing.
First, a quick definition of ‘sustainable investing’ is the practice of making investment decisions that consider associated environmental, social, and governance (ESG) factors.
Vanessa says that Craigs’ has seen a real increase in investors wanting to learn more about sustainable investing. “Our product range has grown over the past few years. We take time to analyse companies on ESG factors so we can help our clients to make informed decisions aligning with their values and circumstances.”
Building an understanding of sustainability practices
One of the biggest barriers to sustainable investing is not a lack of interest, but a lack of clarity. “There is no consistent messaging around what a sustainable investment is, and what it is not,” Vanessa explains. “If there were a simple framework investors could use to understand what kinds of companies their money is invested in, and whether those companies align with their values, that would really help.”
To help investors, Craigs has developed sustainability summaries that provide visibility of company sustainability practices across environmental, social and governance factors.
Vanessa says the summaries have helped investors understand what companies in New Zealand and globally are doing around sustainability initiatives. “Early on, we reached out to domestic companies for conversations to help us develop an internal framework. When we saw information gaps in their reporting, or had questions about how they were thinking about ESG risks and opportunities, we engaged directly.”
As client demand for sustainability information grows, Craigs has expanded its sustainability research by using information from globally recognised sustainability data providers. “Our ultimate goal is to help educate and empower clients to make decisions that align with their values.”
Debunking the negative returns myth
A persistent narrative exists that doing the right thing with your money comes at a financial cost, a claim Vanessa pushes back on. “There is a real opportunity to invest in sustainably engaged companies because, over the long-term, they are considering risks associated with sustainability issues.”
For this reason, Craigs advocates for shifting mindsets to thinking long-term. “People need to move away from short-term thinking that focuses on quarterly profits,” Vanessa says. “Taking a longer-term view and considering the whole supply chain involved in an investment, from manufacturing to how a consumer uses a product, is a beneficial approach when thinking about sustainability issues.”
A commitment beyond the portfolio
At Craigs, one of the biggest opportunities to create positive change is supporting clients to tailor their investment portfolios. This means helping to connect their clients’ values with investment options reflecting their sustainability preferences.
Vanessa says the work she is most proud of is Craigs’ response to the increase in investor interest in sustainable products. “Our response has been to grow our offering of products and options to support clients to make informed decisions.”
What’s AI got to do with it?
Artificial Intelligence is now at the top of many minds and headlines, adding complexity to the landscape of ethical investing and the power of our dollar. Vanessa has written an article exploring this topical issue, noting the growing scrutiny of AI’s environmental and social costs. Understanding the real costs of AI can help users and investors consider whether the benefits of the technology can be delivered responsibly and sustainably. Read Vanessa’s article here.