Responsible investment, an inescapable tendency
The illusion according to which investors abandon a part of the financial performance of their investments in exchange for positive impact is still widely spread today, including in some specialist financial circles. And yet numerous studies show that this vision is flawed.
In a context where efforts in terms of sustainable development do not yet allow to reverse the curve of the global environmental footprint, players from civil society and from the private sector now express their concern, or even their active commitment.
8 out of 10 people
believe that climate change harms or will become harmful to them in coming years
72 % of S&P 500 companies
regularly communicate on their actions in terms of Social Responsibility to minimize negative impact related to their activities.
From an economical point of view, the stakes tied to a transition towards a sustainable growth model are considerable. The potential crises that threaten us generate both significant risks but also numerous opportunities.
The scarcity of natural resources is the cause of many conflicts, but it’s also a source of growth for companies specialised in their optimisation or their replacement (such as recycling companies or companies active in the development of renewable energies).
The growth and aging of the world population brings into question the fragile balance of our social programmes (health, retirement, unemployment) and food supplies, but also provides a tremendous potential for growth via innovative solutions in terms of health, agricultural production and transports.
Technological progress represents a possible threat for the respect of private life and individual liberties, but at the same time harbours considerable potential in terms of technical efficiency and improvement.
Responsible investment is choosing to invest in companies that are the most committed and the most virtuous according to two complementary dimensions: traditional financial analysis and extra-financial analysis that takes into account, in particular, ESG criteria (Environmental, Social & Governance).
The “3Rs”, at the heart of tomorrow’s business strategy (Risks/Returns/Reputation)
The sustainability criteria applied to financial investments are vectors of heightened performance, especially because they enable an approach and a broader control of Risk factors.
In particular, sustainable companies that impose high environmental and ethical standards integrate a preventive approach to operational, regulatory and environmental risks.
On the other hand, poor anticipation of risks can lead to significant financial setbacks, with similar effects on their stock market itinerary, setbacks that some more solid companies have been able to overcome but that have driven others to bankruptcy.
It has been proven that initiatives aiming to improve the “sustainability” of a company’s business model favour better economic Returns, particularly for companies that implement energy and resource savings programmes, integrate recycling into their production process, replace polluting or obsolete technologies and prepare today for the future needs and requirements of consumers.
These improved returns related to implementing a sustainable approach to company development enable the creation of financial value for the shareholder because they generate benefits in terms of efficiency of use of resources: in this way, they reduce company costs and increase resources dedicated to conquering new markets, synonym of revenue growth and improvement of margins.
Finally, the application within the sustainable company of voluntarist policies that aim to limit their environmental footprint and to improve their impact on civil society contribute to their good Reputation. As such, in a connected world that’s sensitive to sustainable development, Samsung already declared in 2010 that the company’s brand value was down by 1%, due to unfavourable assessments by investment organisations and/or NGOs because of an insufficient response to climate change, that was equal to a loss of approximately 200 million dollars (Samsung, Carbon Disclosure Project, 2010).
A good reputation is beneficial in terms of image and brand loyalty (pricing power), attractiveness for talents, key players for future company success, and for a better involvement and productivity of employees. These elements have a direct impact on improving financial results and so also constitute a source of considerable wealth.
BNP Paribas Suisse expertise in terms of responsible investment.
Expectations in terms of responsible investment are multiple and the interest of our customers and prospects is growing, driven in particular by “millennials”, the new generation, born between 1980 and 2000, ultra-connected and highly aware of sustainable development.
BNP Paribas Suisse provides its customers with one of the broadest offers available in terms of responsible investments. Multi-sector or thematic investment funds, investment advice and mandated management, an experienced team of consultants, managers and SRI analysts present in Geneva, Zurich, Basel and Lugano enable us to support our Swiss customers in the construction and the follow-up of mandates entrusted to us.