PRESS RELEASE FROM THE ETHICAL FINANCE HUB
EMBARGO: 00.01, THURSDAY, MAY 14, 2020
BLUEPRINT PUBLISHED TO DISENTANGLE RESPONSIBLE INVESTMENT APPROACHES
A major new report on responsible investing provides a blueprint for investors and advisers to cut through the inconsistent approaches used by asset managers and avoid the risk of ‘greenwashing’.
The Ethical Finance Hub research provides asset owners with greater transparency on how asset managers are integrating responsible approaches to investing.
The report highlights the difficulties in identifying and interpreting the data required to accurately size the responsible investing market, and applies rigour and expert practitioner reflection to provide a detailed analysis.
Research found that asset managers employ a wide range of terms – often within the same organisation – to describe funds managed in some manner which consider non-financial return.
However, by focusing on Scotland as a sample of the wider market, the report is designed to be a positive step towards a common language, disentangling the responsible investing taxonomy and mitigating the risk of ‘greenwashing’.
Scotland has been classed as a ‘leading international centre’ for responsible investing in the report, ‘Mapping the Responsible Investing Landscape in Scotland’.
The report has found that environmental, social and governance (ESG) factors are now firmly on the agenda, with 95% of the 19 responsible asset managers in Scotland making reference to ESG directly on their website or within documents – with fewer than half (47%) providing a definition of ESG.
Over a quarter (26%) of responsible asset managers in Scotland lead with ‘responsible investment’ (or similar) as a headline term on their website, while 21% lead with ‘ESG’. Other terms employed include: governance and sustainability; stewardship, sustainable investment (or similar), circular economy, ESG and sustainability and stewardship / ESG.
Four-fifths (79%) of the 19 responsible asset managers have a dedicated policy, outlining their approach to non-financial factors, available on their website.
The report found that Scotland’s £9.5billion UK-domiciled responsible investment represents 11 per cent of the UK responsible investment market, compared to the country’s 7 per cent share of the total market.
There has been rapid sector growth of around 27 per cent per year since 2004, mainly in climate, impact and ESG funds.
The report been published by the Edinburgh-based Ethical Finance Hub, with contributors including the University of St Andrews Centre for Responsible Banking & Finance and non-executive director Jon ‘JB’ Beckett, an independent advisory committee member for Royal London and Emeritus for the Association of Professional Fund Investors.
Scotland was chosen for the study as the birthplace of modern asset management, with the country serving as a good benchmark for the wider market.
The findings will be presented and discussed later this year at the 2020 Global Ethical Finance Summit, to be held on October 6 and 7 in Edinburgh.
Chris Tait, project manager with the Ethical Finance Hub, said:
“Although Scotland has a highly active and engaged responsible investing sector, the report highlights that Scottish asset managers have taken varying approaches to interpreting and communicating their responsible investment strategies.
“Conducting research for this report highlighted the difficulties in identifying and interpreting the data required to accurately size the responsible investing market.
“To mitigate against the risk of ‘greenwashing’ we applied both rigour and expert practitioner reflection to the analysis throughout the report.”
Report co-author Jon ‘JB’ Beckett said:
“This analysis of the Scottish asset management market provides a blueprint on how responsible investors, and their advisers, can cut through the broad terms and approaches used by asset managers.
“It shares our experiences, research and comparison of asset managers and the problems discovered.
“Having worked as an asset owner myself I could immediately see the value in this research.
“I am proud to co-author this report, which should be of great interest to the responsible investing community.
“Asset owners are crying out for more transparency in how asset managers are integrating responsible approaches to investing.”
Professor John O.S. Wilson, director with the Centre for Responsible Banking & Finance at the University of St Andrews, said:
“Ethical finance has emerged as an important theme since the global financial crisis.
“This timely publication is a comprehensive, thoughtful and practical resource for practitioners and regulators wishing to understand and evaluate the importance of responsible investing within the modern financial services industry.”
NOTES TO EDITORS
The report can be read here: https://www.ethicalfinancehub.org/investingscotland2020/
More details on the Ethical Finance Hub are available here: www.ethicalfinancehub.org
More details on the 2020 global ethical finance summit can be found here: https://www.globalethicalfinance.org/ethical-finance-2020/