Member of Fecif Board of Directors / Foreign Affairs, ANASF
ESG – growing in importance for everyone!
From a recent survey carried out by a famous global investment company, 46% of investors want to focus more on sustainability criteria for their portfolio choice and as a result 93% of fund managers cannot fail to take this into account in monitoring the company in which they invest.
ESG (environmental and social governance) criteria are surely the trend of the future, destined to grow through a multiplicity of different approaches, united among them by the objective of the sustainability from an environmental, social and corporate governance point of view.
Furthermore, according to other research, Italian investors are particularly sensitive to the issue: in fact, not only 46% expect to invest more in sustainable investment products in the next five years, but 47% choose funds and companies based on environmental, governance and social considerations. Despite this growth, there are still several obstacles in this area: the scarcity of information, the limited availability of this type of solution and the lack of adequate financial advice. A very important fact is that most investors have stated that, in order to invest consistently with their values, they would be willing to extend their investment for the time necessary to achieve their goals.
The European Authorities have naturally understood the importance of this sector and several consultations have recently been launched in this regard. The most recent one brings together EIOPA and ESMA in the desire to integrate risks and sustainability factors in the IDD, MIFID II, UCITS and AIFMD directives.
The proposals for amendments made by EIOPA and ESMA concern various areas of sustainable investments: conflicts of interest, product governance, general organisational requirements, risk management and suitability.
As in the research described above, the authorities also note that one of the main obstacles to the development of ESG investments is the lack of a common definition of what constitutes sustainable investment. In this regard, we are trying to develop a specific common definition of ESG investments, preferences, objectives and risks in order to create an effective level playing field, to promote transparency and avoid regulatory arbitrage.
ESG aspects must be taken into account both in customer profiling and in the subsequent selection of the product - and the role of the financial advisor becomes "key" to promote awareness of these aspects among citizens, developing financial education and responsible and informed investment decisions.
Investors who embrace the ESG criteria cannot limit themselves to assessing the expected return on an investment without taking into consideration the social and environmental impact ... this is a big challenge!