Interview with the Head of Responsible Investment
In 2023, our focus was on consolidating our values, ambitions, and the realities of what we see in our portfolios, striving to achieve seamless RI integration and reporting.
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Given the changes happening in the world, including several challenging transitions, what did you focus on in 2023 and what were some of the achievements you were proud of?
In 2023, our focus was on consolidating our values, ambitions, and the realities of what we see in our portfolios, striving to achieve seamless RI integration and reporting. We made significant progress, particularly in consolidating data streams, building effective monitoring dashboards, and understanding the relationship between our ambitions and the performance of our funds. Our role is to identify the winners in financial returns and sustainability. This task is challenging but essential to help our clients invest in line with their values and ambitions to be a force for good. After this year of significant consolidation, I believe we have strengthened our capabilities to achieve this.
Our clients can take comfort in the following to evidence these bolstered RI capabilities: Anthos’ PRI assessment results, reporting to Sustainable Financial Disclosure Regulation (SFDR)6 Article 8/9 for many of our investment products, the below-benchmark carbon emissions for listed portfolios, in addition to the assessments we report on to measure RI integration and impact potential for all our investment strategies.
None of this could have been achieved without the collective determination and enthusiasm of the entire team at Anthos, which I believe reflects our commitment to responsible investment.
“Our role is to identify the winners in financial returns and sustainability. This task is challenging but essential to help our clients invest in line with their values and ambitions to be a force for good.”
What were some RI challenges in 2023?
Market dynamics were challenging for sustainable funds and the broader responsible investment community in 2023. While equity markets performed well financially, our research found that the availability of funds providing both above-market returns and strong sustainability metrics was more limited compared to previous years. Nevertheless, we observed the emergence of specialised funds addressing specific themes like climate transition finance.
For our fund-of-funds portfolios, we need to manage ambition for RI with our fiduciary duty to generate riskadjusted financial returns. As fund-of-funds investors, we are reliant on the offerings in the market though we strive to influence that offering by supporting and sometimes anchoring new, promising funds.
Using our assessment tools to map the impact potential of our portfolios, we saw these challenges play out as the overall allocation to sustainable or impact funds has remained fairly consistent over the past three years. Reflecting on one of the RI ambitions we first set back in 2020, which was to strive for 25% of all assets under management to be invested in sustainable or impact funds by 2025, we started to investigate whether this dot-on-the-horizon ambition was realistic given the lack of suitable funds in the market. At the same time, setting and striving for such ambitions, using innovative assessment frameworks like the Impact Management Project (IMP)7, has taught us a great deal about how to understand the sustainability characteristics of our portfolios. The opportunity now lies in pushing that understanding further, leaning on the support and guidance of the latest regulations, industry standards, and data/technology solutions.
All good things take time, and while Anthos is in many ways a start-up, we also have the patience and tenacity of a 100-year-old business. We believe this combination will help us steadily transition our portfolios to have the impact our clients wish their investments to make on the world.
The world of sustainability, and specifically definitions and regulations, can be overwhelming for many. What is your key message to clients?
I recently read a book about the art of communicating from Thich Nhat Hanh8. The key messages that stayed with me have to do with the guidelines for the right speech and the criteria for communicating. The principles come more naturally: Tell the truth, be consistent, do not exaggerate, and don’t use violent words. The challenge is often in how to deliver this, and the instruction is to use the language of the world and tell the message in a way that people understand, otherwise you will only end up talking to people like you. So to our clients and others who find themselves puzzled by all the abbreviations, regulations, and guidance, I say you are not alone and you are in the driving seat. All of these regulations are made to give you more information and better transparency to your investments in terms of sustainability. So keep being interested, and keep challenging us to explain this in a way that is easy for you to understand.
As you read through this report, we hope you see our efforts to cut through the complexity and communicate by these principles.
What are you most hopeful for in 2024-2025 and what developments at Anthos are you most excited by?
I am excited about the data and technology tools we have built to analyse not just the underlying funds in our portfolios, but their underlying holdings too. In this way, we can move on from ESG integration and strategy assessment to engagement based on deeper portfolio insights.
In addition, our efforts to respect human rights across our value chain continue. We are also having exciting discussions about new sustainable offerings with our clients and discussing what our RI strategy 2025–2030 will be.
On regulations, I am hoping that the new guidelines for fund names by the European Securities and Markets Authority (ESMA)9 and the continuously developing legislation will bring more clarity for our clients and will also make it possible for us to focus less on interpreting the law and more on making a difference in their portfolios.
In summary, a year of significant consolidation and progress. One that I’m convinced prepares us to pursue higher ground.
Sincerely,
Jelena Stamenkova van Rumpt
6The SFDR (Sustainable Finance Disclosure Regulation) mandates that financial market participants disclose how they integrate ESG factors into their investment decisions, aiming to enhance transparency and prevent greenwashing. Article 6 outlines requirements for financial products promoting ESG characteristics, Article 8 covers products with sustainable investment objectives, and Article 9 pertains to products with a specific sustainable investment strategy. For more information, visit Anthos’ SFDR disclosure documents on our website.
7The IMP (Impact Management Project) provides a common framework and language for assessing, measuring, and managing impact across investment portfolios. Anthos has adapted elements of this framework to suit our specific purposes (see As Anthos).
8Thich Nhat Hanh, The Art of Communicating (William Morrow Paperbacks, 2013).
9ESMA, the European Securities and Markets Authority, is an independent EU Authority that contributes to safeguarding the stability of the European Union’s financial system by enhancing the protection of investors and promoting stable and orderly financial markets. ESMA’s new guidelines on fund names emphasize that ESG- and sustainability-related terms should be substantiated by evidence of sustainability characteristics or objectives reflected consistently in investment policies. For further
details, visit ESMA’s website for the “Public Statement Update on the guidelines on funds’ names using ESG or sustainability-related terms” at ESMA EU.
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