Finance & Sustainable Development


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Finance & Sustainable Development

Sustainable and responsible finance, or SRI, is nowadays a global phenomenon, as confirmed by the words of Holy Father Francis in the encyclical Laudato si' (May 2005) that call upon people, governments and economic actors to act for the common good:

   

“It is not enough to balance, in the medium term, the protection of nature with financial gain, or the preservation of the environment with progress. Halfway measures simply delay the inevitable disaster. Put simply, it is a matter of redefining our notion of progress. A technological and economic development which does not leave in its wake a better world and an integrally higher quality of life cannot be considered progress.”  (Laudato Si', n. 194)

   

The Eurosif describes this approach to investments as "a longterm oriented investment approach which integrates ESG factors [i.e. non-financial parameters: Environmental, Societal, Governance] in the research, analysis and selection process of securities within an investment portfolio. It combines fundamental analysis and engagement with an evaluation of ESG factors in order to better capture long term returns for investors, and to benefit society by influencing the behaviour of companies."

The relevance of sustainable finance is also confirmed in the Agenda 2030 proposed by the United Nations, which provides internationally shared guidelines and parameters for enterprises and public and private investors to align investment strategies to the achievement of the Sustainable Development Goals (SDGs) and to turn the financial system towards an inclusive and sustainable development model: the so called SDGs finance.

Following a 61% growth for the period 2012-2014, according to the third edition of the Global Sustainable Investment Review, at the beginning of 2016 sustainable and responsible investments amounted to US$22,89 trillions, with a 25% increase compared to 2014.

That said, although at a slower pace, SRI assets such as stocks, bonds and even hedge funds continue to increase.

With a 53% percentage of SRIs, Europe remains the most virtuous, followed by the United States of America with 38%. Effrtos are being made to integrate ESG criteria into the companies' asset management, and investments.

In Italy, the market for SRIs is growing: between 2015 and 2017, BiC (Best-in-Class portfolio, which typically includes companies that meet both an ESG and a financial evaluation) has grown from €4 billion to €58 billion over the past two years. This is a clear sign that investors in Italy are becoming more mature in the evaluation of ESG parameters and are not content with, for example, simple exclusions (Eurosif SRI Study, 2018). At the same time, more benefits for social ventures and the "Benefit Corporation" as a new legal form for companies were introduced (read more on this topic here).

In ALTIS we contribute to the global debate since the very beginning, by conducting research, developing projects and designing training to support future managers of asset management, insurance, banking, and financial companies, as well as of Faith-based Organisations, in the attempt to identify the best opportunities and make sound investments in line with their values.

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