For professional investors only
Investors are increasingly interested in using their investments to contribute to environmental and social goals. The Global Sustainable Investment Alliance (GSIA) reported that $444bn was invested in impact funds globally in 2018 (representing an annual increase of 34%), $1 trillion in sustainability themes investments (92% annual growth) and nearly $2 trillion in positive/best-in-class funds (50% annual growth).
Access to meaningful and reliable ESG information is therefore an imperative for investors. But ESG reporting has traditionally been referred to as “non-financial”, creating a perception that such information is not financially material. Such a notion is outdated and fails to reflect the considerable value investors place on ESG, both in terms of financial risks but also increasingly the significant investment opportunities this presents.
We believe that now is the time to retire the term “non-financial” from our lexicon and consider ESG issues as an integral part of company reporting, subject to the same rigour, diligence and auditing.
The EU’s review of the Non-Financial Reporting Directive represents an important opportunity to help consolidate the progress made to-date but also to take the next step in ESG reporting: finding the opportunities, not just the risks, in ESG.
Furthermore, in its Green Finance Strategy published in 2019, the UK Government set out its expectation for all UK listed companies and large asset owners to disclose in line with the TCFD recommendations and is working with international partners to catalyse market-led action on nature-related disclosures. The role of private finance is also set to be a major pillar of the UK’s COP26 agenda. While the UK Government has yet to decide on whether it will adopt the EU’s Taxonomy, the UK has committed to match the ambition of the EU’s objectives when it comes to sustainable finance.
Access the full paper on ESG disclosures and what we suggest can be a useful framework for investors to measure and find opportunities in ESG >
Investment risks
The value of investments and any income will fluctuate (this may partly be the result of exchange rate fluctuations) and investors may not get back the full amount invested.
The use of environmental and social factors to exclude certain investments for non-financial reasons may limit market opportunities available to funds not using these criteria. Further, information used to evaluate environmental and social factors may not be readily available, complete or accurate, which could negatively impact the ability to apply environmental and social standards.
Important information
This document contains information that is for discussion purposes only, and is intended only for professional investors in Ireland and the UK. Marketing materials may only be distributed in other jurisdictions in compliance with private placement rules and local regulations.
Data as at 13th September 2020 unless otherwise stated.
This document is marketing material and is not intended as a recommendation to buy or sell any particular asset class, security or strategy. Regulatory requirements that require impartiality of investment/investment strategy recommendations are therefore not applicable nor are any prohibitions to trade before publication.
This document should not be considered financial advice. Persons interested in acquiring the product should inform themselves as to (i) the legal requirements in the countries of their nationality, residence, ordinary residence or domicile; (ii) any foreign exchange controls and (iii) any relevant tax consequences.
This document has been communicated by Invesco Investment Management Limited, Central Quay, Riverside IV, Sir John Rogerson’s Quay, Dublin 2, Ireland.
EMEA8101/2020
