Sustainable and responsible investing will lead the agenda for asset management firms in 2018, according to ALFI’s chairman, Denise Voss.
The funds trade body said strong growth in this area if already noticeable but now is the time for fund management groups to properly meet a huge growth in investor demand.
'SRI is one of ALFI’s key pillars for the year ahead. We have Ucits, we have alternative investment funds and we have responsible investing which has been a focus since 2006,’ she said at a conference in London.
Voss, who is also the conducting officer at Franklin Templeton Investments, said growth in responsible funds has doubled in the period between 2010 and 2016.
'It’s about €476 billion in assets under management in Europe and that’s anything from micro-finance, environmental funds, climate change funds and impact investing funds.
'European investors, institutional investors and pension funds are demanding higher responsible investment strategies and asset managers are starting to use responsible investment tools to execute their strategies.'
Voss admitted 'greenwashing' is a problem in the ESG/SRI space and said it’s a real challenge to identify what’s responsible and what’s not.
'I think what identifies these funds is the name. Whether it be impact investing or micro-finance. I won’t proclaim to be the expert in identifying what makes these funds responsible.
'There are a number of labelling agencies in Luxembourg such as Lux Flag, which makes sure these funds are what they say on the tin.'
Also weighing in on the debate around responsible investing, ALFI’s director general, Camille Thommes, said responsible investing is an interesting development on many levels.
'In climate finance-related projects there have been a couple of initiatives. The Luxembourg stock exchange has integrated a dedicated green exchange that exclusively lists green bonds based on an assessment.
'They have linked up with the Shanghai Stock Exchange to share information of issuers investing in those strategies. That is something that our government fully supports.'
Echoing Voss’s views on the widespread interest of responsible investing, Thommes said when the team travelled to Asia in January, the hot topic across the region was SRI tailored products.
'There’s a lot of growing interest in those markets, especially in mainland China, due to the issuance of green bonds. As an asset class/segment of the market, it is gradually moving from niche to mainstream,' he added.