FINANCE AND INVESTMENTS
Why is sustainability important for the finance sector?
The UN Principles for Responsible Investments (PRI) is the world´s leading organisation for the finance industry when it comes to sustainability. Established as a collaboration with the UN in 2006, the PRI strives to encourage implementation of their 6 principles to ensure a global sustainable economic system. PRI defines “sustainable investments” as a strategy and process that incorporate environmental, social and governance considerations – commonly known as ESG (Environmental, Social and Governance) criteria, within investments and ownership decisions.
The focus on ESG has developed from previously touching on topics such as ethics, reputation risks and compliance, to now having a broader focus on how organisations can ensure sustainability and generate profitable returns within a rapidly changing, complex and challenging business world.
ESG criteria are used to assess how sustainable an organisation is. In other words, how robust and resilient is the organisation to handle new and transformative alterations on topics such as environment, social structure and governance considering risks and opportunities. A company with a high ESG score signals that it has adapted to its surroundings and global changes (related to environment, social and governance), and therefore represent an investment that comply with good business ethics and corporate governance.
Do we see any emerging trends or changes in the industry?
In 2018, the European Commission launched the Sustainable Finance Action Plan, following the work of the High-Level Expert Group on Sustainable Finance from 2016 to 2018. The Sustainable Finance Action Plan contains ambitious regulations, and aims to facilitate for better understanding around sustainable risks, in addition to increase the transparency and long-term perspectives on investments.
Financial markets require high quality and timely data on climate-related risks to ensure right stock pricing and operate efficiently through the energy transition. The recommendations from the FSB´s Taskforce on Climate–Related Financial Disclosure (TCFD) provide a common international framework through which investors and companies can make informed decisions about their exposure to climate-related risks and opportunities in their businesses and future capital allocation plans. To emphasize the importance of TCFD, PRI has implemented the TCFD recommendations into its mandatory reporting framework for signatories.
Pure Consulting has extensive experience from a broad spectre of sub-sectors within finance, including banking, investments companies, fonds and asset management. Together with our clients, we have developed sustainability strategies, as well as provided education and training. Our team obtain experts in the field of sustainable business management and sustainable investments within the finance sector.
Aligned with PRI`s recommendations, we in Pure apply UN sustainability development goals (SDG`s) in our work. The SDG`s represent the articulation of the world´s most urgent issues and key sustainable trends. As such, the global framework also applies in the finance sector, and can support investors in investment activity and their trustworthy duties.
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