Beyond opaque: challenges for sustainable investment funds

Fund houses have increasingly found themselves under scrutiny for overstating their green credentials over the past few years. Up to 85 per cent of so-called, green-themed funds globally were guilty of “misleading marketing”, according to a study in December 2019 by the 2 Degrees Investing Initiative.

London-based sustainable finance firm New Money last year highlighted several funds, including one ETF as examples of products that were not living up to their green marketing. It is one thing to say you are green and sustainable with your investment portfolio but delivering on those promises and keeping to your mission statements is another challenge. Investors and those with capital today want to know and see where their funds are going. Some funds have fallen short of providing this clarity in the past few months and eyebrows are being raised.

With the current global investment community looking to green and medical technology investment opportunities over the next year, it will be key for funds to show that their investments are in no way opaque and can demonstrate active returns in the companies and technology they decide to invest in. Ultimately there is increasing scrutiny in the investment community around this.

The world’s largest fund manager, BlackRock, wrote an open letter last year saying that “sustainability- and climate-integrated portfolios can provide better risk-adjusted returns to investors.” That is to say: over time, more virtue equals more money. There are good reasons for investors to own portfolios that align with their values. But actually, in reality, making sure that they do is another thing.

Communicating how you invest and manage portfolios is essential to maintaining a well-governed and visible structure to funds. A well thought out and managed communications strategy can certainly help here with adequate resource allocated to developing and crafting your key corporate messages and announcing when investments have been made and deals done.

Additionally, a communications strategy and plan before investments are made are key. Your key spokespeople in the business should be trained and briefed for any tricky questions that might arise from media enquiries and any written content or articles placed in external outlets vetted with a fine tooth comb to ensure accuracy and detail is included.

By making sure a communications strategy is in place and following that through you will be able to overcome the challenges ahead and answer questions asked of you by the media, stakeholders and investors alike.

Adoption of sustainable investment opportunities across the UK adviser world is likely to soar over the coming years, and there are numerous potential benefits associated with this. They include greater client engagement, the speed of business growth, and extended client tenure. There appears to be little resistance towards this oncoming trend in the main.

There are clear gaps in ESG strategies and product ranges, which suggests that adviser businesses and providers must work closely together to ensure clients’ values are met with suitable propositions. This can only be achieved by keeping the dialogue open and making sure that there are no walls between what investors think they are getting and what the ESG fund actually delivers. As soon as this relationship breaks down, reputational issues will start to arise across the board.

If your business operates within the sustainable investment sector and you would like to discuss how a PR plan could help you meet your objectives, get in touch with our award-winning team today.

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