Socially Responsible Investment

Through MyNeofintech the access to capital programs under ESG criteria is easier, also called socially responsible investment (SRI) programs is an investment discipline that takes into account environmental, social and corporate governance (ESG) criteria to generate long-term competitive financial returns and positive social impact.

Sustainable investment is one of the fastest growing segments within the asset management industry. Investing sustainably means including "non-financial" aspects in investment decision making. In this case, we consider criteria that take environmental, social, and governance (ESG) factors into account.

In the late 1960s, opposition to the Vietnam War led students to demand that their university investment portfolios stop investing in military companies. We could consider that as the starting point from which the interest in the criteria to be followed in investment and the search for an ethical investment originated.

The modern movement for sustainable investment began to gain ground in the late 1990s with the development of socially responsible investment that sought to capture that interest in investing according to ethical criteria. It was in 1999 when the Dow Jones Sustainability Index was launched, the first global index to follow sustainability criteria, representing a major step forward in sustainable investment. But the real turning point came when the UN presented its Principles for Responsible Investment (UNPRI) several years after the start of the new millennium. This initiative arises from an international network of investors who are drafting the six principles with the aim of helping market participants understand the effects of sustainability and integrate these issues into their investment decisions.

The creation of the Principles for Responsible Investment was a turning point for the socially responsible investment movement. There are 6 principles to follow and, although voluntary, they offer a variety of possible actions in the various asset classes with the aim of integrating ESG criteria into investment practices.

Principles for Responsible Investment

Incorporate ESG issues into our investment and decision-making processes. The Dow Jones Series Sustainable Index (from here on DJSI) represents the best benchmarks for investment decisions and the fulfilment of the funds' purposes.
To be a pioneer in incorporating ESG issues into our ownership policies and practices. The use of the DJSI series, either as a benchmark for The ESG is used as a basis for active funds or as a basis for passive funds, and is a proactive option for market participants seeking to incorporate ESG issues into its policies and ownership practices. It is also a good platform for engaging with companies and challenging them in areas of improvement.
Seek transparent disclosure of ESG issues by the entities in which we invest. Self-assessment is taken into account and company reporting, plus an analysis of media coverage, comments from the parties and other publicly available sources that are reviewed by RepRisk ESG Business Intelligence.
To promote the acceptance and implementation of the Principles in the investment world Passive managers can use the DJSI series to create relevant investment instruments, thus helping investors with the acceptance and implementation of the Principles. The active managers can use the DJSI series as benchmark or reference to demonstrate their adherence to fiduciary standards and support the incorporation of investment in sustainability.
Working together to improve our effectiveness in implementing the Principles. One of the best ways to increase the effectiveness of Principles is to educate investors and to make sustainability index investing an industry standard is something promotes this goal.
Provide information on our activity and progress in implementing the Principles. The reports, both the questionnaires answered by the companies, such as information obtained from objective agencies and third parties, are an essential part of updating the databases from RobecoSAM. The participation of enterprises in surveys of RobecoSAM demonstrates its effort to adhere to the Principles at the global level.

The ESG Criteria. Definition and scopes

As we have already mentioned, the ESG criteria cover various fields. By delving into each of the acronyms that make up these criteria, we can see what each one implies.

Environmental: It focuses on environmental reporting and the environmental impact of companies, as well as on the efforts made by companies to reduce pollution levels or carbon emissions. It would cover waste management, water management and the use of other environmental resources, for example.
Social: This refers to the mentality in the workplace (e.g. diversity, management, human rights) as well as the links established with the community (corporate citizenship and philanthropic initiatives).
Corporate governance: Corporate governance focuses on the impact of stakeholders, as it relates specifically to shareholders and company management, while addressing board structure, executive compensation and the rights of shareholders. It would cover remuneration, shareholders' rights and the relationship between shareholders and management of the companies, for example.

How is the investment carried out with ESG criteria?

This type of investment can take various forms, including ethical exclusion, avoiding companies or industries that are considered unacceptable either to minimise extra financial damage or to promote change from the investors themselves, or full integration according to ESG criteria, on the basis of which investment portfolios can be built by selecting the best assets in their class in order to maximise returns.

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