{"id":11443,"date":"2020-03-25T09:00:39","date_gmt":"2020-03-25T08:00:39","guid":{"rendered":"https:\/\/my-life.lu\/?p=11443\/"},"modified":"2020-03-20T10:06:32","modified_gmt":"2020-03-20T09:06:32","slug":"sustainable-investment-a-toolkit-for-investors-30503","status":"publish","type":"post","link":"https:\/\/my-life.lu\/en\/sustainable-investment-a-toolkit-for-investors-30503\/","title":{"rendered":"Sustainable Investment: A toolkit for investors"},"content":{"rendered":"
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Short-termism has been widely identified as a common negative side-effect from financial markets, resulting in \u201cunderinvestment, economic inefficiency and poor decision-making, undermining long-term value creation\u201d1<\/strong><\/sup>. It is also widely recognised that today’s financial system does not actively promote long-term thinking.<\/p>\n

When speaking about the investment horizon, a classical perspective comes into mind: speculating (short-term) vs. investing (long-term). Our role is not to pour moral scorn on the first category, but as investment advisors or portfolio managers, we have a duty to help clients navigate, for instance, the stock markets as a \u201cwarehouse of cash-flows, not a casino\u201d2<\/strong><\/sup>.<\/p>\n

For us long-term investing is a state of mind. It is not a predefined holding period, written in stone. It is basically a culture of making investment decisions based on sound and viable dimensions. It gives emphasis to long term expectations on fundamental factors and reaps the rewards of patience. It is less about timeframe and more about alignment to structural trends and challenges.<\/p>\n

It is our conviction that when discussing structural trends, climate change should be at forefront of priorities<\/strong><\/span><\/a>.<\/p>\n

Embedding resilience and mitigating environmental risk should, as well, become a routine part of any investment decisions.<\/p><\/blockquote>\n

Traditional fundamental analysis is about routinely scrutinizing upside financial opportunities and downside risks. But this is clearly not enough anymore. From our perspective, embedding ESG factors in order to measure resilience and incorporate environmental risk should, as well, become a routine part of any investment decision.<\/p>\n

Broadly speaking, growing awareness of the sustainability agenda is clearly visible inside the investment community. According to the Harvard Business Review, we are currently facing an \u201cInvestor Revolution\u201d3<\/strong><\/sup> in relation to sustainable investment. While market experts are debating the history of sustainable investment, the factors driving the portfolio management industry (sustainability) revolution and its impact on past performances, we would like to describe some of the crucial requirements when looking for investment service providers in relation to sustainable ambitions.<\/p>\n

To translate these words into action, the starting point is the establishment of investment beliefs and associated sustainability convictions. Investment beliefs are the views held by the portfolio management institution. They represent explicit assumptions an institution makes about how it should invest and the principles it follows as a result.<\/p>\n

To illustrate, a classical set of investment beliefs could reflect one or more of the following:<\/p>\n