VIDEO | As regulators crack down on greenwashing, asset managers find themselves navigating a tricky new landscape while trying not to trip up. Therese Niklasson – Global Head of Sustainable Investment at Newton Investment Management – sees the industry needing an overhaul of how responsibility is shared and accountability taken. At PostTrade 360° Stockholm, she joined discussion with Sustainalytics’ Benjamin Schofield and ERI’s Alan Goodrich.
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“Everyone’s having a bit of a wakeup call,” says Therese Niklasson. “We are now starting to ask ourselves if we are doing exactly what we say we are doing with all the grand purpose statements, principles, and so on. But it’s a really useful exercise, because it places accountability and responsibility in the right areas.”
The “right areas”, according to her, lie with the portfolio managers. “It is really important that the portfolio managers who run the strategies also own the responsibility of ensuring that what they say in their prospectus is also what they do in real life,” she says.
A mindset change
But convincing portfolio managers to take on this responsibility will entail a radical mindset change. That’s because conventionally – and perhaps mistakenly – ESG-related concerns have always been seen as the domain of ESG or responsible investment (RI) teams.
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“They would ensure, on behalf of the portfolio managers, that everything was fine,” Therese Niklasson explains. “Some people have been hesitant to take on the responsibility – not recognising that it has always been their responsibility – believing that somehow, having a veto, for example, from a responsible-investments team, would protect them.”
At the centre of this heated debate on greenwashing and accountability is the question of data – and how trustworthy it is in a space experiencing rapid change. Sustainalytics director Benjamin Schofield says that this is where the human touch is necessary. Data should be put through both automated quality assurance checks and manual checks conducted by dedicated methodology teams. “We rely on the human capability to read and interpret data rather than a machine, because it allows us to create estimation models that may not be possible based purely on reported data.”
There is value in quality data and getting the backing of a dedicated responsible-investments team, but, Therese Niklasson says, “ultimately it is still the responsibility of the portfolio manager to ensure that what’s delivered is what it says on the tin and also complies with any other labels, regulations, and disclosures.”
The panellists were:
Therese Niklasson, Global Head of Sustainable Investment, Newton Investment Management, and
Benjamin Schofield, Director, Product Strategy and Commercialisation Regulatory and Compliance, Sustainalytics,
under moderation by Alan Goodrich, Regional Sales Manager – Benelux, Nordics, Baltics & SEE, ERI Bancaire.
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