Past SSF Events 2019

ESG integration in investment management

Geneva, 21 March

At this joint CFA & SSF event in Geneva, 90 participants were present for the launch of the regional report ESG integration in Europe, the Middle East, and Africa: Markets, practices and data and in-depth discussions about how companies are defining and implementing ESG Integration approaches. Jean Laville (Deputy CEO, SSF) and Christian Dreyer (CEO, CFA Society) opened the event with welcome notes from both organisations.

Matt Orsagh (Director Capital Markets Policy, CFA Institute) followed with a presentation of the key findings of the regional study. The study, based on extensive interviews, surveys, workshops and data from the PRI reporting framework, showed regional differences in the level of understanding and implementation of ESG integration, as well as on perceived key drivers and barriers. While risk management was listed as one key driver over most regions, other drivers such as client demand, regulation and generation of alpha varied from region to region.

After this overview, a specific case study of ESG integration in Fixed income was presented by Christopher Greenwald (Head of Research Sustainable and Impact Investing, UBS). The UBS case study can be found in the CFA/PRI publication Guidance and case studies for ESG integration: equities and fixed income. In his presentation, Christopher discussed how ESG integration, originally exclusively used for equity research, is now also an important topic for fixed income investments. When showing correlations between credit ratings and ESG ratings and methods to look for opportunities to generate alpha, he explained how important it is for teams looking at traditional credit analysis to work together with dedicated ESG specialists.

 

To gain even more practical insights, Eric Borremans (Head of ESG, Pictet AM) and Nicolas Jamet (Senior Quantitative Analyst, RAM Active Investments) joined Christopher on a panel moderated by Kelly Hess (Senior Project Manager, SSF). The panelists emphasized the importance that a company’s ESG Integration approach should be systematic and focus on material ESG factors.

They also agreed that over the years, there has been a shift in the interactions with clients, who are becoming ever more sophisticated on the topic. In this contexts, it is particularly useful to have specific examples to share. A big challenge in the industry is the terminology within Sustainable Finance that can potentially confuse clients. With regard to data availability, there was clear consensus that although the ESG data may not yet be perfect or “investment-ready”, there is already a lot that can be done with the data. It is up to asset managers to have a solid process that identifies the relevant information.

The event ended with a networking lunch where participants continued discussions.

Launch of natural capital risk framework for financial institutions

zurich, 16 january

Together with the Natural Capital Finance Alliance (NCFA), SSF co-organised a launch event for the newly available guide “Integrating Natural Capital in Risk Assessments”, the first step-by-step guide to help financial institutions conduct a rapid natural capital risk assessment. At the fully-booked event, hosted by UBS, 80 professionals gathered to learn more about the guide and the online tool ENCORE, a project funded by SECO and MAVA Foundation. These tools enable practitioners to better understand and assess their natural capital exposures.

After opening notes from Liliana de Sà Kirchknopf (Head of Private Sector Development Division, SECO), Sabine Döbeli (CEO, SSF) and Christian Leitz (Head of Corporate Responsibility management, UBS), event chair Anders Nordheim (Programme Leader, Ecosystems and Sustainable land use, UNEP FI) kicked-off the presentations and introduced the speakers.

Katie Leach (Senior Programme Officer, UNEP World Conservation Monitoring Centre) presented an in-depth look into the ENCORE tool and the vast knowledgebase behind it. She showed how users can apply the tool to visualise economic dependencies on nature and how environmental change creates risks for businesses. The tool covers 167 economic sectors on a global scale, and helps banks better analyse, measure and report on their exposure to natural capital (i.e. water, forests and clean air) and related risks and opportunities.

To give an overview of the new guide, Jon Williams (Partner, Sustainability & Climate Change, PwC), took the floor, explaining PwC’s work with pilot banks in preparing the report. Collaborating with banks located in areas heavily affected by environmental stresses, such as South America and South Africa, was a success factor to define key elements of the report.

 

Following these two input presentations, in a panel moderated by Eric Usher (Head of UNEP FI), first-hand experiences and insights from practitioners were presented. Liselotte Arni (Head of Environmental and Social Risk, UBS) and Madeleine Ronquest (Head of Environmental and Social Risk, FirstRand) joined Jon Williams on the panel. Madeleine pointed out how important the topic is for their bank, as South African banks generally have substantial exposure to agriculture and mining. When lending to such industries, banks must be fully aware of the natural capital risks to avoid financial losses should clients default and return unusable land/assets to the bank. The panel also agreed that artificial intelligence and smart data collection will be key to make the process more efficient, considering that we have yet to leverage on alternative sources of data. Additionally, the panel discussed how the language used when addressing this issue must focus on strategic risks, in order to sensitise management to the fact that natural capital risks are indeed to be looked at on a corporate level and not only in niche products.

The event closed with a networking lunch, during which many participants could continue their discussions and connect with the experts and their peers.

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