“On the road from the City of Skepticism I had to pass through the Valley of Ambiguity,” said Adam Smith, founding father of modern economics. This sums up the current state of investing in the environmental, social and governance sphere. A survey last November by the Dutch Association of Investors for Sustainable Development, which covered 90 per cent of Dutch pension assets, shows that most investment managers see the UN-sponsored goals as an opportunity.
Despite this, two-thirds have no formal policy to pursue them and only a fifth have brought their activities into alignment. For the rest, a key obstacle is the lack of a robust template, with consistent definitions and reliable data, that permits statistical modelling. Additionally, establishing a line of sight between, say, climate change and investment outcomes remains a complex task and requires expertise that many Dutch pension plans have yet to acquire, despite their reputation as savvy investors.
The good news is that there are positive straws in the wind.