Effortless consolidation: our five responsible investment themes for 2023

When it comes to Anthos Fund & Asset Management (Anthos)’ responsible investment roadmap for this year, we think of two words to help guide our efforts: "Effortless consolidation". We beleive these two words summarise how we would like to approach the year, as we work to seamlessly integrate our values with regulations and focus on refining our processes in an ever-changing and unpredictable world.

Here are the five big Responsible Investment themes where we see the most opportunity to do this.  

1) Consolidating values and regulation

We spent 2022 transposing our values into the expectations of the EU's Sustainable Development Financial Disclosure (SFDR). Being trained as a lawyer, I do love a good regulation. It promises alignment to values, common language, and attention at the highest level of an organisation. And while SFDR brought some of this, it also threatens to lower ambitions, stifle innovation and encourage underreporting. We’ve seen many good funds reclassify from Article 9 to Article 8 just to avoid greenwashing risk. This could negatively impact fund flows and delay the positive contribution those funds could have on the world. We hope innovation will continue strong and reporting will improve. In the meantime, investors must keep doing thorough diligence, cast their net wide, and not rely fully on SFDR “labels”.

This year, we commit to consolidating our values with regulation further. We will be learning how to strengthen our fund-of-fund products and improve our reporting. We expect the same will be done across the board.

2) We are not alone! Frameworks and the ecosystem

In the spirit of consolidation, we also are happy to see the Impact Management Project’s System Map which will bring strengthened alignment if investors use it and the frameworks within. We believe in collaboration and always encourage the managers we invest with to join and help build the responsible investment ecosystem. For our faith-based clients, we also welcome new guidance and call to action “Mensuram Bonam”, which moves towards engagement, collaboration and impact investing.

3) Climate and biodiversity

Remember that exciting time when investors “simply” had to set a single target, using metrics we could measure? Net Zero by… 2040… 2050. Indeed, we set ours for 2040. A few years later, a global pandemic behind us, the world has become even more complex. Climate is only one of Earth’s nine boundaries we need to take care of. This is why we are hoping to see renewed understanding and focus on Climate and Biodiversity in 2023, which could help expand the narrow focus of CO₂ reduction to holistic solutions that address systemic challenges. One consolidated approach of this is the continuous development of Sustainable Development Investing (SDI) in line with achieving the UN Sustainable Development Goals. We are exploring this at Anthos helped by the data and taxonomy developed by the SDI Asset Owner Platform.

4) Human rights come to focus

Climate change, the pandemic, the tragic war in Ukraine, the cost of living crisis. All of these things have human rights in common. For example, how will we make the energy transition a just one that is right for all citizens? Negative externalities of fossil fuels will continue to displace people and lead to poor health, and yet recent energy security scares mean countries are opening up coal mines once more just to meet the energy needs of citizens.

Human rights have long been a difficult topic to integrate fully into investments because of the lack of data and its complexity. We see a new wave of strengthened awareness and resolve for putting human rights at the heart of the investment agenda. As investors at all stages of investment, we have a role to play. We call on all our partners to incorporate the UN Guiding Principles for Business and Human Rights in their process and endorse the UN Principles on Responsible Investment (PRI)'s collaborative engagement on human rights, Advance. Read our Human Rights Statement and our commitment to strengthen this in our investment practice moving forward, including how we intend to implement human rights in our investment portfolios, and the plans we’ve set out for 2023 and beyond.

5) Good corporate citizenship beyond regulation

For us the value of good corporate citizenship is about being a responsible investor, and supporting our other two values of sustainability and human dignity. But it goes beyond that, and as I said in the beginning, in a world of insecure and volatile outcomes, we need to make sure that our processes and our culture are strong and trustworthy. Consolidation of values and principles at all levels. We need to make sure that all our stakeholders are heard and that accountability doesn’t only come from the top-down, but the eagerness and transparency of accountability of everyone at every level. From supporting creative ideas, to exerting ownership on issues, to embracing regulations and seeing them as opportunities to grow, there are multiple ways good governance can extend to all parts of all organisations if the right culture is in place.

So, a year of “consolidation”. But why “effortless”? We believe there is an element of choice in how investors approach difficult times and there’s much to point to that may be uncomfortable and challenging this year. We're reminded of a ballerina performing a complex performance. If any of you have ever tried barre, you will have felt how much strength and concentration it takes, so that the result looks, and is anything but - “effortless”. So if we choose to tackle the significant challenges ahead us with strength and precision, and work together to consolidate our efforts, the results can be effortlessly impactful. That’s a performance worth training for.