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Sustainability: A Blessing on Your (Investment) House - Muzzles Off!

The increase in relevance of sustainability factors in investment continues apace in 2015. Macro themes require commitment at the micro level to make the difference. This demands flexibility not only on the part of institutional investors collectively and individually, but by their service providers too.

Manifest’s recent agreement with Sustainable Value Investors (SVI) is the latest example of our on-going commitment to offering the flexibility of choice institutional investors need to adequately respond to the multi-faceted demands of sustainability issues.

For example, significant attention was given to the announcement by the Norwegian Government Pension Fund of divestment of coal mining companies, underpinning the growing momentum behind carbon disclosure, carbon credits and stranded assets as investment themes gaining mainstream ground. The 2015 climate change conference in December in Paris is looming large on the sustainability horizon too, setting the direction which will undoubtedly add weight and expectation to the responsibilities of investors.

But sustainability isn’t just about managing “green” issues at portfolio companies for a better world. It’s wider than that. It’s about how we look after every aspect our investments, the management of diverse risks.

Jamie Dimon’s tirade against “lazy investors”  using proxy advisors like credit rating agencies for outsourcing voting decisions recently won mainstream attention (“Dimon hits out at ‘lazy’ shareholders”, Financial Times 27th May, “JPM’s Dimon: ‘Irresponsible’ for Investors to Vote Solely on Proxy Adviser Recommendations”, Wall Street Journal, 1st June). Hardly a case of the blind leading the blind as Dimon may want us to believe, but he rightly underlines a risk: if you’re not watching the radar, it’s irrelevant if the radar picks something up or not.

Simultaneously to that, institutional investors increased pressure on the likes of Adidas, Coca-Cola, Visa and Hyundai (among others) to consider their sponsorship of corruption allegation-riddled FIFA. Several sponsors have spoken out; others (such as Castrol, Continental and Johnson & Johnson) have already not renewed sponsorship of the 2018 World Cup in Russia.

What this all points to is momentum, because these issues are appearing from so many different investment angles. Opportunity: Investors need to be nimble and well informed in order to capitalise on the opportunity they represents. Threat: Institutional investors are also looking for imagination, adaptability and flexibility to respond to the investment-driven sustainability demands that their clients and stakeholders now articulate.

As a service provider, Manifest is renowned for nimble service development and implementation. We are delighted to demonstrate that yet again we offer an integrated approach to sustainability activity in investment by facilitating joined up working with other specialists.

Like us, SVI places an emphasis on supporting institutional investor stewardship activity in the context of the investor’s own sustainability policy and investment priorities, allowing investors to articulate their own voice.

As the recent UK general election demonstrated, a single, large voice is easily heard but not necessarily representative. As FIFA’s sponsors are finding out, a large number of well articulated, un-muzzled independent voices cannot be ignored.

What do you think?