Data on sustainability generate discussion on investment decisions

The bank’s aim is to have 46 billion euros in sustainably invested assets under management by 2024. With 37 billion euros this year, the bank is ahead of schedule.

“Things are moving very fast indeed. The overwhelming majority of new clients’ assets are now invested in sustainable strategies,” says Richard de Groot, Head of ABN AMRO’s Global Investments Centre. “Client surveys also show that sustainable investment is becoming an increasingly important priority for them. That’s why we definitely expect this growth to continue.”

There’s a danger, though, that the concept of sustainability could become watered down or even meaningless, particularly when every business out there is claiming it’s sustainable. And that’s exactly why ABN AMRO believes it’s important to ensure that sustainability can be expressed in quantifiable terms. Business developer Jesse van Scherrenburg’s job is about making non-financial data transparent to the client through non-financial reporting.

Quantifying investments in emissions

“Every quarter, clients whose assets are managed by ABN AMRO or whom we advise on asset management receive a report on how their investments have performed,” explains Jesse. “They also get a fact sheet with statistics and graphs showing them at a glance just how sustainable their share portfolio really is.”

Jesse continues, “We translate the equity portfolio into carbon emissions and assess it against the Paris climate accord. Using data from the provider ISS Oekom, we also look at how the portfolio contributes to the United Nations’ Sustainable Development Goals. Finally, we publish the average ESG risk assessment of the portfolio by Sustainalytics (a Morningstar company), a research firm specialising in ESG and corporate governance research and analysis. That’s how we quantify sustainability in concrete terms. This service is not yet available for bonds or alternative investments, but we’re working on it.”

“Our personalised client portfolio scores show that the bank is at the forefront in this area,” says Jesse, who together with his colleagues is focusing hard on expanding their methodologies and indicators. In 2022, for instance, data on sustainability will be added to an online dashboard accessible to ABN AMRO investment clients 24/7.

Excluded sectors

In addition to offering data on how sustainable individual companies are, sustainable investment categorically excludes certain sectors, such as the tobacco industry, mining and arms production.

ABN AMRO also initiates dialogue with other companies. On the basis of international standards and treaties like the UN Global Compact, the bank tries to reach agreement on plans for improvement and concrete actions through its engagement partners. As a result, ABN AMRO is contributing to the transition to a more sustainable economy in line with its purpose, Banking for better, for generations to come.

Sustainability versus profitability

But doesn’t the focus on sustainability end up having a negative impact on profitability? “Far from it,” says Richard. “On average, sustainable investments score even better. That makes sense, too – companies with high sustainability scores are usually quality-driven, transparent organisations with a vision for the future. That’s what investors are looking for, and that’s what generates healthy returns. Last year, sustainable investments outperformed the benchmark, and this year they are again 2 to 3 per cent ahead. So we’re seeing that data on sustainability are increasingly important in terms of a company’s valuation.”

Richard and Jesse both expect that within the foreseeable future, sustainable investment will win out over all other types of investment, not least because companies that fail to make the transition to sustainability will end up having a very hard time. “It’s not just investors who expect companies to have a sustainability strategy in place,” says Richard. “Governments, consumers and society do too. By providing insight into sustainability scores, we’re helping clients make informed choices and initiating discussions with them.”