Sustainability gets academic boost

Since 2018, new ABN AMRO investment clients in the Netherlands are being offered sustainable investing as standard. Naturally, it’s up to clients themselves whether they opt for a sustainable or a traditional investment strategy. Experience shows, though, that the vast majority of new clients are opting for sustainable investment.

Return?

Of the total assets base of roughly EUR 140 billion, EUR 8 billion was invested in sustainable mandates in 2017. The aim is to double that amount by 2020. That’s a big challenge. Although existing clients are interested in sustainable investment, they’re often reluctant to make a change. They have lots of questions like “Sustainability is all well and good, but won’t it affect my return?” Or “Is there really any impact if I opt for sustainable investing?” To help facilitate a proper discussion about sustainability, 900 private bankers and investment advisers are undergoing special training.

Oxford

ABN AMRO has developed a three-part education programme starting with an e-learning module based on the United Nations’ Principles for Responsible Investment (PRI) which covers the terminology and theory behind sustainable investing. The second part is taught by representatives of the Oxford University’s Saïd Business School , and builds on the first to deepen the understanding of the theory and practice of ESG and impact investing. The Oxford Fundamentals of Sustainable Investing Programme provides on-site training at various ABN AMRO branches in the Netherlands, Belgium, France and Germany. The programme concludes with a workshop focusing on the relevant investment products and services provided by ABN AMRO. An initial pilot training course in which fifty private bankers took part was launched in Brussels in December. And that’s a good thing, too, because Belgium is seeing a sharp rise in demand for sustainable investing. It’s also no coincidence that Oxford University is involved, given its pioneering engagement in this field.. Prof. Robert Eccles, an advisor to this customised programme, is a leading authority on the integration of environmental, social and governance (ESG) factors in investment choices, as well as the world’s foremost academic expert on integrated reporting.

Higher returns

Eccles studied approximately 200 papers and research projects on investments, and drew interesting conclusions. Many investment clients are critical of how a sustainable investment strategy impacts on the performance of their portfolio. But Eccles says he’s found that sustainable investing actually generates a higher return in 80 per cent of cases. “This training programme is happening at just the right time,” says Eccles, who is keen to create context in a sector which “has become mainstream”.

Sustainability is a factor in half of all investment decisions taken

“Twenty years ago,” Eccles continues, “companies started to understand the importance of sustainability. At that time, though, it was all very small-scale, and budgets were small. In the last three years, that situation has been completely reversed. Roughly a quarter of all outstanding investments in the US were made on the basis of ESG criteria. In Europe, that’s now half of all investments.” The third part of the ABN AMRO education programme involves a workshop in which real-life client portfolios and situations are discussed, thus ensuring that dilemmas and critical questions from clients are dealt with in an authentic way.

Going the extra mile

Pieter van Mierlo, CEO of Private Banking at ABN AMRO, is pleased with the education programme, calling it “a logical continuation of ABN AMRO’s overall sustainable strategy”. He continues, “Obviously, the bank is prepared to go the extra mile – both for its staff and particularly for its clients. It can only be in the client’s best interests that our staff’s knowledge grows. We want to work towards making the world a better place, but our clients want that too, whether they consciously realise it or not. It’s often apparent from discussions with clients that we all basically want the same thing. And that’s more than enough motivation for us to keep improving in this area.”