Responsible investment could create huge opportunities for fund managers, as long as they take advantage of it, said Jane Wilkinson, a partner and head of sustainability at KPMG in Luxembourg, at the Association of the Luxembourg Fund Industry (ALFI) Spring Conference.
Wilkinson explained that the number of responsible investment firms in Europe is growing, with 60 percent of funds now being managed responsibly.
She also accepted that it is difficult to define exactly what a responsible strategy is, reminding the audience: “We are talking about money here.”
Wilkinson predicted that the number of funds investing responsibly will continue to grow, particularly as investors take more control over how their money is used.
Funds are increasingly held accountable to their members, usually pension holders or insurance companies, and these members are becoming more socially aware, and specifying where their money will be invested.
The investors of the future, Wilkinson said, will be even more so inclined: “They’re going to looking for simplicity and transparency and flexibility.”
She also pointed out that, while some investors may be concerned that responsible investment funds won’t perform as well as regular funds, this is a myth, and cited a range of studies that show responsible funds to perform at least to the same level.
“The question is,” she said, “will the responsible investment market seize those opportunities?”
Wilkinson concluded by saying that asset managers could stand to lose out on business if they continue to ignore the rise of responsible investment.
Her speech coincided with the release of the KPMG and ALFI European Responsible Investing Fund Survey 2015, which found that assets under management in European responsible investment funds saw compound annual growth of 25 percent between 2012 and 2014.
According to the survey, these assets can be split into a number of categories, including cross-sectoral funds, where there are €322.8 billion in assets, environmental funds, which hold €31.8 in assets, and social funds, with €6.7 billion in assets.
ALFI deputy director general Anouk Agnes said in a statement: “With the rising demand from clients seeking to invest in companies, organisations and funds which aim not only to achieve a financial return, but to also generate measurable social and environmental benefits, the asset management industry is broadening its range of options.”
“Investors can choose between targeted products—like microfinance funds—and more traditional funds applying environmental, social and governance screening techniques.”
