Research in Finance (RiF) had the opportunity to attend and contribute towards several events and conferences in October 2023. Members of the team attended the Socially Responsible Investment (SRI) Services & Partners Good Money Week event, the Association of the Luxembourg Fund Industry (ALFI) London Conference and the London Investor Show, all of which took place during the month of October.
The SRI Services and Partners annual event took place in the week commencing 2nd October as part of the UK Sustainable Investment and Finance Association’s ‘Good Money’ week. The event represents a chance for all involved in finance to think about how organisations, pension schemes, professional investors and end investors can make ‘good money choices’, tackle the investment challenges of today and consider what we want the investment world of tomorrow to look like.
The ALFI London Conference, held on 19th October, was extremely well-attended by people involved in all aspects of the investment and wider finance industry. Keynote speeches on regulation and the macroeconomic trends shaping the future were of particular interest.
The London Investor Show, on Saturday 21st October, saw RiF presenting findings from our latest research among private investors on their sentiment and attitude towards the best sectors and countries to invest in currently, as well as chairing and contributing to different panel sessions throughout the day.
It was hugely insightful to be able to listen to presentations and panel sessions from multiple people in the investment industry, engage in several interesting conversations on what is crucial to push the industry forward and strive for improvement, as well as also present findings from our recent research. Responsible investing (RI) was a key topic across all 3 conferences, both as a subject in itself and also as a catalyst for discussion on how it relates to all the issues which we face today, both in our individual lives, our jobs and the global economy.
A common theme from several of the presentations, panel sessions and wider conversations with different people across all facets of the investment universe, is the need for more clarity and transparency if we are going to make real progress in RI. Professional investors, both retail intermediaries and institutional investors, are demanding increased transparency and tangibility from investment managers in their explanations and products focused on RI. Professional investors need greater clarity on the investment case of certain RI solutions so they can better understand if those solutions will meet the needs of end investors and pension scheme members.
There is clearly work to do. The volume of products and funds which have a responsible element or focus to them seems to be growing exponentially. This has brought a barrage of terminology, which can be hard to decipher and separate, which can, in turn, lead to the serious issue of greenwashing. The RI landscape is certainly more opaque than transparent at present. The chart below highlights how understanding of key RI terms has stalled in recent years, as well as how few retail intermediaries completely understand terms such as ESG integration and impact investing.
Couple this with the lacklustre performance of several RI funds throughout 2023 and the global macroeconomic challenges of inflation, impending recessions for certain countries and war across the world, and it is very hard to paint a positive picture.
Yet the opportunity to build a future we can all be proud of, and are excited to be a part of, through sustainable finance is possible. It was certainly pleasing to see this optimism shine through at the events throughout October, and to hear passionate people involved in investing proclaim that this opportunity is achievable. The never-ending list of RI terminology and products should be seen as a positive – the demand for different solutions is out there, and there are different ways to reach different goals. We need to harness that demand and opportunity and understand that those products and goals are all under one large RI umbrella. The umbrella is huge and multi-faceted, but it is one umbrella – to invest sustainably and responsibly to build a better future.
Regulation will of course play an important hand; of that there is no doubt. Research will too, as it is crucial to understand both the barriers and drivers of responsible investment among different investor audiences. Phase 4 of our Retail Customer Interests study among private investors kicks off imminently, and is focused on RI, ESG and sustainability. The aim is to shed further light on what end investors are looking for and what they are struggling with currently, in terms of RI and ESG. Capturing professional investor sentiment is also extremely pertinent, and our UK Responsible Investing Study (UKRIS) among both retail intermediaries and institutional investors kicks off in January 2024. The annual study is entering its fifth iteration, and we look forward to understanding how attitudes and needs among these audiences have evolved at such a crucial time.
If you are a private or professional investor and are interested in being involved in our research, please do get in touch with Jack Dominy, Associate Research Director. If you are an investment manager and are interested to know what investors are saying about RI, please do get in touch with Mick Hrabe, Commercial Director and see how we might be able to help you.