Institutional investors have a fiduciary duty to consider sustainable indicators that are relevant to financial performance (see Freshfields, 2005).
European companies must disclose sustainable indicators relevant to their business in annual reports (see 4th and 7th EU accounting directives).
SD-M GmbH, drawing on years of scientific research by its managing director Dr Axel Hesse, advises on how relevant sustainable indicators can be integrated in the investment process using:
- industry-specific key performance indicators (SD-KPIs) or a thematic approach ("Big Six");
- a clear definition based on global standards that are simple, systematic and transparent.
This process is particularly appropriate for equity and bond investing and does not necessarily entail limiting the investment universe via exclusion. The process also enables the portfolio and the related mandates to remain largely intact, so that the cooperation between asset owners and asset managers may continue (see UN PRI Services and references).