Major challenges lie ahead that will require us to shift our consumption and lifestyles in a more environmentally, socially, and economically sustainable way. The same is true of our saving, and fund management companies offer a variety of ways to save sustainably. Sustainable investments, also known as responsible investments, mean that the fund management company works to ensure that those companies in which the fund invests take sustainability into account and report details of their environmental, social, and governance (ESG) work. This lays the groundwork for improved risk management within the context of fund management and generates the potential for good, long-term returns.
Every fund management company decides on how to conduct its sustainability work in practice, which is one aspect of effective competition. The trend has shifted from funds that exclude certain industries towards a greater focus on the positive selection of companies regarded as role models, or towards influencing companies in the desired direction through active ownership. Funds that take specific sustainable considerations into account, and where sustainability steers investment decisions, take an increased responsibility for the environment, for example.
It is important to make savings decisions easier for savers by providing clear information on the way in which sustainability work is conducted. The Swedish Investment Fund Association has developed an industry standard for funds’ sustainability information with which all of the Association’s member companies must comply. The standard meets the legislative requirements for sustainability information that apply, and makes it easy for fund savers to gain an overview and compare funds’ sustainability work.
What does ESG mean?
ESG is a commonly used term in investment fund management. It stands for Environment, Social, Governance, i.e. issues relating to environmental considerations, social considerations (human rights and working conditions issues), and corporate governance.