Socially Responsible Investing is a growing trend
Experts | 03.10.2020 | MoraBanc editorial staff
Socially responsible investing (SRI) is an investment strategy which seeks to incorporate environmental, social, and corporate governance factors into investment decisions and generate long-term sustainable returns. This type of investment is one of the fastest growing segments in the sector.
Sustainable investing means including “non-financial” aspects in investment decision-making. These criteria involve environmental factors (climate change, greenhouse gas emissions, natural resources and waste/pollution), social factors (working conditions, local communities, health and safety and employee relations) and corporate governance factors (preventive measures against bribery and corruption, fiscal strategy and board diversity and structure). These are called ESG (Environmental, Social and Governance) criteria.
According to the Morgan Stanley Investment Institute, 85% of investors are interested in sustainable investments. As for the millennial generation, 67% of investors are involved in at least one sustainable investment activity and the generation is twice as likely to invest in companies or funds whose objectives set specific social or environmental outcomes.
Socially Responsible Investment at MoraBanc
In line with our philosophy as a pioneer in social responsibility in Andorra, at MoraBanc we are also focused on opening our product portfolio to go beyond investment funds and include proposals for sustainable investment. This initiative aligns with the values and the Sustainable Development Objectives that we promote, while responding to Europe’s growing demand for sustainable products.
How are these investments socially responsible?
The development of investment products based on socially responsible criteria can be defined in three parts. One fairly common way is to create products focused on specific topics. An example is MoraBanc’s latest proposal, a structured product designed for companies that work in renewable energies. The approach taken by Ferran Vila, Head of Structured Product Desk & Flow Desk, begins with making a list of the companies that meet the desired criteria. Nowadays we have many information channels available for selecting a full range of businesses.
The second phase is to define which of these candidates has sound market referrals, that is, which businesses are most likely to yield a relevant return. It is important to remember that although SRI seeks to consider both social and environment good, clients continue to seek financial returns.
The third phase for developing a product is to analyse the volatility, dividend and correlation of the chosen companies. This information means we can offer customers specific profit conditions.
Ultimately, the objective is to provide an exciting product to our Private Banking customers with the right investment profile that also rewards companies working towards positive social change. The companies chosen for MoraBanc’s renewable energies product are Iberdrola, Siemens Gamesa and ACS. MoraBanc’s inclusion of new financial products that invest in companies with a verifiable public commitment to environmental protection joins other socially responsible initiatives aligned with environmental protection, like the Eco-Car Loan, which aims to promote electric cars. The bank’s environmental efforts have reduced CO₂ emissions by 13.1% and MoraBanc has invested 3.2% of profits in community initiatives in 2018.
To learn more about the investment options that we offer at MoraBanc, please visit the investment section on our website or contact your personal manager.
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