On May 7th, Steve Waygood, Chief Responsible Investment Officer at Aviva Investors in London, will be guest speaker at the Luxembourg Green Business Summit. In order to wet the participants’ appetite, Steve answered the questions from Laurent Rouach, PwC Luxembourg, along with the ones from GreenWorks. Steve Waygood’s team focusses on macro rather than micro: What’s going wrong with the markets? Why is the market so short-term?
ESG, data and responsible investment approach
At Aviva Investors, the global responsible team is charged with helping colleagues who run roughly $250b, embed environment social government issues to all the asset classes. Steve insists on the importance and transparency of the voting process at Aviva Investors, during AGMs. The way the company integrates ESG into security selection and portfolio management gives Aviva Investors a competitive advantage.
“We look at the cost of market but also at the best providers of ESG data. How do they fit together? What are the best data points? Which are the ones with the best materials for companies and particular sectors?” It does change and it’s not “one size fits all”.
Their mission? Influencing the way towards mainstreaming responsible investment. For example, governance and social values fluctuate and vary depending on the sector of the company. The data we gather helps us create a heat map, which color codes voting records, external data from governments’ metrics, and sometimes even data from MSCI or VGO. The aim of this map is to confront asset and portfolios managers to the following question: “Is the risk adjusted-return worth it? Does it look good enough to take this additional risk?”
The growing importance of non-financial reports
Steve continues: “It’s not about avoiding the problem; it’s about knowing that those problems would exist. As an owner, it is you duty to make sure you’re dealing with these issues. We look at Human Rights, environmental issues like climate change, the supply of raw materials, etc. We are actually big fans of non-financial reports. We have seen the incidence of good broker analysis on ISG issues grow significantly, and that has been fantastically useful to analysts and fund managers”.
Aviva Investors currently works on shaping the non-financial report environment, by using data embedded with security selection and portfolio management. This domain is still in its early phase: most of this data hasn’t even been provided for the last 10 years. Steve is very proud of what is team has achieved so far and adds: “top managers really start to understand the additional information that we provide them with. We shape investment decision making: it’s a world of innovation and it’s very exciting”.
Responsible investments require responsible actions
Aviva Investors also constantly reduces its carbon emissions using Gold standard carbon offsets which, for example, fund the production and dissemination of energy efficient stoves in developing countries. The company therefore reassures its owners and clients by working towards climate change and proving that carbon emissions are well-managed and properly offset.
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Alexandre Keilmann - @Alex_Klmnn