There is strong evidence that SRI is becoming a more mainstream investment philosophy among investors. According to the Global Sustainable Investment Review, by the end of 2015 responsible investment stood at 26 percent of all professionally managed assets globally — an increase of 25 percent since 2014.
When it comes to Spain, the rate of assets managed according to ESG criteria has risen fivefold in the last six years, reaching a 35 percent increase just in the last two years alone.
The different Fora for Sustainable and Responsible Investment (SIFs) spread around the world have played a prominent role in the development of the SRI market through initiatives in the fields of research, education, advocacy and promotion.
As far as promotion is concern, Spainsif’s SRI Week has traditionally been a highly regarded event in our market. It is a series of conferences aimed at bringing together the SRI community to discuss hot topics and trends across the length and breadth of the country.
Spainsif’s SRI Week , now celebrating its sixth year, is being held between June 5-12 in Madrid, Zaragoza, Barcelona, Bilbao and Valencia.
The opening session in Madrid focused on occupational pension schemes, one of the main players in the Spanish SRI arena. That is partly because our legislation (provision 69.5 of the Pension Plans and Funds Regulation) requires them to disclose whether ESG-related risks have been taken into account in the overall investment decision-making.
To implement this legislation, Spainsif has partnered with Spain’s pensions and insurance regulator (Dirección General de Seguros y Planes de Pensiones) to provide guidance and a framework for pension funds to disclose their SRI policies. The aim is to obtain comparable and harmonized information. This financial year will be the first in which Spanish authorities gather this input.
Another big trend worldwide is the issuance of sustainable, green and social bonds, which have been launched in a large number of countries, including at a sovereign level. Spain has followed suit and a number of initiatives on this front have recently made the headlines.Issuers such as Iberdrola (so far with four green bonds and a green loan out in the market), Caja Rural de Navarra (with a €500m sustainability bond) or the Instituto Oficial del Crédito (ICO) are just some examples.
In addition, the regional government of Madrid became the first Spanish administration to issue a sustainability bond, covering both social and environment aspects. We touched upon these issues in Zaragoza on June 7.
Closely linked with the topic of green bonds issuance, it’s the pressing need to transition towards a low carbon global economy. We are tackling this issue in Barcelona, addressing how SRI can be a powerful tool to unlock capital that enables the decarbonisation of the economy. Taking into account a Spanish perspective, we are examining the different investment strategies, beyond green bonds, such as impact and thematic investments connected to clean energy, water stewardship, etc.
At Bilbao, the topic for discussion was SRI as a driver for fostering long-term investments. As the global financial crisis of 2008 has shown, short-termism investments don’t contribute to the real economy, tend to be speculative, more volatile, less transparent and harder to manage.
In line with that idea, a February 2017 study by McKinsey & Company, entitled Measuring the Economic Impact of Short-termism, found that companies with a long term strategy outperform their shorter-term peers on a range of key economic and financial metrics.
While in Valencia, we are addressing ways to democratize SRI trying also to entice retail and individual investors, back in Madrid at our closing session on June 12, we are examining the contribution of international asset management firms to the Spanish SRI market.
Currently, about 85% of all funds with an SRI mandate in Spain are led by those international firms. As such, they are a relevant player that has helped indigenous firms to counteract the scarce, yet nascent, offering of SRI products in Spain.
Adrían García is senior analyst and Irene Estevez is junior analyst at Spainsif. Translated by Carlos Tornero.