Image via WikipediaResponsible investing is not only a goal of large multinational firms according to socially responsible investing (SRI) consultant Lars Hermann, but also of an increasing number of smaller investment firms.
The Danish specialist says he has observed a 50% increase over the last five years in the small to mid groups integrating SRI themes into their investment strategies.
‘It is coming from the top 20 groups who are very involved in SRI themes and it is seeping down through the layers to the smaller firms,’ says Hermann. ‘The new generation of investors and managers are entering the market and are also very aware of responsible investing themes.’
The former financial consultant set up his own firm, CPH Advisors, two years ago and specialises in responsible investing strategies for Nordic and UK-based firms
His clientele is mostly medium sized companies which he assists in areas from screening processes and fund selection to the implementation of environmental and social governance (ESG) principles.
‘Some managers in these groups are not aware enough of the ESG factors and I help make them aware of the risks,’ says Hermann. ‘More and more of them are wanting to behave like “grown-up investors” and help change companies’ behaviour.’
Hermann believes the increase can be partly attributed to the efforts of the Danish government to increase social and environmental awareness among the business world. Introduced in 2008 the Corporate Social Responsibility action plan, which is similar to the UK's Stewardship Code, aims to promote SRI themes and help firms reap benefits from this approach
‘The Danish government have tried to take the lead,’ says Hermann. ‘They want companies to behave properly and want them to produce regular reports saying what they are doing and how they are investing.’
One of the areas which is getting a lot of focus at the moment is a firm’s supply chain. A recent documentary called 'Blood in the Mobile' caused some controvery for Finnish group Nokia and a handful of other groups as it had sourced minerals in the Democratic Republic of Congo which had been produced through child labour.
‘Many corporate groups are being pressured into this and it could lead to them completely changing the way they buy certain materials. It’s a question of controlling the supply chain and knowing where it comes from.’