The PRI (Principles of Responsible Investment) is the organizer of the world’s leading responsible investment event, PRI in Person. The annual PRI in Person conference helps investors understand how to apply sustainable practices such as integrating environmental, social and governance (ESG) issues into their portfolio decisions.
In 2016 the event took place in Singapore and was attended by over 600 participants. The main mission of the event was to promote responsible investment across Asia. UPM was invited to the conference as a UN Global Compact LEAD company to discuss the UN Sustainable Development Goals (SDG) with investors and support them in defining the business case for tackling SDGs.
Taking part in the conference was a natural step for UPM. “All of LEAD’s work aims to inspire and advance the full integration of sustainability into core business operations. In 2016 LEAD continued its efforts in shaping investor-company engagement and communication. I found the discussions with investors very useful. We enjoy a strong presence among investors who integrate sustainability in their investment decisions. Roughly 25% of our institutional investors have adopted ESG at the core of their investment approach based on NASDAQ sources. The percentage is more than double that of other industrial and materials companies,” says Nina Norjama, Director of Responsibility Development at UPM.
Green light from Singapore
The PRI is an independent, non-profit organization supported by the United Nations. Its role is to encourage investors to enhance their returns and manage risks more effectively through responsible investment strategies. The organization celebrated its tenth anniversary in 2016.
“Our aim is to educate, help and support investors so that they understand the benefits of using sustainable practices in their decisions. We work with our members and other organizations to produce research that can help investors on their ESG journey,” describes Nathan Fabian, Director of Policy and Research for the PRI.
The outcomes of the Singapore conference were an excellent indication of progress. “One of the most exciting recent statements was about the G20 countries’ intention to encourage responsible investment and green finance around the world. One of the ways they wanted to achieve this was by supporting the PRI to expand its activities,” notes Fabian.
Another positive sign is the new green financing strategy currently being implemented in China. “China has just announced a green finance policy that makes it easier for investors to buy Chinese green assets. We really welcome this policy, as do our investors.”
The PRI in Person event also hosted the Sustainable Stock Exchange (SSE) Initiative, which drew speakers from stock exchanges, regulatory bodies, investors, companies, ministries and international organizations to Singapore.
Emerging opportunities in sustainable investing
There is a growing niche for eco-conscious and social investment products targeted at both institutional and individual investors. One sign is the growth of investment in green bonds, which were created to fund projects that have positive environmental or climate effects.
Another signal is that investors are voting on environmental resolutions on company boards. Furthermore, governments have changed their strategies to design policies that favour sustainable investment. “The change reflects a wider view among policymakers, companies and investors that sustainability or ESG issues are material from a financial perspective. Investors should therefore be assessing them and ultimately directing more capital into emerging opportunities like biofuels,” says Fabian.
According to Fabian, there are excellent responsible investment opportunities in all markets. “In Asia, investors are very commercially astute about investment opportunities. They are making rapid progress with green investments supported by government policies. That is one of the strengths of the Asian markets.”
In Europe investors are actively looking for companies that demonstrate good performance in this field. “Social performance and sensitivity to the environment are more important factors for European investors,” he adds.
Progress is mixed in the US: Good headway has been made alongside some reductions. “I expect that the market will be very responsive to investment opportunities, as with the Asian market. In the US it’s always a case of putting forward a clear investment proposition.”
Investors look at the world from a different perspective since 2008. “Financial information only does not give a full picture of how stable a company is. Investors now look at how companies deal with issues such as transitioning to a low-carbon environment, and how they treat their employees. There are excellent opportunities for investors in projects such as renewable energy and green transport. Projects like these will grow very rapidly worldwide. These markets are well beyond their early phases. Investors have to move quickly to take advantage of those opportunities, and that is a promising development,” says Fabian.
UPM as a responsible investment
Through the renewing of the bio and forest industries, UPM is building a sustainable future across six business areas worldwide. Our products are made of renewable raw materials and are recyclable. The group employs around 19,600 people and its annual sales are approximately EUR 10 billion. UPM is listed on UPM shares are listed on NASDAQ OMX Helsinki.
- UPM is listed on CDP Forest A list and is the forest and paper industry leader in the Dow Jones Sustainability Europe Index (DJSI) for 2016-2017.
- UPM was invited to join UN-led Global Compact LEAD in January 2016.
Read more about UPM as an investment.