We sat down with our very own Anja Rundquist, Worldfavor’s latest recruit and Strategic Account Executive. Anja has worked with financial information and software for institutional investors since 2007. Most recently she joined us from the ESG team at S&P Global. Given her experience, we took the opportunity to ask her about the benefits of ESG efforts, what investors look for in a company, and how the new international regulations will form the investment market.
How would you say the importance of sustainability among investors and organizations has been adopted on the market?
– ESG has become a key topic on everyone’s agenda and gone from a “nice to have” to “must have”. The acceleration in ESG focus in the past few years has not escaped anyone. Ten years ago when we were looking at portfolio performance, only a handful of funds were curious about their carbon footprint and how to reduce the impact. This year regulations are coming into force to stress the importance of the environmental impact, not only for carbon footprint, but across the ecosystems. Social and governance have moved beyond due diligence checks for code of conducts and ISO certifications.
Most investors and organisations today have a clear understanding of that ESG means both risks and opportunities with a financial impact that they need to consider. Conversations have moved from why ESG measures are important to what shall we measure and how do we do it effectively? The maturity level of ESG implementations still varies across organisations. There are also local variations where the Nordics tend to have a focus on CO2 emissions and forestry, the Netherlands are focusing on biodiversity, whilst measuring carbon footprint is high on the agenda for the UK, with TCFD becoming mandatory.
New regulations are being inserted to direct investments toward sustainable activities. What are your hopes for this type of regulations?
– We need to ensure sustainable development globally, and to do so we need to finance the right type of activities. My hope is that the regulations will encourage companies to become more sustainable; being EU Taxonomy-aligned makes the company more attractive to invest in, and that the investors actually do reorient the capital towards a more sustainable economy, as the regulation aims for. The EU Sustainable Finance Disclosure Regulation (SFDR) and the EU Taxonomy will help to prevent greenwashing, whereby funds make claims to be sustainable without a foundation to back it. There are still funds that declare ESG to be key priority but struggle to demonstrate how it’s been implemented beyond words. The new regulations will be a fact sheet for comparing firms' words with their actions.
You must have witnessed very fast changes within finance, tech and sustainability – what are your tips for organizations to stay leading and relevant through these fast changes?
– It is interesting how it seems to always become a race for firms to get aligned in the last months and sometimes even days before a new regulation come into force. The same seems to be the case for SFDR and EU Taxonomy, with firms now intensifying their search for solutions to comply with the new regulations.
My first tip would be to implement sustainability to the core of your business, so that it becomes a natural part of your strategy and DNA, and not just a check box for regulations. The regulations will likely evolve, hence it is important to ensure that the right building blocks are already in place in order to avoid fumbling to meet deadlines at the end. Assess what data you will need and start collecting it now. The sustainability reporting process can be run smoothly if you have a software that can collect, aggregate and calculate your sustainability data. There are EU Taxonomy/SFDR reporting solutions to turn to help you implement the reporting process.
Most importantly, don’t wait until it’s perfect – start now!
Besides saving the planet, what benefits have you witnessed of sustainable investments?
– There are several cases that have shown that sustainable companies are more agile and preserve value through difficult situations. Diversified workplaces tend to have more inputs and less blind spots. Firms that focus on lowering their emissions and waste not only make a positive impact, but also reduce their costs, directly impacting the bottom line. ESG factors have direct financial results, both positive and negative ones, as seen with Wolkswagens emissons scandal, where the related financial fines and costs exceeded $33bn. On the positive side, Sustainable companies tend to have a stronger brand loyalty amongst its consumers and attract large investors, as seen with Blackstone investing in Swedish plant-based food company Oatly.
What is most important from an investor perspective when investing in ESG?
– Integrating ESG as an integral part of the valuation and not as a separate checkbox. Make it more than an exclusion list of business activities not to invest in. The financial impact on companies from ESG risks and opportunities should be a natural part of the assessment and reviewed with the same scrutiny as the financial information.
How can you see Worldfavor’s solutions improving sustainability in the finance industry?
– Transparency and information sharing. Worldfavor makes sustainability mainstream, as the platform works with sustainability information from SMEs and private companies, not generally covered by the larger ESG information players.
Worldfavor provides a solution for supply chain visibility, which pushes transparency through the entire value chain. Investors can seek the impact not only from the firm they invest in, but also the impact of their supply chain. The network effect and information sharing which the platform enable reduce reporting fatigue.
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