ESG and sustainable investing

In the past, everyone could apply the term sustainable investing to whatever they wanted. Now, thanks to new regulations, a definition of sustainable investing has been created so that everyone uses this term to refer to the same things. And that's a really good thing. It allows you to assess whether your investments are truly sustainable and it can also try to put a stop to the phenomenon of investments being wrongly promoted as sustainable (referred to as "greenwashing"). Sustainable investment means investing in an economic activity that contributes to an environmental or social goal, and where the investment does not significantly harm any environmental or social objective, and where the companies in which you invest follow good governance practices. A sustainable investment therefore has quite a few requirements to meet. 

Sustainable investment products like this are also referred to as Article 9 products, as defined by the SFDR Regulation. You can find out more about this in our brochure 'A closer look at your investor profile'.

The new regulations make a strict distinction between ESG investments and sustainable investments to promote transparency and prevent greenwashing. If you opt for ESG investments (also referred to as Article 8), you will be investing in companies that comply with a number of Environmental, Social and Governance sustainability criteria. These ESG investments are identified by applying a best-in-class principle, exclusion methods and engagement. 

Sustainable investments go one step further and must meet a greater number of criteria. Creating an impact is a priority: as mentioned above, they must aim to make a positive contribution in an environmental and/or social area. The financial return takes a back seat with this type of investment. 

By asking you a few questions, the Bank can work out your sustainability preferences. More specifically, you need to indicate your preferences in relation to various sustainability criteria (such as making a positive contribution to an environmental and/or social goal). In addition to the traditional risk profile determination, your sustainability preferences will help determine what approach is most suitable for you. You can find out more about this in our brochure 'A closer look at your investor profile'.

Would you like to get started with ESG or sustainable investing, but don't know where to begin? Your Private Banker will be happy to discuss how you can build your portfolio with you and advise you on our investment solutions. Book an <strong>appointment online</strong> with one of our experts, and we will discuss, in a no-obligation review, what you are looking for and what you expect from ESG and sustainable investing. Based on the results of this meeting, you can select the form of investment that suits you best. 

As part of your quarterly report, you will then receive an overview of the sustainability information for your investments. You can also consult this at any time during the year through the Sustainability Dashboard in the app, or through the web portal.

Impact investing is our form of sustainable investment, through which we try to emphasise even more our objective of using investments to make a positive impact. Only companies with a measurably positive social and/or environmental impact are selected, and their turnover must also contribute to the Sustainable Development Goals. At ABN AMRO MeesPierson, you opt for this type of investment when you choose the Impact Mandate.

Fears about moving to ESG or sustainable investing in these uncertain socio-economic times generally stem from the assumption that these investments will yield less than traditional investments. We see the exact opposite: companies that consciously pursue a more sustainable long-term vision offer good growth prospects for the long term. You could compare the sustainability transition to the fourth industrial revolution, or more recently with digitalisation, when those who got on board early reaped the benefits. Companies that missed the boat collapsed. As a bank, our job is to select the right companies. Companies with a high ESG score that contribute to one or more sustainability goals. In the case of our sustainable products, the ESG score levels required to qualify have been further increased, and selection is also based on companies' net positive impact on the environment and/or society. We are convinced that technological advances, product innovation and process-based efficiencies will lead to increased profitability in the long run, accelerated earnings growth and, ultimately, a good market valuation. If the global community continues to support the Paris Climate Agreement and seeks to achieve the Sustainable Development Goals by 2030, sustainable investments offer attractive opportunities. 

Remember to bear in mind the risk of concentration and other risks when it comes to your sustainable investments.