In the realm of sustainable finance, Quorus is a non-profit association which has been striving to make a significant impact for 50 years. With 1,528 financial institution members (from 156 countries), Quorus fosters collaboration, produces valuable content, and conducts research. One of its key initiatives is the Digital Reinvention Community, which brings together professionals to share insights and best practices.
Objectway invited Roberto Ferrari, Digital Reinvention Community Leader at Qorus, to speak at a stage during OWIN23 about the evolution of investment solutions design, aligning to profitability while expanding its potential to create social and environmental value over the long term. Below are the key insights from his speech, directly from his pen!
The rise of sustainable investments and key factors driving change
The flow of capital into sustainable ESG assets has been remarkable, amounting to billions of Euros or Dollars. This surge in interest and investment serves as the impetus for discussions and events. Furthermore, the impact of sustainable investing extends beyond the financial industry itself. As companies are increasingly evaluated based on their sustainability practices, the potential for driving global change emerges, transcending the confines of the financial sector.
Amidst market dynamics and economic uncertainties, understanding the developments and challenges within the industry becomes therefore crucial. A primary focus is discerning the true impact of ESG changes versus the issue of greenwashing. Are changes really true or just strategic manoeuvring to derive industry benefits without necessarily promoting social progress? But also, measurement and interpretation of sustainability metrics become paramount; how do you measure in a reliable and effective way against the multitude of scoring systems and analysis tools available? How do you interpret such a wide concept that is sustainability?
On the other side, there are clients who play a crucial role in the equation. Are they genuinely interested in the wellbeing of the planet, or is it just another fleeting trend? If the financial returns were to be affected, would their commitment waver? These questions are yet to be answered, but one challenge is for sure, and it is client engagement. Particularly as expectations differ among generational cohorts, balancing performance, time horizons, and social equity becomes a delicate endeavour.
At the end of the day, overcoming greenwashing and ensuring the reliability of sustainability claims is of utmost importance. As various vendors, data models, and scoring systems proliferate, standardisation is necessary to maintain consistency across the industry. Still, simultaneously, the personalisation of products to meet individual client preferences is essential and increasingly required.
Data, technology, and trust
Data, technology, and trust are at the core of navigating this evolving landscape. Effectively measuring, monitoring, and leveraging data is vital for managing vast assets and serving millions of customers. Technology plays a crucial role in designing, segmenting, and tailoring offerings.
Harnessing data, utilising technology, and establishing trust form the foundation for success as the industry undergoes a transformation within the broader digitisation wave, enabling asset managers to create innovative and accurately measured products and services.
Regulation and innovation go hand in hand to fuel the market and create real social impact
Finally, there is one last elephant in the room to address: regulation, which heavily impacts the financial services industry. While regulation can stifle innovation by imposing control, I believe it undoubtedly serves to enhance credibility, foster standardisation, and provide transparency to customers regarding the balance between social and financial returns. Finding this balance is the challenge ahead, considering the varying targets and preferences of individual clients. Despite potential complexities, the objective is to deliver clarity and transparency to customers, aligning their desired balance between social and financial outcomes.
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