Responsible Finance: Managing Risk and Driving Competitive Advantage

17/12/18



Strict regulations and increasing consumer demand have placed a greater focus on environmental, social and governance (ESG) among organisations across all sectors. Organisations of all sizes are focusing on ESG factors to help drive continuous improvement and competitive advantage.

However, there is one key area in particular, in which ESG factors are facing even greater scrutiny; investment. Responsible finance, or responsible investment, is an approach to investing that aims to incorporate ESG factors into investment decisions, to better manage risk and generate sustainable, long-term returns. And it is becoming more important than ever, on a global scale.

Setting a framework for a responsible future

The premise is simple. Responsible finance aims to support national, EU and global commitments to deliver a low-carbon, more resource-efficient and sustainable economy, with the overall objective to build a financial system that supports sustainable growth.

Japan, Sweden, France, Luxembourg, China and the Netherlands are amongst the countries to have taken initial steps to encourage sustainable investment; in some cases, revisions have been made to the obligations placed on fiduciaries to incorporate ESG factors, not just the financial interests of beneficiaries. In response to global sustainability targets and greater regulatory requirements, this is largely about greater transparency to ensure the identification and management of risk to organisations, people, the environment and the economy.

In May 2018, the European Commission launched an ‘action plan for sustainable finance’ with a series of measures to support the implementation of an EU-wide responsible finance system, and a Technical Action Group was also established by the Commission in Summer 2018. In its action plan, the Commission proposed that ESG factors are “consistently taken into account” in the investment process of institutional investors and asset managers.

There has also been significant input from investors themselves. At the Global Roundtable UN Environment Finance Initiative (UNEP FI) in Paris last month, the initiative linked with 28 banks from around the world to launch the Principles for Responsible Banking for public consultation. The Principles are set to launch in September 2019 and will set the global standard for responsible banking, providing the first global framework to support the integration of sustainability across all business areas of a bank. Once agreed, participating banks will commit to being publicly accountable for their significant positive and negative social, environmental and economic impacts, with the overall ambition to align their business with the objectives of the Sustainable Development Goals (SDGs) and the Paris Climate Agreement.

Why does this matter?

The momentum behind responsible finance has grown in recent years, driven by a number of factors including, but not limited to:

Growing recognition in the financial community of the role of ESG in determining risk and return

Greater emphasis on investors’ fiduciary duty to their clients and beneficiaries

Concern about the impact of short-termism on company performance, investment returns and market behaviour

Enhanced legal requirements placed upon investors

Pressure from competitors seeking to differentiate themselves by offering responsible investment services as a competitive advantage

Beneficiaries becoming increasingly active and demanding transparency about where and how their money is being invested

Increased exposure to reputational risk issues such as climate change, pollution, working conditions, employee diversity, corruption and aggressive tax strategies in a world of globalisation and social media

How can Bureau Veritas help?

Bureau Veritas offers a diversified portfolio of sustainability and climate change services for clients. If you want to speak to one of our experts to know more about our services or to have an understanding of responsible finance and its implications on your organisation’s strategy, please email us at sustainability@uk.bureauveritas.com or call 0345 600 1828.

Contact us

Phone: 0345 600 1828

Send an e-mail
  • Algeria
  • Angola
  • Argentina
  • Armenia
  • Australia
  • Austria
  • Azerbaijan
  • Bahamas
  • Bahrain
  • Bangladesh
  • Barbados
  • Belarus
  • Belgium
  • Benin
  • Bermuda
  • Bolivia
  • Bosnia and Herzegovina
  • Botswana
  • Brazil
  • Brunei
  • Bulgaria
  • Burkina-Faso
  • Burundi
  • Cambodia
  • Cameroon
  • Canada
  • Cape Verde Islands
  • Central African Republic
  • Chad
  • Chile
  • China (Peoples' Republic of)
  • Colombia
  • Congo
  • Congo (Democratic Republic of the)
  • Costa Rica
  • Cote d'Ivoire
  • Croatia
  • Cuba
  • Curacao
  • Czech Republic
  • Denmark
  • Djibouti
  • Dominican Republic
  • Ecuador
  • Egypt
  • El Salvador
  • Equatorial Guinea
  • Eritrea
  • Estonia
  • Ethiopia
  • Fidji
  • Finland
  • France
  • French West Indies
  • Gabon
  • Georgia
  • Germany
  • Ghana
  • Gibraltar
  • Greece
  • Greenland
  • Guatemala
  • Guinea
  • Guinea Bissau
  • Honduras
  • Hungary
  • Iceland
  • India
  • Indonesia
  • Iraq
  • Israel
  • Italy
  • Japan
  • Jordan
  • Kazakhstan
  • Kenya
  • Korea (South)
  • Kuwait
  • Latvia
  • Lebanon
  • Liberia
  • Libya
  • Lithuania
  • Luxembourg
  • Madagascar
  • Malawi
  • Malaysia
  • Mali
  • Malta
  • Mauritania
  • Mexico
  • Montenegro
  • Morocco
  • Mozambique
  • Myanmar
  • Namibia
  • Netherlands
  • Netherlands Antilles
  • New Zealand
  • Nicaragua
  • Niger
  • Nigeria
  • Norway
  • Oman
  • Pakistan
  • Panama
  • Paraguay
  • Peru
  • Philippines
  • Poland
  • Portugal
  • Puerto Rico
  • Qatar
  • Romania
  • Russia
  • Rwanda
  • Saint- Pierre & Miquelon
  • Saudi Arabia
  • Senegal
  • Serbia
  • Seychelles
  • Sierra Leone
  • Singapore
  • Slovakia
  • Slovenia
  • Somalia
  • South Africa (Rep.)
  • Spain
  • Sri Lanka
  • Suriname
  • Sweden
  • Switzerland
  • Syria
  • Taiwan
  • Tanzania (United Republic of)
  • Thailand
  • Togo
  • Trinidad & Tobago
  • Tunisia
  • Turkey
  • Turkmenistan
  • Uganda
  • Ukraine
  • United Arab Emirates
  • United Kingdom
  • United States of America
  • Uruguay
  • Uzbekistan
  • Venezuela
  • Vietnam
  • Yemen
  • Zambia
  • Zimbabwe
  • Other Websites
  • Africa
  • GLOBAL WEBSITE
  • Middle East
  • South East Asia
Choose your industry, asset and / or service need
Your Industry

Your Asset

Our Services