Translating intuition into process
We started with a hunch. We knew instinctively that in the long run it is better if our investments are behaving in a sustainable way – better for society, nature and the financial returns. But we needed to translate our thinking about sustainability from intuition to an investment method.
It was important for us that a formalized approach reflects our beliefs. We did not want to copy anyone’s approach, rely on third party sustainability research, or outsource this work in any way.
We wanted to put Anrepa into our approach to sustainability – just like we do with financial considerations. At the beginning of our sustainability journey, we ran three workshops to identify the sustainability topics that were closest to our hearts. This helped us pinpoint not only the topics themselves but also better understand the logic and emotions that lead us to care for each of the topics. This in turn informed our implementation.
You can see the outcomes of one of our workshops below. The most discussed topics were human rights, addiction issues, weapons, climate change, biodiversity, water, corruption, responsible board governance, and diversity. We also talked about privacy, data responsibility, circular economy and social license to operate. However, one thing that stood out in our discussion is that a company we invest in should create products that experience a natural demand, rather than unnecessary luxury.
Figure 2: Above are some of the key topics we wrote down on post-it notes during the workshop. Outcomes of these workshops helped us identify sustainability themes that the team considered important and that should inform our research in the next steps.
This was one of the many synergies between sustainability and financial considerations: from a financial perspective, you can be certain of a demand for a product that is a necessity, and from a sustainability perspective, you don’t contribute to unnecessary waste.
Once we understood the themes that most concerned the team came the hard conceptual work of systematically implementing our sustainability ideas into our investment process. Here we decided to align quantitative and qualitative aspects of sustainability with those of investment research as shown in Figure 3.
Our sustainability process mirrors our financial research – this helps us make informed decisions at every step of our research process.
“… in the long run it is better if our investments are behaving in a sustainable way – better for society, nature and the financial returns…”