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Mike Scott speaks to Bozena Jankowska, head of sustainability at RCM – the investment manager of Allianz Global Investors – on her plans for more research and education
Having one of the world’s largest insurance companies as a parent is bound to have an impact on your investment strategy, and that is certainly the case for RCM, which is owned by Allianz Global Investors.
‘Allianz is very focused on sustainability at board level as a key strategic issue,’ says Bozena Jankowska, global head of sustainability at the investment manager.
As a result, about 18 months ago, RCM embarked upon its own strategic review of what sustainability means for the firm’s investment process. ‘In the aftermath of the financial crisis, it is clear there was a huge gap in governance and risk assessment,’ Jankowska says. ‘But equally, sustainability is a major trend that will not go away, so we needed to ask what lessons we could learn while continuing to capitalize on what we have learned about sustainability in the last ten years.’
Sustainability is far more than box-ticking and it is more than just having thematic funds, she says. ‘We needed to make a distinction between the various types of strategies that are out there, and identify where RCM sits within the alphabet soup that characterises the responsible investment field,’ she continues. ‘Sustainability has really gathered momentum over the last few years and we want to be ahead of the curve.’
RCM takes a ‘best-in-class, materiality approach’ that is very different from socially responsible investing or ethical investing, she asserts.
To help implement the strategy, Jankowska is building dedicated research teams in the US and Asia that will be able to build personal relationships with companies that RCM invests in all over the world. ‘It’s very important to have “face time” with companies when you are talking about sustainability. You need ongoing discussions so you can pull together the case studies which show that taking environmental, social and governance (ESG) issues into account is a part of good management.’
Jankowska believes that it remains important to build the case for ESG analysis and, to this end, RCM plans to forge stronger links with academic institutions to encourage thought-provoking but academically rigorous research. ‘We have always been asked where the proof is of the benefits of sustainability, and while there is a growing body of evidence, the argument is not yet won.’
The onus is on RCM to educate clients about the value of ESG by building up the body of evidence, she insists. ‘There is still some way to go in educating investors in what sustainability is all about and why it is important, especially outside Europe. This is in the very early stages in the US and has not taken off at all in Asia.’
Nonetheless, examples of company growth and investor returns being restricted by a failure to consider ESG issues are now emerging, such as BP in the wake of the Deepwater Horizon disaster and mining group Vedanta’s problems in building a new aluminium smelter in India.
'There are still a lot of ingrained attitudes about sustainability being a negative concept that restricts the investment universe and constrains performance. There is a lot of fine-tuning to be done, but we are clear that good quality research on sustainability is a critical tool for making better investment decisions,’ Jankowska says.
Having one of the world’s largest insurance companies as a parent is bound to have an impact on your investment strategy, and that is certainly the case for RCM, which is owned by Allianz Global Investors.
‘Allianz is very focused on sustainability at board level as a key strategic issue,’ says Bozena Jankowska, global head of sustainability at the investment manager.
As a result, about 18 months ago, RCM embarked upon its own strategic review of what sustainability means for the firm’s investment process. ‘In the aftermath of the financial crisis, it is clear there was a huge gap in governance and risk assessment,’ Jankowska says. ‘But equally, sustainability is a major trend that will not go away, so we needed to ask what lessons we could learn while continuing to capitalize on what we have learned about sustainability in the last ten years.’
Sustainability is far more than box-ticking and it is more than just having thematic funds, she says. ‘We needed to make a distinction between the various types of strategies that are out there, and identify where RCM sits within the alphabet soup that characterises the responsible investment field,’ she continues. ‘Sustainability has really gathered momentum over the last few years and we want to be ahead of the curve.’
RCM takes a ‘best-in-class, materiality approach’ that is very different from socially responsible investing or ethical investing, she asserts.
To help implement the strategy, Jankowska is building dedicated research teams in the US and Asia that will be able to build personal relationships with companies that RCM invests in all over the world. ‘It’s very important to have “face time” with companies when you are talking about sustainability. You need ongoing discussions so you can pull together the case studies which show that taking environmental, social and governance (ESG) issues into account is a part of good management.’
Jankowska believes that it remains important to build the case for ESG analysis and, to this end, RCM plans to forge stronger links with academic institutions to encourage thought-provoking but academically rigorous research. ‘We have always been asked where the proof is of the benefits of sustainability, and while there is a growing body of evidence, the argument is not yet won.’
The onus is on RCM to educate clients about the value of ESG by building up the body of evidence, she insists. ‘There is still some way to go in educating investors in what sustainability is all about and why it is important, especially outside Europe. This is in the very early stages in the US and has not taken off at all in Asia.’
Nonetheless, examples of company growth and investor returns being restricted by a failure to consider ESG issues are now emerging, such as BP in the wake of the Deepwater Horizon disaster and mining group Vedanta’s problems in building a new aluminium smelter in India.
'There are still a lot of ingrained attitudes about sustainability being a negative concept that restricts the investment universe and constrains performance. There is a lot of fine-tuning to be done, but we are clear that good quality research on sustainability is a critical tool for making better investment decisions,’ Jankowska says.
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