The consolidation of sustainable investment: new challenges and issues

Eduardo Ripollés, Institutional Business Development Director of MAPFRE AM

During 2022, we saw how investing with sustainable criteria was affected by geopolitical factors, such as the invasion of Ukraine, or economic factors, such as rising inflation.

This situation cannot be used as an excuse to disregard the application of these criteria when making investment decisions. Moreover, they should be even more relevant for portfolio construction with a strategic vision.

As always, it’s better to see the glass as half full, rather than half empty. Last year served to consolidate criteria, metrics, and objectives. Furthermore, the development of solid and consistent regulation is currently underway, which will help investors, providers, and advisors to establish a common scope of action.

The product offering has also been adapted to the regulation, separating the "wheat from the chaff,” which tailors proposals to sustainable objectives, facilitating the choice of funds as investment tools.

At MAPFRE, and particularly MAPFRE AM, we’re taking a prudent and consistent approach to sustainable investment so it becomes a fundamental pillar of our value proposition.  Developing our own methodology and database, measuring results, and making an impact are the objectives we've set internally. But also in collaboration with our strategic partners, such as La Financière Responsable, a French boutique with more than 25 years of experience in this segment, which we have increased our share in to up to 51% of the capital.

Another positive development in the wake of 2022 is the new range of topics. In addition, there are more angles of action. In short, the field is opening up at both the environmental and social levels, not only for liquid solutions, such as traditional mutual funds, but also for alternative solutions.

To the traditional topics, which have been part of our proposals over the years, we have to add other open fronts, such as energy efficiency through new sources such as green hydrogen or biogas, and a derivative thereof, biomethane. I would like to focus on this point, since the development of these new energy sources helps to reduce dependence on traditional gas, which gives Europe, and in particular Spain, much-needed self-sufficiency and allows us to position ourselves as a key player in energy generation for the future.

We also can’t ignore the circular economy, which allows us to optimize resources and save costs. For these developments, artificial intelligence helps us to find synergies and significantly reduce the learning curve. Artificial intelligence leads us to the social sphere, since it helped us to get vaccines in record time to face Covid-19 and to be able to develop the concept of HEALTH and WELL-BEING to enhance and improve our quality of life.

The social sphere has another aspect to it, which MAPFRE attaches great importance to due to the origin, development, and purpose of our company. It’s about equal opportunities in the workplace and, therefore, avoiding any type of discrimination. To this end, we've taken what I would say is a pioneering approach in the pursuit of social objectives and aims, through a global commitment from the company and metrics that endorse us. It’s difficult to measure impact in the social field, but with a prudent, analytical, and academic approach we're facing the challenge with more than satisfactory results, the proof of which is MAPFRE INCLUSION RESPONSABLE, a fund that invests in companies that promote integrating people with disabilities in the workplace.   

In conclusion, we can say that today more than ever, sustainable investment is here to stay and has become a fundamental element, not only when making investment decisions but also to share with companies the necessary tools for them to apply these criteria in their day-to-day work and to make them understand that the implementation of these criteria doesn’t reduce the profitability and development of their strategies. On the contrary, non-financial criteria are an ideal complement to include in the equation, as they have a positive impact in the long term and, moreover, investors are demanding it.

Finally, we cannot leave aside "sustainable" financial education, which should be an ongoing subject. We must nurture it with new concepts and ideas to be able to explain the reasons for them to institutional and private investors in a simple way. Quite a challenge.