Now more than ever, investing sustainably is an obligation, according to Sara Razmpa, who heads Unigestion’s responsible investment division.
The Swiss asset management firm is grounded in its reputation as an “intelligent risk taker”, but when it comes to sustainable investing there is a profound need to balance those risks with rewards; both financially and socially.
For Razmpa, who has been in the role for a little over a year, being on the forefront of the wider shift towards a more sustainable world is exciting, but it has given her time to reflect on the drawn-out process of bringing ESG investing to the forefront of the industry.
“As the big issues became bigger and bigger, there comes a lot of obligation to listen to people,” she says.
Razmpa can trace her involvement in the field to 2012, when she began talking about ESG investing as an important topic and an area to which the wider industry needed to pay more attention.
She says that at the time, many people didn’t even know what ESG was, even if today many in the sector claim they have been “doing [ESG] since 2000”.
But times have changed, and now there is a degree of certainty coupled with “an obligation to listen and learn”, she says.
“Obligation” is a term that Razmpa turns to frequently, perhaps due to her view that the shift towards mainstream sustainable investing came too late. She claims her early emphasis on sustainable investing fell on some deaf ears.
“A lot of people that I worked with through the years, and in different companies, always thought of ESG as a marketing aspect.”
Yet Razmpa maintained her conviction, strong in the belief that there would be a shift away from previous environmentally detrimental practices, towards embracing the duality of sustainability and investing as one.
“There are some things that need to stop happening – and some stuff needs to expand.”
She says the mainstreaming of ESG investing came late, but emphasises that it is not “too late”. Now, she says, everyone talks about it, they have got to know it, and through understanding what ESG investing truly entails, people are inevitably taking it more seriously.
Razmpa explains that through directives such as the European Union’s Sustainable Finance Disclosure Regulation (SFDR), the finance industry has made more progress “in the past six months” than it has over the past four years.
Yet she adds that the frameworks currently in place do not go far enough to meet the needs of both the industry as well as wider environmental and sustainable agendas.
The SFDR, in its current state, is the “bare minimum” but upcoming legislation, such as the EU taxonomy, will provide the next necessary steps.
She says with the taxonomy providing definitions of what “environmental, social and governance aspects must be covered, then you are going to have a structure around what you expect the companies to report on”. This will encourage companies to maintain high standards, amid fears of being left behind.
“Then, I would assume that the EU taxonomy becomes more and more strict, which means the definitions are going to be more and more narrow,” she adds – a measure she would welcome.