Responsible Investment And Product Innovation

At EG, we launched our first sustainable office fund in 2015 (the High Income Sustainable Office Trust), focusing on improving energy efficiency in existing buildings while delivering a commercial return for our investors. Since its inception, the landscape for investing has changed substantially and so has the importance of broader climate and social considerations.

The recent rapid evolution of responsible investing has created numerous industry frameworks, both domestic and global, that often have common themes but are nuanced in their approaches. This creates challenges for investors and managers who have a common goal of investing responsibly but adopt different frameworks to measure performance. This becomes increasingly difficult when investing globally, across asset classes and with varying control rights.

The development of new investment products and strategies requires innovation to find clear and meaningful ways to measure financial and responsible investment performance. This may be achieved by reviewing and distilling the key themes from relevant industry frameworks, while crosschecking them with underlying stakeholder objectives. Once identified, these themes and criteria may form the basis of the responsible investment strategy and be used to determine its ultimate performance. For investment products that have a long lifespan, it is also important to build in flexibility to allow the strategy to remain relevant over the life of the product.       

This changing market environment provides an opportunity for managers and investors to collaborate and create more relevant and impactful products that can adapt over time.