Sustainable finance is using Environmental, Social and Governance considerations when making investment decisions. In more simple terms, sustainable finance is not only assessing traditional risk/performance frameworks, but it also incorporates ESG factors when assessing the risk of a company/investment. For example, it takes into consideration a company’s long-term environmental and/or social impact and how this impact might affect the long-term returns of an investment in the specific company.

In addition to applying sustainability to public debt and equity markets, sustainable finance also means financing the transition economy. This involves financing different investment activities and/or countries aiming to reduce different environmental and social impacts in order to transition to a climate neutral and sustainable economy.

There is a general misconception that sustainability is mainly focusing on environmental issues. However, it is important to highlight that the concept of sustainability is also focussing on the assessment of the impact of a company’s activities on different social issues, such as human rights violations or diversity, equity and inclusion. Lastly sustainability also considers different governance issues which assess the ethical behaviour of companies towards their different stakeholders and the effectiveness of their corporate governance.

I completed my master’s degree in accounting and finance, and within this program I was introduced to the concept of sustainability. I started my career working as an analyst in a proxy voting advisory firm analysing companies on specific ESG characteristics. Through that role, I was exposed to the ways that different institutional investors are incorporating ESG data into their processes and policies. As I was always interested in the application of sustainability in investments, I joined Irish Life Investment Managers where I am working as an ESG analyst within the Responsible Investment team.

A very important and successful project that I worked on recently was the submission of ILIM’s Stewardship and Responsible Investment report with the Financial Reporting Council (FRC), with the ambition to receive signatory status. This submission was successful and we are very proud that we became signatories of the UK Stewardship Code.

The UK Stewardship Code is promoting the transparency and accountability of investors’ stewardship activities and decisions, not only for the UK investors but also globally.

This report was a significant body of work as it was based on 12 different principles, covering topics such as our strategy on incorporating stewardship in responsible investing, our response to market wide and systemic risks and also details on our stewardship activities.

This was an important project as it provides evidence on the outcomes of our activities, and it also provides details on our long-term and risk aware approach which incorporates financial material ESG factors that enhance our overall investment framework.

There are a lot of opportunities to work on different ESG projects both in isolation and in collaboration with other investors and industry groups. The amount of existing opportunities to collaborate with like-minded investors in different projects makes my role exciting and dynamic.

For example, in ILIM we are exercising our shareholder rights on behalf of our clients in order to deliver long-term returns. That results in a number of engagement activities with companies on different ESG issues and for different themes within ESG. We are having conversations with different investee companies on specific themes such as Climate Change, Natural Capital, Human Rights and Corporate Governance. We are also tracking the progress of these companies towards specific objectives. There are also different collaborations that we are working on with other investors and industry groups that are assisting us in achieving greater results in terms of our engagements with companies.

It is very important to assess the impact of our investments as well as the potential long-term risk that these investments are bearing.

The financial services sector in Ireland has taken significant steps towards adherence to global standards and regulations. However, since the sector becomes more challenging and demanding in terms of reporting, there is a higher demand for enhanced transparency that the financial services sector needs to adhere to.

I think the Irish government needs to improve the planning process to enable the transition infrastructure required to meet our commitments under the Paris Agreement.

I believe that sustainable finance is constantly evolving. Whoever is interested in proceeding with a career in responsible finance should be kept abreast with all the developments and with all the local as well as global, existing and upcoming regulations.