Interview with Wim Van Hyfte, Global Head of Responsible Investments at Candriam Investors Group
Feb 12, 2018
Climate Action had the pleasure to speak with Wim Van Hyfte, Global Head of Responsible Investments and Research at Candriam Investors Group about the importance of sustainable investing.
Candriam has been running responsible investment portfolios since 1996. Do you want to say a few words about your company profile?
We are a leading pan-European multi-specialist asset manager, with a 20-year track record, and a team of over 500 experienced professionals. Our name, Candriam, stands for Conviction and Responsibility in Asset Management – it was actually proposed through a poll of our employees. So, sustainability is embedded in our strategy and our corporate culture. Investing in a sustainable and responsible manner is at the heart of our daily lives.
A pioneer in sustainable investing, Candriam launched our first SRI fund in 1996. We established an independent and dedicated in-house SRI research and analysis team in 2005. For two decades, Candriam has been central in shaping the development of SRI investing. We now manage one of the broadest ranges of sustainable investment strategies in Europe. More than 27% of Candriam’s investments – or more than €30 billion – are in dedicated ESG mandates or funds. We cover all liquid asset classes and regions and are recognized for our in-house capacity and skills in building SRI solutions tailored to specific client needs. At Candriam, SRI is not new. It is not a trend. Sustainable investing is here to stay, and we will continue to use our sustainable approaches to help secure long-term stable returns for our investors.
What screening process do you use to evaluate Environmental, Social and Governance (ESG) criteria in each investment?
Our investment philosophy is founded on our conviction that sustainable investing can identify the hidden, non-financial sources of company risk and opportunities that are not directly observable or accounted for in traditional financial or credit analysis.
Over the years, the sustainable investing has evolved to fully embrace sustainability as an economic and investment imperative, one which enhances risk awareness and improves long-term performance. This is a long way from its genesis as simply the avoidance of investments in unattractive companies based on specific values, ethics, or moral considerations.
Our investment process is designed to select the best issuers from a financial and sustainable-development standpoint. Indeed, our premise is that over the long term, meeting sustainable challenges enhances financial performance. The foundation of our ESG Best-In-Class framework is that we look at why and how sustainability impacts the long-term value and competitiveness of companies, and identify those which are best-positioned to manage the sustainability risks and opportunities specific within each industry. We begin with a top-down assessment of the exposure of business activities of companies to the long term sustainable development trends or challenges that we see in the market. Our second phase includes our Micro, or bottom-up, analysis in which we evaluate how companies are managing all categories of their stakeholders. We go beyond the traditional corporate governance shareholder perspective and evaluate other important stakeholders such as customers, employees, or society, which underpin the long-term profitability of a company. A norms-based analysis ensures that all companies within our Best-In-Class universe comply with the principles of the UN Global Compact on human and labour rights, environment and corruption. Companies that exceed acceptable levels of involvement in controversial activities are fully excluded from the SRI universe.
What do you think the future of responsible investing is? Which, according to your experience, are the biggest challenges to overcome?
Today there is growing awareness that investors should take a broader view in assessing their investments. Previously, investors were only looking at maximizing financial returns and sustainability was not considered part of our fiduciary duty. We believe that sustainability dynamics have a direct impact on the long-term success of businesses and societies and that the social and environmental impact will become part of a truly holistic view on investing. Change takes time, however, and promoting change relies heavily on education and research. Sustainable investing will not thrive if it is undermined by short-termism. We need to look at the long-term economic and societal imperative of sustainable finance and investing, and to price assets accordingly. Today, our industry lacks the data, knowledge and tools to integrate positive and negative environmental and social externalities of business activities. Currently, these are borne not by companies but by society, and it should be the opposite. Companies should not be allowed to, or worse rewarded for, polluting or to exploiting low labour standards in some countries for the benefit of short-term gains.
The investment industry needs to develop a common sustainability taxonomy for identifying and assessing when and how and investment strategy contributes to sustainable growth. In that regard, we highlight another big challenge: how to adequately measure and report the real sustainability impact of an ESG investment strategy.
UN has set up the Principles of Responsible Investment (PRI) to spur sustainable investment. Do you think the finance sector needs more institutional signals like this?
Back in 2006 we became one of the founding signatories of the PRI, and have renewed our commitment every year since. We are committed to these widely-respected principles, which represent a structure to which all responsible investors should adhere. The UN Principles are at the core of our ESG approach, and we welcome every institutional signal which promotes Sustainable and Responsible Investing. As a result our SRI convictions translate into active membership of numerous sustainable organisations and networks.
Candriam Investors Group is sponsoring the Sustainable Investment Forum this year. Why did you decide to get involved?
Next to providing our clients with a broad range of cutting-edge SRI solutions, Candriam wants to widen the impact of our commitment by sharing our long-standing experience and knowledge base with society as a whole. We want to translate our engagement into thought leadership and action in sustainable development. Last year, we launched the Candriam Academy on Sustainable Investing. We are convinced that the Sustainable Investment Forum is a great opportunity to help the financial community promote sustainable growth.
Wim Van Hyfte will participate in the "Translating the Sustainable Development Goals into investment opportunities" panel during the Sustainable Investment Forum Europe, taking place 13th March in Paris. Learn more about the event here.