ACT-S Capital Fund’s Post

In 2023, Triodos Investment Management’s assets under management increased to EUR 5.7 billion (end of 2022: EUR 5.5 billion). Compared to the year-end figures of 2022, the total volume of the assets under management increased by 2.8%. Dick van Ommeren, Chair of the Management Board of Triodos Investment Management: “While we are pleased to see our assets under management have returned to an upward trend in 2023, we must also acknowledge that the past year brought challenges. Investor sentiment remained on the cautious side, especially in terms of direct investments in sustainable projects and companies. However, it remains vital that we also continue to invest in unlisted initiatives that are at the forefront of the sustainable transition. Only by combining both listed and direct investments can we really make a difference from the perspective of positive impact.”

The Compelling Case for ESG in Real Estate Investment In the dynamic world of real estate investment, funds that embrace strong environmental, social, and governance (ESG) principles are not just leading the way—they’re reaping tangible rewards. Here’s why a robust ESG strategy is more than a moral compass; it’s a competitive edge: 1. Enhanced Risk Management ESG isn’t just about doing good; it’s about smart business. By integrating ESG principles, funds can better identify and mitigate risks associated with environmental, social, and governance issues. This proactive approach safeguards asset values and boosts long-term returns. 2. Operational Excellence Sustainability is synonymous with efficiency. Measures like energy-efficient retrofits and water conservation are not just eco-friendly—they cut costs and bolster net operating income. 3. Magnetic Properties Today’s tenants seek more than just four walls and a roof; they’re drawn to properties that reflect their values. ESG-certified buildings command higher occupancy rates and longer leases, thanks to their green credentials. 4. Capital Magnetism The investor landscape is evolving. There’s a clear pivot towards ESG-focused funds, driven by the promise of superior risk-adjusted returns. 5. Ahead of the Curve Regulatory winds are shifting towards sustainability. Funds with a keen ESG focus are already ahead, ensuring compliance and sidestepping potential fines and reputational damage. The numbers speak for themselves. A study by ANREV and GRESB illustrates a direct correlation between ESG performance and fund returns, with a 0.852% increase in performance for every 10-point rise in ESG scores. Notably, the environmental aspect of ESG shows the strongest link to fund success. Moreover, ESG-minded funds often outshine on industry benchmarks like GRESB, which not only fosters transparency but also cements investor confidence. While we navigate through the complexities of data and metrics, one thing is clear: Real estate funds with a solid ESG framework consistently outperform their less conscientious counterparts. The evidence is compelling—ESG integration is no longer optional; it’s foundational for future-proofing investments.

In 2023, Triodos Investment Management’s assets under management increased to EUR 5.7 billion (end of 2022: EUR 5.5 billion). Compared to the year-end figures of 2022, the total volume of the assets under management increased by 2.8%. Dick van Ommeren, Chair of the Management Board of Triodos Investment Management: “While we are pleased to see our assets under management have returned to an upward trend in 2023, we must also acknowledge that the past year brought challenges. Investor sentiment remained on the cautious side, especially in terms of direct investments in sustainable projects and companies. However, it remains vital that we also continue to invest in unlisted initiatives that are at the forefront of the sustainable transition. Only by combining both listed and direct investments can we really make a difference from the perspective of positive impact.”

In 2023, Triodos Investment Management’s assets under management increased to EUR 5.7 billion (end of 2022: EUR 5.5 billion). Compared to the year-end figures of 2022, the total volume of the assets under management increased by 2.8%. Dick van Ommeren, Chair of the Management Board of Triodos Investment Management: “While we are pleased to see our assets under management have returned to an upward trend in 2023, we must also acknowledge that the past year brought challenges. Investor sentiment remained on the cautious side, especially in terms of direct investments in sustainable projects and companies. However, it remains vital that we also continue to invest in unlisted initiatives that are at the forefront of the sustainable transition. Only by combining both listed and direct investments can we really make a difference from the perspective of positive impact.”

In 2023, Triodos Investment Management’s assets under management increased to EUR 5.7 billion (end of 2022: EUR 5.5 billion). Compared to the year-end figures of 2022, the total volume of the assets under management increased by 2.8%. Dick van Ommeren, Chair of the Management Board of Triodos Investment Management: “While we are pleased to see our assets under management have returned to an upward trend in 2023, we must also acknowledge that the past year brought challenges. Investor sentiment remained on the cautious side, especially in terms of direct investments in sustainable projects and companies. However, it remains vital that we also continue to invest in unlisted initiatives that are at the forefront of the sustainable transition. Only by combining both listed and direct investments can we really make a difference from the perspective of positive impact.”

Sustainability is important to anyone in business - you cannot have a system that collapses upon itself. As regulatory bodies in Europe and the UK tighten rules to ensure funds labeled as "sustainable" meet stricter criteria, the asset management industry points to real advances like increased renewable energy investments as evidence of meaningful transformation. What many would like to see is the extent to which sustainability criteria have been genuinely integrated into the broader asset management industry, and how effectively firms are aligning their investment strategies with these standards.

Rethinking Sustainable Investing in Asset Management 🌍💰 The asset management industry claims to be all about sustainable investing, but a recent survey shows the reality is quite different. Dirk Jenter and his team surveyed 509 equity portfolio managers to see how much firms’ environmental and social (ES) performance really matters in their investment strategies. The results? A lot of talk, but when it comes to the bottom line, it’s all about profits. Despite the hype, it seems the commitment to truly integrating ES performance into investment decisions is weak. Key Findings from the Survey 📊 Profitability Over Principles: Most portfolio managers, whether managing traditional or sustainable funds, won't sacrifice even a fraction of returns to support ES goals. Their fiduciary duty to clients trumps everything else. Low Priority for ES Performance: When ranking factors that contribute to long-term firm value, managers consistently placed ES performance dead last. They might acknowledge its relevance, but it’s clearly not a priority. Similar Expectations Across Fund Types: Traditional and sustainable fund managers expect similar returns and see strong ES performance as a sign of a well-managed company, not necessarily a key to financial success. Constraints Influence Decision-Making: Many fund managers face ES-related constraints from firm policies or client demands, but these pressures aren’t exclusive to sustainable funds. Both types of funds focus on financial objectives while dealing with outside pressures. Implications for Sustainable Investing 🤔 These findings prompt serious questions about the effectiveness of sustainable investing in driving corporate responsibility: 1. Limited Influence on ES Performance: Don’t expect the asset management industry to lead the charge for better ES performance. Most managers only care about ES considerations when they have financial implications. 2. Misleading Fund Labels: Just because a fund says “sustainable” doesn’t mean it prioritizes social goals. Many sustainable fund managers focus primarily on financial returns, while traditional ones may also consider ES performance if it aligns with profit motives. So, look beyond the label—dive into the actual investment strategies and voting patterns to know what you’re really getting. As Hans points out, sustainability investing often seems to be mostly about marketing. But that cannot be enough—sustainability shouldn’t just be an add-on; it should be a core investment principle. It’s time for real action, not just nice words!

Shariah-compliance and green accountability is a dynamic combination. The problem is that portfolio managers may think that the cost-of-capital is lower than it really is for so-called green investments. That misstep may lead to poor allocation decisions.

The CITB Industry Impact Fund has four new priority areas. Registered companies can apply for up to £500,000. One of our new priority areas is net zero. Projects should address the skills and training elements of building for a net zero future.  This could include- retrofit of existing structures, sustainable practices on site and sustainable construction processes/better use of materials. Interesting areas: How do sustainable construction processes or the introduction of new materials change a site or certain roles? What about site logistics? What do customers need from construction companies? Can they get the right project management skills? Are trades people confident and comfortable to advise on sustainable options and retrofit projects? Do companies know how they might need to pivot in the future? Do senior managers know what investments they need to make? What about cross cutting issues? When you hear people talking about net zero, they are often talking about things that would make any business better. E.g. more leadership and management training to inform decision making, better team working and communication on site, better information management. Is there any mileage in developing interventions that would work for net zero futures or just a better industry in general? A couple of key issues to be careful of: Current demand- most people accept that net zero building is a necessity, but client demand can be patchy and it’s not at the top of every construction company’s agenda right now. So- we need to think about where the demand is/how to engage company’s who know this is important but aren’t sure what to do about it. CITBs scope order- we can’t fund activities like plumbing and electrical- contact us if you aren’t sure about how our scope could impact your idea and we’ll work through it with you. If you’ve got a bright idea- talk to us, we are here to help you shape your bid and make sure your proposed solution is likely to be fundable. You don't need a perfectly formed master plan for us to start talking.

In 2023, Triodos Investment Management’s assets under management increased to EUR 5.7 billion (end of 2022: EUR 5.5 billion). Compared to the year-end figures of 2022, the total volume of the assets under management increased by 2.8%. Dick van Ommeren, Chair of the Management Board of Triodos Investment Management: “While we are pleased to see our assets under management have returned to an upward trend in 2023, we must also acknowledge that the past year brought challenges. Investor sentiment remained on the cautious side, especially in terms of direct investments in sustainable projects and companies. However, it remains vital that we also continue to invest in unlisted initiatives that are at the forefront of the sustainable transition. Only by combining both listed and direct investments can we really make a difference from the perspective of positive impact.” Read the full press release on our website. #ImpactInvesting #AnnualResults #MakingADifference