Investor interest in responsible investing has been growing for a long time. For the first time, May’s Fund Report now includes ESG ratings that provide information on the responsibility of the funds. Funds domiciled in Finland had inflows of 480 million euros. Aggregate AuM at the end of the month was 115 billion euros.
There are many different ways to assess and measure the responsibility of funds. Jari Virta, the leading lawyer of the FFI, says that several commercial service providers provide various calculations and comparisons. In addition, the EU is preparing new regulations on sustainable financing and assessment of the sustainability of investments. The Fund Report produced by Investment Research Finland Ltd for the FFI now includes fund specific ESG quality scores and ESG coverage metrics provided by MSCI Incorporated’s analysis.
The ESG rating measures the ability of the fund’s holdings to manage medium and long-term risks and opportunities related to environmental, social, and governance factors. ESG scores range from 0 to 10 with 10 being the best possible.
“We respond to the need for information by adding ESG information to the Fund Report. When interpreting the figures, it is prudent to keep in mind that there does not yet exist a uniform regulation or guidance on the ESG metrics of funds. Thus, the figures offered by different service providers may vary somewhat between funds, companies, and markets “, says Virta.