For Alberto Matellán, chief economist at MAPFRE Inversión, the global economic outlook is looking better. “I am optimistic, even if the risks persist,” he explained at the beginning of the event on Sustainable Finance organized by Neofinders. He said that they are promoting that sentiment in the financial markets, with estimates of economic growth above 5 percent, large corporations – especially the United States – recovering earnings and taking advantage of opportunities, especially in Asia. However, he remarked that people in Spain continue to see a scenario dominated by high unemployment rates and difficulties for SMEs.
“I think that from here, everything will get better”, he commented during the event, in which Juan Carlos Delrieu, Director of Strategy and Sustainability at the Spanish Banking Association (AEB), and Eva Benítez, Director of Operations and Investments at Neofinders, took part, with the latter also acting as moderator.
Delrieu also put an optimistic accent on the future, dominated by an agreement in extremis with the United Kingdom and the multilateralism of the new administration of Joe Biden in the U.S. “If the vaccination programs go well and European funds are used properly, Spain will lay the foundations for a brighter future,” he anticipated.
For Matellán, the important thing is not how much the economy grows, but that growth reaches everyone – that is why sustainability is so important – and that the needs of everyone are reflected in monetary and fiscal policies.
The transformative nature of ESG
Both experts pointed out that the profitability-risk binomial and the social element strengthen finances and produce a transformative effect. In other words, responsible investment creates wealth through the integration of ESG criteria, which were broken down to explain the importance of each of its factors: environmental (E), social (S) and governance (G).
The environmental part was the first variable that entered into the financial equation, because it can be measured with more precision and because it appeals to a problem – that of natural catastrophes – that can affect the global financial system, not only because of the physical risks that it entails (floods, droughts, fires) but because of other parallel risks it can generate.
Matellán then referred to the “more ethereal” social and governance parameters. “It’s only now that we’re beginning to develop measurement methodologies. The social part is the one that concerns people, the one that can really improve life across all dimensions: not only in terms of reducing poverty, but also supporting disability projects – in the way that the MAPFRE AM Inclusion Responsable fund does – increasing the employability of these people and improving their lives in many aspects.” “Banks and insurance companies have the responsibility to give back to society what we receive. We have funds like the Inclusión fund that precisely measure the commitment of companies, using proprietary methodology, and we demonstrate that it impacts directly on their bottom line,” he explained.
On good governance, he highlighted as an example the importance of companies having independent directors on their boards and measuring the quality of accounting. “I think there is a lot more to do in this area,” he admitted.
He referred to MAPFRE AM Good Governance, possibly the only good governance fund in the world, and which, in 2020, in a complex context marked by the pandemic, delivered a return of more than 25 percent.
Credibility and consistency
MAPFRE Inversión’s chief economist explained that social, green and well-governed investments are profitable if they are managed well and credibly. “Profitability is generated when a business works correctly; the advantage is that it is possible to unite both things, uniting the sustainable part with the materiality in the business,” he claimed.
Regarding the challenges of sustainable investments, both agreed that they are tactical and unresolved, such as the difficulty of collecting data from companies on ethical or social issues. There are also geopolitical challenges.
Delrieu mentioned the Center for Sustainable and Responsible Finance (FINRESP), the financial center for Sustainability in Spain, designed by the entire Spanish financial sector with the purpose of maximizing opportunities, demonstrating to SMEs and the industrial sector that betting on sustainability delivers positive results.
In addition, MAPFRE created a Sustainable financed Observatory to deal with the lack of a body of knowledge on sustainable finance, and to make that knowledge and related best practice resources available to academic entities, such as the University of Siena, to jointly create greater awareness of these topics.
“The key is credibility,” stated Matellán. “I can’t be a very green and social investor if afterwards I don’t act in a similar fashion at all levels of the organization. Consistency is required: sustainability must permeate the entire culture and all the activities of the company.”