Better Life Breakthroughs: Innovation in Investment – SRI and fintech

By From The Economist Intelligence Unit,

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This report explores the ways in which SRI and fintech are transforming investment for the better.

In a global investment landscape that at times appears rife with uncertainty and beset by bubbles and busts, two main areas stand out both as pockets of opportunity and as major forces for change: sustainable, responsible and impact (SRI) investing – that is, investment that considers environmental, social and governance criteria as well as returns – and financial technology, or fintech, which is revolutionizing how financial services are delivered. Both of these sectors have attracted massive investor interest in recent times and are poised to transform the way people invest and transact in the years ahead. More importantly, both are creating possibilities, particularly for individual investors, which were all but unimaginable even a decade ago.

>> Download the Report (in English)

About the Report

Innovation in Investment, written by The EIU and sponsored by Standard Chartered Private Bank, is the first report in a series called “Better Life Breakthroughs”. The aim of the series is to analyze innovations that have the capacity to extend and enrich life, create new experiences and potentially improve society in general. For those with the means to incorporate cutting-edge technology into their lives – thereby experiencing the future before it becomes mainstream – the impact may prove more revolutionary than anyone can imagine. From advances in computing, financial technology, medicine and healthcare through to commercial space travel and artificial intelligence, these developments will likely be driven in their early stages by globally and intellectually curious consumers.

In this first report, we examine how innovation and advances in technology are opening up new avenues of investment opportunities for high net worth investors, and how they may develop in future. The report draws on detailed desk research and in-depth interviews with the following senior executives and specialists (listed alphabetically by last name):

• Amit Bhatia, CEO, Impact Investors Council
• Philippe El-Asmar, CEO and co-founder, Amareos
• Zennon Kapron, founder, Kapronasia
• Rehan Noor Pathan, head of Middle East and Malaysia, Arabesque
• Jake Reynolds, executive director, sustainable economy, Cambridge Institute for Sustainability Leadership
• Art Tabuenca, founder and partner, EarthFolio
• Anson Zeall, CEO, CoinPip, and chair of the Association of Cryptocurrency Enterprises and Startups Singapore (ACCESS)

We would like to thank all interviewees for their time and insight. None of the experts interviewed for this report received financial compensation for participating in the interview program. Gareth Nicholson was the editor of this report. The EIU bears sole responsibility for the content of this report. The findings do not necessarily reflect the views of the sponsor.

Executive Summary

In a global investment landscape that at times appears rife with uncertainty and beset by bubbles and busts, two main areas stand out both as pockets of opportunity and as major forces for change: sustainable, responsible and impact (SRI) investing – that is, investment that considers environmental, social and governance criteria as well as returns – and financial technology, or fintech, which is revolutionizing how financial services are delivered. Both of these sectors have attracted massive investor interest in recent times and are poised to transform the way people invest and transact in the years ahead. More importantly, both are creating possibilities, particularly for individual investors, which were all but unimaginable even a decade ago.

Based on extensive research and interviews with industry participants and experts, this paper explores the ways in which SRI and fintech are transforming investment for the better. Among its main conclusions are:

• SRI is on the cusp of a revolution. Previously the domain of large institutional investors, SRI is poised for a period of growth among a wider base of investors, beginning with high net worth individuals (HNWIs), as a more idealistic, socially engaged generation comes to the fore and takes advantage of a growing range of SRI products and options.

• Sustainability will become more standardized. Investor demand and the emergence of codes like the UN-backed Principles for Responsible Investment will drive the creation of more objective frameworks and measurements for key sustainability indicators, taking some of the “guesswork” out of sustainable investing.

• Emerging markets will catch up with – and at times surpass – developed markets, both as destinations and sources for SRI investment, and in the development and adoption of fintech solutions for a wider base of investors.

• “Green” will go mainstream. With more jurisdictions mandating sustainability reporting and more investors embedding sustainability principles in their mission statements, data on sustainability approaches and performance will be as important (and scrutinized) as financials in presentations by companies and funds.

• Technology will “democratize” investment. The gaps between large institutional investors and HNW investors in terms of access to information and investment opportunities will narrow as solutions emerge that harness and analyse data on behalf of the individual user. Automated and mobile platforms, meanwhile, will provide individual investors with a wider range of asset management solutions at lower overall cost.

• Expect an SRI-fintech feedback loop. By automating elements of SRI asset management, fintech will make it easier for investors to achieve their impact goals and has significant potential to contribute to the sector’s growth. The refinement of SRI-related fintech solutions, meanwhile, is likely to result in advances that can be applied in other areas.

>> Download the Report (in English)

 

Source: The Economist Intelligence Unit

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