With the words: "Readers of our magazine know your column on the subject of Impact Investing, you are one of the pioneers in this field in this country", we were asked for an interview by Christine Petzwinkler, editor at Börse Social magazine.
We are happy to reveal what we are passionate about and why we are particularly committed to the financial sector.
What motivates you to work on the topic Impact Investing?
Lederer-Pabst: The world is currently facing many and great challenges - keywords are climate change, education, aging society and much more. We are of the opinion that you can do a lot of good with private capital, because sufficient funding is required for all of these challenges. And we all have to pull together. We have to focus on the overriding view and recognize that social returns are returns as well. There are many issues that the state is currently funding or should be funding.
We have to get away from “bad speculator thinking” and recognize that finance is a part of all of our lives. Society has great added value when its funds, which are managed in trust by pension funds or employee provision funds, are invested in socially important issues that ultimately have to be borne by all of us, that is, society.
It is therefore our personal concern to inspire institutions such as pension funds, insurance companies and banks to do just that.
Bolena: We want to contribute to a paradigm shift in the financial sector. Social impact should be considered equally as risk and return. In any case, it is foreseeable that what began ten years ago with green bonds will be continued with social bonds or impact bonds. The focus is not only on climate change, but increasingly on social issues such as school construction, student loans, care for the elderly and the sick, integration and much more.
It is difficult to make return forecasts here, because quantification is a challenge, we know that.
Bolena: But we will take the example of insurance companies: They are increasingly investing in investments that have to do with climate change. Why? Because they are directly affected by the damage caused by climate change. There is hail, storms, storms, frost. Here the effects can be clearly quantified. In other areas one has to find new models of quantification and observe and quantify the positive effects - for example, what long-term positive and quantifiable effects does it have when stability is established in countries and refugee flows are thereby stopped? Or what happens when refugees are integrated into the labor market and create added value for society or mothers who have been with their children for a long time are accompanied back into the professional world of work? This certainly has positive effects on society.
Companies are becoming increasingly aware of ESG criteria. Active investors probably play an important role here.
Bolena: Nowadays, no company can afford to ignore ESG criteria. Keyword reputational risk. Investors can play a strong role here and put enough pressure on companies. Active management is therefore increasingly being expanded to include this ESG component. Many fund companies today, for example, take a very close look at the companies in which they invest. The supply and production chains, the working conditions and much more are discussed. viewed precisely according to sustainability and impact criteria. Often, rating agencies and consultants are also involved, who work with the companies to develop improvements in terms of sustainability. A striking example is the British retail chain Marks & Spencer, which mainly sells convenience food and years ago packed many of its products in plastic. Together with a rating agency and the “Engagement Activist” GES Global Engagement Services, the plastic packaging was simply left out after a customer survey. This campaign not only satisfied the customer's wishes, but also protected the environment and saved money, which had an overall positive effect - on the sustainability rating. Marks & Spencer has therefore increasingly moved into the focus for sustainability. We believe that commitment to companies always pays off.
There are hardly any investment products that are not geared towards sustainability. Are there also increasing numbers of social impact products?
Lederer-Pabst: The demand for sustainable products is very high in the international institutional sector, and the regulation must follow suit! Sustainable products such as green bonds are mostly immediately oversubscribed. In the area of impact investing, politicians should create functional framework conditions so that institutional investors can also invest. Follow up regulations. Institutionals in this country still find it difficult to invest in it. First of all, a system has to be structured in, for example, social infrastructure or renewable energy projects or whatever. If the state then steps in with a guarantee, that would be enormous progress. Unfortunately, in the area of impact investing in this country we are not yet where some Nordic countries are. However, there is awareness among domestic investors. If sensible investments with manageable effort and risk are possible, they would invest in them too.
You also have a teaching position on the subject at the St.Pölten University of Applied Sciences.
Bolena: We are very pleased that we can sensitize a new generation of people who will be active in the financial sector to the topic of impact investing.
Lederer-Pabst: I think it's fundamentally extremely important to impart more financial knowledge. Unfortunately, the topic of financial literacy is far too weak in Austria. There are enough studies to show that societies that have extensive financial knowledge are also more prosperous and that every single member of this society is more prosperous. Finance is extremely important and can have so many positive effects if the funds are used correctly and directed in the right direction. Contributing to this is our greatest concern.