Matthew Smith has a Bachelor of Arts in Political Science from the University of Melbourne, a Diploma of Education from LaTrobe University and a Masters in Sustainable Development from the Centre for Development and the Environment at the University of Oslo. He has worked at Storebrand since 2008, both as a Senior Analyst in the Sustainable Investment team and as Group Head of Sustainability in 2014. Since March 2015, Matthew has been Head of Sustainable Investments at Storebrand Asset Management.
Christopher P. Skroupa: Can you share with us Storebrand’s investment philosophy regarding sustainable investment?
Matthew Smith: Storebrand’s fundamental philosophy is that sustainability is relevant across all asset classes and investment styles. For us, sustainability is a way of understanding a company’s interaction with society. Naturally, this means the effects its operations and products have on society, but also how companies are influenced by the world around them. There is a growing awareness in the investment community that issues such as climate change, corruption, workers rights and water shortages can all have significant and unpredictable financial consequences.
Skroupa: What do you feel makes Storebrand’s investment philosophy distinctive?
Smith: We feel that Storebrand is unique in a number of ways. Primarily, it is well over 20 years since Storebrand launched its sustainable investments. This gives us almost unrivaled experience and insight into the challenges associated with sustainability.
Second, our approach covers all 720 billion NOK in AuM. Sustainability is not a niche offering for us but a fundamental part of the way we think about fund design and fund management.
Finally, our index near funds are nothing short of pioneering. They are fossil free, optimized on sustainability rating and carbon intensity and still maintain a tracking error below 1. No other product we know of on the market can deliver so much sustainability in such a low risk profile.
Skroupa: From the Swedish perspective, do you feel sustainability is becoming more integrated into traditional investment strategy?
Smith: Integration is a term that, in my opinion, is used far too loosely in our business. There is not a fund manager in the Nordics who doesn’t claim full integration of sustainability in asset management. Unfortunately, closer inspection often reveals glaring inadequacies in how sustainability is understood and handled in day to day transactions. What we need is an honest discussion of the challenges and an admission that we have a long way to go before we can claim full integration.
Skroupa: What challenges, if any, are you facing in the short term in transitioning investments toward sustainability?
Smith: Perhaps the biggest challenge facing us today is the significant lack of quality reporting on financially relevant sustainability issues. Sustainability reporting is rarely regulated and therefore many companies simply fail to disclose fundamental risks associated with climate change, water shortages and demanding geographical areas.
We believe that demanding better reporting is one of the most important tasks the financial community can adopt. After all, it is only when we have a complete overview of the risk environment a company operates in, that we will be able to achieve fully assess a company’s ESG risks and opportunities.