Where good data is the investor’s best defense

The data on European sustainable funds’ exposure to defense stocks (“European ESG investment funds double exposure to defense sector”, Report, September 3) is a stark example of the complexities associated with the definition of environmental, social and governance investing. With this type of sector, the risk is high and becomes very complicated, very quickly.

In recent years, even the BlackRock ESG fund mentioned in the article has faced criticism for including major players in the production of military equipment and weapons.

A sustainable bond can fulfill its promise and warrant its categorization, while still investing in sectors that some may not view as appropriate or characteristically “green”.

Equally a social bond will probably not put the same emphasis on environmental goals, which are otherwise well applied and nowadays considered a given.

In these cases, the importance of backing up investment decisions with data becomes a non-negotiable. Reliable, high-quality data is the key to accurately understanding the make-up of portfolios, especially when navigating complex sectors like defense.

Investors risk misjudging the true impact and alignment of their investments with sustainable principles.

As companies grapple with more stringent regulatory requirements and a more complex geopolitical landscape, now is the time to act.

Volker Lainer
Vice-president (Product Management), GoldenSource, London EC2, UK