A new investment platform will aim to boost the transparency of ethical investing when it goes live later this year and even let traders choose a portfolio aligned with the degrees of global warming its investments are calculated to cause.
Luxembourg-based Investre, headed up by founder and chief executive officer Georges Bock, is planning to improve the accessibility of ethical investing for private investors, by increasing transparency of both the investment and the process.
A primary impediment to ethical investing has been a lack of that transparency on where many funds or companies stand on environmental, social and governance (ESG) issues, the company says.
Indeed, a 2021 survey conducted by the Index Industry Association found 61% of US and European asset managers were reluctant to invest in ESG due to concerns over a lack of meaningful metrics.
With Investre, Bock told Proactive that investors will be able to dig into tangible aspects of their investments and filter out what they find objectionable. Each of these, he believes, will drop the ambiguity that has impeded the early growth of ESG investing.
Companies and funds trading through Investre will be required to pass Article 8 of the EU’s Sustainable Finance Disclosure Regulation, which indicates that a fund promotes environmental or social characteristics, while being encouraged to comply with Article 9, where funds have sustainable investment as their objective, also known as dark green funds.
Aquis Technologies, the software licensing arm of Aquis Exchange PLC, will provide the pipework for the platform, it was announced last week, supplying its matching engine, market surveillance and ongoing operational support.
But ultimately, Bock says it will be up to the investor to decide the fund that aligns most closely with their values.
The crux of that choice, according to Bock, rests on transparency that moves beyond the strict parameters of ESG policy.
“We felt that there is an entire generation out there that wants to invest based on more than just financial return, they really want to see what their money does.
“You can choose your portfolio along the degrees of heating it causes to the earth, from 0.5 degrees to 1.5 degrees.
“This allows a portfolio to be much closer to an investor’s heart, and the possibility to really make an individual decision.”
And Bock sees no reason why a retail investor using Investre’s services couldn’t realise gains similar to those by a traditional investor. He cites studies that have shown in the last two years that ethical funds grew faster than classic funds over the last two years, mainly due to the lack of suitable ethical funds for retail investors to sink their funds into, driving up their price.
Investre’s platform operates on the blockchain, embracing distributed ledger technology with the aim of reducing costs and increasing transparency of financial transactions for retail investors.
The inspiration to found Investre came from the belief that the digital transformation of the last few years had yet to embed itself in financial institutions.
“I was driven by the belief that investing should be an easier exercise, and I was convinced that distributed ledger technology could bring us there.”
Bock hopes the increased ease of transactions will improve the accessibility of values-led investing, which Investre will champion on its platform.
That retail investor enthusiasm, which was shown in the embracing of GameStop shares on both sides of the Atlantic, arrives in tandem with enhanced climate activism and net zero targets adopted by major companies,
Bock sees it as a combination of a young investor more attuned to how their money needs to grow before they retire, as well as one attuned to environmental harms of investing that previous generations were not.
“This is a generation that has started to take everything in its proper hands.
“The DIY investor is looking out for long term strategies, and they also have this strong will of saying their words.”
Investre is expected to begin displaying its platform in the second quarter of 2022, hoping to receive regulatory approval shortly after, for a Q3 2022 launch. Bock expected 100 funds to be available to investors upon release.