Citadele Bank (Latvia)
A majority - 86% - of Latvians aged between 18 and 74 find it important that the business in which they are considering investing their money operates sustainably. At the same time, the company’s financial results and reputation are named as the main investment criteria. Meanwhile, preserving the environment is more important to younger people as an investment criterion, according to Citadele Bank subsidiary CBL Asset Management and market research company Norstat’s online public survey.
The presentation of a public survey and panel of experts took place at Citadele Bank, with the goal of determining in what sort of businesses the Latvian public wishes to invest their money whether and how the criteria of the younger and older generations differ, and whether the fact that a business operates responsibly long-term affects the public.
The public survey confirms that the most important criteria for the Latvian public when evaluating whether to invest their money in a company are financial results (as stated by 81% of those surveyed) and the reputation of the business (76% of those surveyed). This is followed by the company’s attitude towards its employees (43%), the reputation of the company’s management and owners (42%), and the company’s popularity and recognisability (36%). Meanwhile, just 14% of respondents indicated that the company’s environmental policy is important to them, and 8% mentioned the company’s donation, sponsorship and support activities.
“The results of the survey show that 86% of the Latvian public find it important that the business they invest in is sustainable. Sustainability includes environmental, social and corporate governance factors. But we see in the public survey that a company’s impact on the environment is more important to younger people. 24% of those aged between 18 and 29 acknowledged this as an important factor. Meanwhile, other age groups saw 11-14% of respondents marking this as important,” explains CBL Asset Management Chairman of the Board Kārlis Purgailis.
He emphasizes that, “the times when people only took financial results into account are long past. Worldwide, investors are giving more weight to a company’s attitude towards the environment and its employees, reputation, governance and other principles of responsible, sustainable operation alongside financial information. The basis for this is both social and financial. First of all, we see what happens to our planet, living conditions, animal diversity and natural resources when businesses don’t act responsibly. Secondly, a company’s sustainable operations have a direct impact on its financial results and stability. For example, if a business does not sufficiently take into account and thus doesn’t try to reduce the negative impact of its operations on the local environment, the risk of a natural disaster and public protest increases, and sooner or later this will affect their financial results and the value of the company’s shares,” adds Purgailis.
Data from the survey suggests that, among various industries, the Latvian public would most like to invest their money in information technology businesses (25%); hospitality, tourism and catering businesses (10%); as well as in forestry (10%). This is followed by manufacturing (9%) and agriculture (9%). The public is comparatively less likely to choose to invest in industries such as financial services (8%), electric energy generation (8%), leisure and arts (7%), construction (5%), telecommunications (4%), trade (3%) and transport (3%).
“The government puts 6% of every Latvian inhabitant’s pre-tax wages in a level 2 pension fund. This means that every employed person is an investor, because the funds they accumulate are invested by pension fund managers in the shares of various businesses and in treasury bonds.
The money saved in various pension funds worldwide is one of the largest assets in the global economy. In the last ten years, pension capital saved in the world’s 22 most-developed countries has doubled, growing from around 20 trillion Euro to 40 trillion Euro.
Pension capital saved in Latvia over the past ten years has increased almost six-fold, growing from 660 million at the end of 2008 to more than 4 billion now. This means that pension savings are playing an increasing role among investments, significantly impacting how global business develops and what impact it has on the environment and society. That’s why I invite everyone to assess whether their chosen pension manager and pension plan invests in sustainable businesses,” encourages CBL Asset Management Chairman of the Board Kārlis Purgailis.
To promote sustainable investment practices and to ensure pension savings are invested in the most responsible businesses possible in the long term, the CBL Asset Management investment management company has joined the UN-supported declaration on Principles for Responsible Investment (PRI), showing that, going forward, CBL Asset Management will give additional weight to environmental, social and governance factors as well as financial information when deciding where to invest. In parallel, CBL Asset Management has created the CBL Sustainable Opportunity Investment Plan, Latvia’s first pension plan in which pension savings are invested in businesses which are leaders of sustainability in their industries. Thus Latvians have the opportunity to entrust their pension savings to a manager who invests responsibly.
The sociological survey was undertaken by Citadele Bank’s subsidiary CBL Asset Management in collaboration with market research company Norstat Latvija. The survey was done in May this year, surveying 1,005 members of the public aged between 18 and 74 online.
Citadele Bank’s subsidiary, IPAS CBL Asset Management, is one of the leading and most experienced financial asset management companies in the Baltics. It has been managing investment portfolios since 2002. Meanwhile, in 2003, it became one of the first in Latvia to manage level 2 pension savings. CBL Asset Management has the largest team of managers in Latvia, which regularly analyses the financial and capital markets and macroeconomic trends, investing pension savings in both large international and local Latvian businesses, as well as in the bonds of various countries.
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