Paavo Pöld (Estonia)
Partner - Limestone Investment Management
Sustainable Investing In New Europe: Ahead Of The Crowd
Emerging markets have provided early access to the recovery of world economic growth, but have also raised issues about poor transparency and governance standards contributing to higher portfolio risk. Turning this risk from a threat into opportunity is a key challenge on the way to sustainably excellent returns.
Limestone New Europe SRI Fund focuses on new and prospective European Union member states, where the biggest problem is not the lack of standards, but the lack of data availability. This inefficiency is no excuse for avoiding the market, but an opportunity for investors to earn extra return. Identifying leading companies that perform well on extra-financial standards is a vital ingredient for effectively managing risk whilst achieving strong and sustainable long-term returns.
Limestone approach to ESG integration focuses on: (1) adding the decisive bit to financial valuation to pick long term winners into the fund’s high conviction concentrated portfolio; (2) mitigating the risk of negative corporate governance shocks – the main non-systemic corporate risk; (3) educating and encouraging companies to improve their practices; (4) never distracting our focus to earn superior investment returns.