Sasja Beslik, Chief Investment Strategy Officer at SDG Impact Japan

The Western Balkan region has rich resources and growth potential in terms of sustainability, but leaders must grasp the value of sustainability as a revenue driver in order to boost long-term valuation

Most companies still lack understanding of how to make money on sustainable finance and ESG standards. “Commercial sustainability, a concept I have developed over the last 10 years, targets the financial valuation of companies by using financial material ESG drivers,” explains Sasja Beslik, Chief Investment Strategy Officer at SDG Impact Japan. “This approach enables companies to clearly identify the centre of gravity for their commercial sustainability value.”

Our interlocutor explains that companies usually focus on the conduct side of their business, i.e. the right policies, set of KPIs and reporting, and not on their products and services. However, it is on the product and service side that the rubber meets the road in relation to sustainability as well as value creation for companies. “Current legislation in Europe, like CSRD and SFDR, are driving compliance and disclosure, which is indeed needed and very good for creating a level playing field. At the same time, it does alter companies’ business models,” says Beslik. “Reporting what is there is not the same as developing new products and services for markets impacted by climate change and energy transition.”

Could you elaborate on how SDG Impact Japan is driving sustainability through its investment strategies?

— SDG Impact Japan is an investment platform in Tokyo that focuses on sustainable investments. We manage listed and private investment funds targeting mid-cap companies in Japan on the listed side and early-stage private companies developing solutions to tackle global, energy, food and tech transition. We’ve been very successful over the past three years in identifying companies that we believe can scale global solutions – from Agritech to decarbonisation strategies.

Our listed investment fund, NextGen ESG Japan, by investing in medium-sized Japanese listed equities, has been outperforming the market and its peers since its inception two and a half years ago. We can see that our approach of using the lens of commercial sustainability helps us identify undervalued companies to invest in and engage with. Performance is a consequence of the decisions we make. Making decisions takes time and demands insight and patience. All our investments have delivered great financial performance and great sustainability-related returns, including reduced CO2 emissions, improved human capital management and more robust corporate governance performance.

In your experience, what are the biggest challenges confronting companies and investors in aligning their financial returns with sustainability goals, especially in emerging markets like those of the Balkans?

— In my 30 years as an investment professional on global markets, I have had many arguments over the challenges related to aligning financial and sustainability goals. One of the major takeaways is that companies focus too much on an inside-in perspective. This leads to a focus on compliance in relation to their own conduct framework. In short, a company doesn’t make money by being A-rated for ESG conduct reporting; it makes money by serving market segments with products and services.

Sustainability can be an agent of commercial change and not just a theme. Examples like those of the electric vehicle industry are perhaps the most telling. Additional insight is related to the time horizon. The notion of a bird in the hand today being better than two tomorrow remains the dominant narrative in the Balkan region. Creating wealth takes time and demands continuity and focus.

The EU is the biggest trading partner for the majority of Balkan countries, and given the recent rather stringent legislative changes, companies in the Balkan region that have the EU as their main export market will simply have no choice but to align. The alternative option, which many companies in the Balkans are still contemplating and which relates to ways to avoid this alignment, would prove very costly.

The Balkan region has substantial natural and human resources and great potential to capture growth in the sustainability space. Politicians and business leaders will need to learn how to see the wood for all the trees and to understand commercial sustainability for what it is: a source of revenue that boosts valuation over time.

What role do you envisage for Integrity Capital D.O.O. in terms of promoting sustainable investments in Serbia and the Western Balkans, and how do you plan to leverage your expertise in this region?

— Integrity Capital was founded with the clear vision of addressing the gap in sustainable and impactful investments in this region. I identified a clear need to provide the expertise that me and my partner, Vladimir Rajić, have developed over many years of working in sustainable finance. Our goal is to bring this knowledge to Serbia and the Western Balkans, a region that has significant growth potential in responsible investment practices.

Integrity Capital is an advisory company that specialises in providing structured and corporate financial advisory services to clients who are looking to prioritise ESG factors in their operations.

I wanted to bring my own experience in the field of sustainable finance to Integrity Capital, offering advisory services that help our clients not only achieve their financial goals, but also contribute to positive societal and environmental outcomes. By leveraging our expertise, we aim to become a leader in promoting sustainable investments in Serbia and the wider Western Balkan region. We believe that this approach is essential to the future success of businesses and the development of a more resilient and responsible economy.

How do you view collaboration between Integrity Capital D.O.O. and local companies influencing the growth of sustainable finance and ESG practices across the Western Balkans?

— The collaboration between Integrity Capital and local companies is a crucial step towards accelerating the growth of sustainable finance and ESG practices in the Western Balkans. Our aim is to create partnerships that not only help businesses adapt to global trends, but also position them as leaders in responsible investing.

We believe that local companies are key to driving sustainable change in the region, and through our advisory services we can help them integrate ESG principles into their core business strategies. We ultimately want to demonstrate that responsible business practices aren’t only beneficial to society and the environment, but are also essential for long-term business success. Through our partnership with local companies, we aim to accelerate the transition to a sustainable economy across the region.