Sasja Beslik got tired of greenwashing.

So, he left his role as head of sustainability at Danish pension provider PFA and joined another firm on the other side of the globe – SDG Impact Japan – and started his own fund.

It is quite unusual for sustainability heads to enter fund management. Beslik, however, considers it a necessity.

‘People with extensive ESG experience must, to a larger degree than they do at present, move into operative roles to ensure that the sustainable transition actually happens.

‘The problem is that there is a lot of greenwashing, and it goes on because there is still a wide discrepancy between those who work with ESG and those who handle the money. That’s the bridge we need to build.

‘To me, this is just a natural step in my work. I’ve worked with fund management on different levels and in different ways, as CEO as well, and now that role is becoming more active,’ Beslik told Citywire Selector.

As PE as possible

It will be the first time Beslik has actively run a fund.

But he is no stranger to sustainable strategies, having spent more than 20 years designing them in various top management roles in sustainable finance and stewardship at ABN Amro Bank, Nordea Asset Management, and J Safra Sarasin.

On top of that, Beslik has co-authored Where the Money Grows, a guide on investment opportunities in the green transition, and spends his weekends producing the newsletter ‘ESG on a Sunday’.

His work on sustainable finance has earned him the Order of the Seraphim medal from the King of Sweden, a recognition as a Young Global Leader at the 2011 World Economic Forum, and an industry reputation as a fiercely outspoken ESG pioneer.

So, in designing a strategy for himself, Beslik’s priority was to make it as close to private equity as possible in the listed market.

That’s why the NextGen ESG Japan fund holds 30 companies for as long as five years, whereas ESG funds typically hold 50-200 holdings over shorter horizons, normally of around one year.

‘For ESG to make a difference, you have to work extremely closely with the companies. That means you can’t hold 100 companies. Or, you can – but then you’ll need a team of 20 people, and that’s pretty costly,’ said Beslik, whose team consists of seven people with a track record of investing in Japanese SMEs.

‘It’s a lot of people per company. We will spend a lot of time and energy on changing these companies,’ he added.

Japan in focus

The NextGen ESG Japan fund is the first fund in the Asian market aligned with Article 9 under the Sustainable Financial Disclosure Regulation.

The region has lagged the EU in terms of ESG, particularly in terms of corporate governance and gender representation. That’s why Beslik is particularly excited to make it his core focus.

‘The great sustainable transitions in the world are happening, and will need to happen, in Asia. That means that there’s a lot of opportunities.’

While Beslik believes the Japanese market has matured enough for ESG products, he doesn’t see his enthusiasm reflected among other sustainable funds.

‘Japanese SMEs have been punished for their lack of transparency and poor disclosure practises, and traditionally been left out of ESG funds’ he said.

Perhaps this explains why only two of the fund’s top five holdings are part of Moody’s ESG Solutions research universe. While Izumi and Food & Life Companies are in Moody’s ESG database, their failure to provide consistent reporting on their response to material sustainability challenges has contributed to their weak overall ESG performance.

‘When we’re discussing some of our questions about key ESG issues relevant for these companies, such as governance or around gender with Japanese companies, we can tell that they are working on it. It’s not that these questions aren’t dealt with, they’re just not as good at disclosing it. That’s the challenge, and our main focus.’

The 30 holdings have business models on par with two to four degrees of global warming. Beslik’s aim is to get it down to 1.5C within five years.

To achieve that, each company’s progress is measured from a baseline and tracked through three to five individual KPIs and reported to clients annually.

A broader view of gender representation

Rather than just looking at gender equality at board and top management level, the fund has a strong focus on gender from a social perspective.

Beslik’s team will assess if women in the supply chain have the same opportunities and work conditions as their male colleagues, and if there are policies in place to support gender representation throughout the company.

‘Very few funds are looking at gender from the S-side of ESG, and that’s where we’re coming in. What’s often overlooked is that a company’s gender equality also comes from the operative side.

‘You can’t have 40% female representation at board level, or female CEOs, while having poor wages and a lack of basic rights like maternity leave for women working in the supply chain,’ said Beslik.