The Risk and Opportunity for America’s Corporate Pension Plans
An increasing number of companies in the United States make sustainable investments, and an increasing number of investors integrate sustainability performance data in their capital allocation decisions. This speaks to the efficiency of sustainability investments, and for asset managers who have committed to the integration of sustainability factors in their capital allocation decisions. Companies must meet shareholder expectations for short-term business performance while meeting broader stakeholder expectations for long-term social impact.
We need to change the conversation between CEOs and their boards, directors, and investors to one of sustained long-term corporate performance. Another important step is to facilitate commitments by a significant number of leading global companies to research, pilot, and adopt mechanisms to shift strategies and capital of from short-term to long-term sustainability.
The demand for sustainable and impact investing is growing. Investors now consider environmental, social, and governing factors across $8.72 trillion of professionally managed assets. This is a 33 percent increase since 2014. Money managers and institutional investors are scrutinizing an array of concerns including climate change, weapons production, human rights, and corporate political spending. A diverse group of investors is seeking to achieve positive impacts through such strategies as corporate engagement or investing with an emphasis on community, sustainability, or the advancement of women. Client demand is one of the major drivers for money managers that introduce products that take these factors into account.
Evidence of the growing interest in sustainable investing is the recent launch of services that issue ratings for thousands of mutual funds and exchange traded funds with their portfolio companies. A number of organizations are also assessing mutual funds and other investment firms on how they are voting on issues, and whether the voting policies are consistent with sustainability values. As this movement grows, some growing pains are to be expected. A continuing concern first identified in the 2014 is the significant growth of “green” assets for which limited information is disclosed. Increasing numbers of money managers report that they incorporate these types of investments, but do not disclose the specific criteria used.
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Here are some of the organizations mentioned in the article:
United Nations Global Compact
Principles of Responsible Investment
The CEO Force for Good
Focusing Capital on the Long Term
Coalition for Inclusive Capitalism
The Forum for Sustainable and Responsible Investment
UNEP – Finance Initiative
Generation Foundation