A review of the legal barriers to investing for sustainability impact in 11 jurisdictions gives confidence to investors wanting to re-think old investment paradigms and include impact alongside risk and return.
The report commissioned by PRI, UNEPFI and The Generation Foundation was conducted by global law firm Freshfields Bruckhaus Deringer provides the first ever comprehensive analysis of how far the law requires or permits investors to take deliberate steps to tackle sustainability challenges in discharging their duties, described as investing for sustainability impact
It brings much needed clarity on the legal framework for sustainability impact investing, and also looks at the opportunities for policy reform that would better enable investors to have coherence on the legal frameworks to invest sustainably.
Some of the suggested policy reforms include changing investors’ legal duties and discretions, such as allowing the pursuit of sustainability goals as long as financial return goals are prioritised, and a presumption in favour of investor collaboration in tackling sustainability challenges.
“This report is the first of its kind. This detailed legal analysis shows investors they should feel empowered to rethink old investment paradigms by considering risk, return and impact as the pillars of successful investment practice,” said David Blood, senior partner, Generation Investment Management.
The research will provide insights on how far investing for sustainability impact is legally required or permitted across 11 jurisdictions: the EU, Australia, Brazil, Canada, China, France, Japan, South Africa, the Netherlands, United Kingdom and the United States. The project reference group of experts will also support and test the legal analysis.
The PRI’s chief executive, Fiona Reynolds, said that Freshfields has identified a diverse spectrum of actions that investors and policymakers could take to better facilitate investing for sustainable impact.
“These are based on an extensive analysis of the unique legal and regulatory conditions they face in their respective jurisdictions,” she said.