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Impact investing’s case for scale
Impact investing has come a long way in the past two decades, going from a niche strategy to a $1.5 trillion industry, but there are still challenges for it to reach institutional scale due to the lack of products and insufficient evidence of outperformance in some parts of the market.
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Asset Owner Technical Guide: Monitoring
A growing number of asset owners now expect their investment managers to incorporate ESG factors into their investment processes. This means that ESG needs to be at the core of the relationship between the asset owner and the investment manager – and that ESG considerations need to be addressed at every stage of that relationship, from setting the initial investment strategy, to drafting requests for proposals, to selection, appointment and monitoring.
Asset Owner Technical Guide: Appointment
Asset owners increasingly include ESG considerations in their investment management agreements (IMAs) and other legal documentation. More than two-thirds (69%) of PRI asset owner signatories typically implement ESG requirements in contracts such as IMAs and limited partner agreements (LPAs).1 To ensure that investment managers abide by their clients’ ESG requirements, certain legal aspects are becoming standard features of the asset owner-investment manager relationship.
A Greener Fiscal Future
With fiscal policy now the dominant lever supporting growth in most economies, it has become even more important to understand how the various fiscal policies will flow through to GDP, inflation, and different markets. We have been working to get our understanding of fiscal policy to the same level as our understanding of monetary policy. This is a difficult task, as fiscal comes in so many forms, each having different implications at the macro and micro levels. Some policies can be clearly counter-cyclical (the best of these are typically direct checks and shovel-ready infrastructure), while others aim to address more structural problems (like low productivity or environmental issues) but are less effective cyclically, as they are typically longer-term.
A new era of ESG under Biden
Against all odds, there is an air of optimism in 2021. We have entered a new era in US politics, and the inauguration of the Biden-Harris administration brings renewed hope for sustainable investment, particularly climate policy. So what can investors expect?
How to avoid funding treason
The siege on the US Capitol has revealed asset owners may be investing in companies that work with or fund extremist groups. To protect their organisations, their stakeholders, and their savers from such risks, asset owners should consider revising their ESG frameworks to include disclosure and accountability policies on corporate political spending.
Amazon under fire
Two of the world’s largest asset owners are putting pressure on Amazon to reveal exactly how it is protecting its workers from COVID-19. It’s a move indicative of the investor mood to focus attention on human and labour rights among investee companies, with a particular spotlight on the tech sector.
