A more structured approach to managing risk in its equities exposure has led Danish fund Lønmodtagernes Dyrtidsfond (LD) to introduce four style buckets for equities – from pure beta through to pure alpha – and a dynamic allocation approach that allows movement between the buckets depending on market conditions.

The fund has also partnered with other Danish pension funds – Sampension and the Medical Doctors’ Pension Fund – in an innovative approach to managing fees. In its passive bucket, it has co-invested in mandates that its Danish pension fund peers have already set up. The mandate with Sampension is a targeted index fund that cuts off the smallest 25 per cent of companies in the index. With the Medical Doctors’ fund, the mandate is an emerging market index fund with an environmental, social and governance overlay.

LD is relatively small, with DKK43 billion ($6.5 billion) and collaborating with peers on mandates with external managers is one way it can innovate around fees, chief financial officer Lars Wallberg says.

Collaborating with peers who have gone through the process of mandate design and manager selection allows the fund to reduce costs and time spent on external managers. LD has a clear focus on fees, with a total cost – including administration, management fees and trading fees – of 0.5 per cent of assets.

“Co-investment in passive equities, where we are buying a proportion of the assets, is a very attractive way of investing,” Wallberg says. “We are investing in something that the other pension funds have set up themselves. It’s a win/win; it reduces our costs and we can benefit from the fact our colleagues found the manager and set up the investment guidelines, and we are comfortable the manager is capable. There is no reason for us to set up a fund ourselves. There are significant economies of scale for both of us regarding costs and set up.

“You need to be open and precise as to what your objectives are…Every fund will make their own allocation based on risk profile but there is no reason every fund should invent everything for itself. The risk allocation and monitoring [are] unique to a fund, and should be kept close, but keeping managers to yourself is a losing game. It is more relevant to share knowledge of good managers and spend time on your strategic portfolio.”

In addition, smaller funds benefit from having a collaborator with which to discuss investments.

“We are a very small organisation,” Wallberg says. “In equities, for example, we have only one person monitoring it, so we like collaboration. Our colleagues are more than welcome to invest in our mandates; the firm believes in collaboration.

“For large and growing pension schemes, internal management reduces costs, but for us it is not a strategic opportunity. Ten years ago, we were fully self-managed but identified outsourcing as key. We can be agile in changing allocations, can call managers and reduce or increase mandates at very short notice, and can exit asset classes. It’s easier to call an external manager and reduce by half the mandate. If you had to call internal staff and say to colleagues they’re now managing half the size of the mandate, they would wonder about their jobs.”

 

From active management to a more varied approach

Like the innovation around management fees, the new approach to equities arose out of a focus on risk management within the equities portfolio.

The fund has traditionally emphasised active management but since the beginning of the year the equities portfolio has been separated into four parts: pure beta, beta plus or factor investing, core alpha and special alpha.

Pure beta is in global developed equities as well as the index funds with slightly higher tracking error, where LD co-invests with its Danish pension peers. On top of the pure beta risk bucket, LD has added a beta plus basket, which is a factor investing strategy with a high weight to value, but also a tilt that can be changed. This was also done with Sampension. The core alpha bucket holds the existing active managers within developed and emerging markets. Finally, special alpha is where managers with significant tracking error reside. This includes Danish equities. The fund has reduced its allocation to domestic equities from 25 per cent to 10 per cent over the past few months.

The four new risk buckets allow for a dynamic approach to equities and the exposures to each bucket can be dialled up or down depending on whether alpha or beta is dominating the market. Since the beginning of the year, about 20 per cent of the equities portfolio has changed from active to passive.

“We have seen a quite significant twist in the overall equities portfolio,” Wallberg says. “We reduced the core alpha bucket a lot as well and have increased the beta exposure significantly. We now have about 45 per cent in beta and beta plus, and 55 per cent of equities in the alpha-generating buckets. This is a significant change.

“It allows us to be more precise about when we take a pure beta exposure, when we take factor-based exposure and when we are getting return from fundamental stock selection. We have to have the discipline in ourselves between the mandates. But we hope it will help us achieve our goal of minimising losses in down markets. We can forgo excess return as long as we mitigate losses in down markets.”

Wallberg says LD had previously achieved “quite a lot of excess return” from equities but it had a large tracking error because of the allocation to Danish equities. The first step in this more structured approach to managing the equities exposure was to reduce tracking error and the volatility of the portfolio. The added benefit was to reduce costs.

The next step will be to work on how to manage the individual parts of the portfolio separately.

“We are finding the right risk metrics to identify the action/inflection points to initiate a change in the allocation; this is a work in progress,” Wallberg says.

In the next few weeks, Wallberg will be leaving LD to start a new job as chief executive of Norliv, which is an association with 300,000 members who are all customers of Nordea Life & Pensions.

He’ll be responsible for the association’s endowment, with a portfolio that invests partly in Nordea Life & Pension and partly in discretionary investments. The majority of returns from the fund are distributed to members as a bonus, with 20 per cent going to a charity focusing on mental health for workers and those in early retirement.

Social issues have traditionally been viewed as the weakest link in investment analysis. In many cases, the absence of company data and robust regulation has hampered investors’ ability to assess the risks and opportunities such issues present to their portfolios. While some companies have made efforts to provide good quality disclosures, on the whole, investors have had limited information on which to base decisions.

This is changing. A plethora of new initiatives and engagement activity is driving more meaningful disclosure of data on human rights and labour standards by companies and across supply chains. Policymakers worldwide have a renewed enthusiasm for enacting hard laws and soft guidelines to expand the role and responsibilities of companies when it comes to social issues.

The Principles for Responsible Investment (PRI) recently responded to a government inquiry underway in Australia to determine whether the country should introduce its own Modern Slavery Act, which would complement recent legislation on human rights due diligence introduced elsewhere, such as the California Transparency in Supply Chains Act of 2010, the UK’s Modern Slavery Act 2015 and the European Union’s Non-Financial Reporting Directive. Earlier this year, France adopted its own Corporate Duty of Vigilance law, which requires its largest companies to assess and address adverse impacts on people and the planet, both in direct operations and throughout the supply chain.

Beyond national and state-based legislation are a series of soft laws – norms, standards and frameworks – launched in recent years to promote best practice and stamp out the most egregious violations. These guidelines have included the United Nations Guiding Principles for Business and Human Rights, the Organisation for Economic Co-operation and Development Guidelines for Multinational Enterprises and the International Labor Organization Fundamental Conventions.

More for investors

Such changes are giving investors better data. For example, the Committee on Workers’ Capital recently launched its own Guidelines for the Evaluation of Workers’ Human Rights and Labour Standards, which trade unions have developed to help investors scrutinise social issues such as labour relations in the investment chain. Better metrics on the treatment of workers, employee engagement, training and staff turnover can be strong indicators of the health of a business.

Early evidence suggests both the UK and California laws – which require companies to disclose on their websites the efforts they’re making to address risks of human trafficking and slavery by their suppliers – are providing a wealth of new data and insights to help investors better assess the ‘S’ in their portfolios and inform their engagement and integration strategies, while increasing senior-level corporate engagement, transparency and action on social issues.

More action from investors

Earlier in June, the PRI published a collection of case studies showing how investors are making use of this additional information, putting to rest the notion that investors can’t scrutinise social issues. ESG Integration: How are social issues influencing investment decisions? contains examples from a wide range of sectors – from retail to mining – highlighting methods being used to integrate social issues into listed equity investments.

At the same time, the PRI has facilitated a number of collaborative engagements to improve investors’ understanding of human rights risks and supply-chain labour practices. The findings and outcomes from these projects are captured in the PRI’s From Poor Working conditions to Forced Labour: What’s hidden in your portfolio? and Investor Expectations on Labour Practices in Agricultural Supply Chains.

Matt McAdam is head of Australasia for the PRI.

Asset owners play an important role in advocating for diverse and inclusive workplaces at service providers and the companies they invest in, Bloomberg’s global head of diversity and inclusion, Erika Irish Brown, says.

“Everyone is in search of alpha,” Irish Brown says. “What information are investors leveraging to find that alpha? A lot of big pension funds put out [requests for proposals]. What questions are they asking? Are they asking diversity questions?”

She urges investors to think about the positive impact of diversity on their investments, and cites the way the various networks in a diverse workplace might help generate private-equity deals.

Irish Brown, who has decades of experience working for diversity, including as senior vice-president of diversity and inclusion at Bank of America, says when she first started in such roles, all the data points were anecdotal.

Now there is a huge body of work around the outperformance of companies with women in management and on boards, from organisations with great academic backing, such as McKinsey & Co. and Catalyst. There is also a developing movement around the impact of women’s employment, as exemplified by Womenomics in Japan.

“We have spent so much time on making the business case but now I hope you don’t have to do that,” Irish Brown says, adding that she sees diversity as more as an opportunity for investors.

Irish Brown says Bloomberg has always been an innovative workplace with an open and transparent culture. But the financial services and technology industries, in which Bloomberg operates, have not always been inclusive and diverse in their hiring.

The Bloomberg diversity agenda is coming from the top. Bloomberg chair Peter Grauer has always been deliberate in promoting diversity and making it a business imperative, Irish Brown says. It’s not an HR-driven set of mandates. Each business has a diversity and inclusion business plan and set of goals, and Irish Brown’s team provides resources to help implement those plans.

The only goal Bloomberg states publicly is that its senior leadership will be 30 per cent women by 2020, and Irish Brown says “we are making progress towards that”.

“We also do employee surveys around engagement. It is not just about representation but also career progression, attrition rates and external hires – it’s the whole cycle,” she says.

Diversity and inclusion also have a profound effect on limiting staff turnover, she says, with employees of a diverse and inclusive culture being more highly engaged and productive.

Data that makes a difference

One of Bloomberg’s key business offerings is data, and through data it also aims to drive change in corporations with regard to diversity.

Last year, it introduced the Financial Services Gender-Equality Index (GEI), which measures gender equity in the financial services industry.

The index uses gender statistics to track how companies demonstrate their commitment to diversity and inclusion by promoting women into management. It also factors in company policies and goals set to maintain and improve a diverse working environment and promote women, including initiatives such as gender-neutral family support.

Product offerings, whether companies publicly support women, and an organisations’ commitment to women’s empowerment – including financial resources and opportunities for women clients – also affect the index.

In 2016, the GEI revealed that the percentage of women on boards in financial services firms (at that time it covered only the US but in 2017 its reach became global) was 12 per cent.

The survey also found that the proportion of women who get stuck in middle management in financial services is greater than at S&P 500 companies in general. This is despite the evidence that having more women in leadership roles has a positive impact on performance metrics and share price.

“In general, financial services companies recognise they need to improve diversity and are putting resources behind it,” Irish Brown says, adding most now have chief diversity officers.

“Through diversity and inclusion, you can attract the top talent, have better decision-making, and create a culture of innovation. As a technology and media company, that is important for us. It also helps us deepen our relationships with clients and become a connector of people and ideas.”

Innovation comes naturally from diversity

Irish Brown says having debate is an important part of innovation, and the fact that diversity is not easy means debate comes naturally. This means innovative cultures are a natural by-product of diverse and inclusive workplaces.

“If everybody’s perspective is from the same education and the problem solving is the same, then you won’t have the discourse and debate,” she says. “When you’re challenging the status quo and the most common approach, ultimately you are able to innovate. Disruption leads to innovation, and diversity is supposed to be disruptive.

“For example, in a 100-year-old bank, the leadership pipeline has existed for a long time and people hire in their own image. Most people are averse to change and that has nothing to do with whether they are a good or bad person. It’s a little more difficult or time-consuming to create that disruption in a way that doesn’t create big backlash or become counter-cultural,” she explains. “But when people experience it, and when they are introduced to a new pool of talent, there’s enthusiasm. It is very much experience based. You have to be a courageous leader.”

Diversity is not enough on its own, however, she says. It’s important that the culture can deal with the diversity and be inclusive.

“You need to be prepared to acknowledge that diverse teams are harder to manage,” she says, adding that diversity, which goes way beyond gender and is embedded in Bloomberg’s business, so that it affects its products. The company scored a perfect 100 per cent score in the 2017 Corporate Equality Index, which is a US-based report that benchmarks corporate policies and practices around workplace equality for lesbian, gay, bisexual and transgender people.

“We have enhanced our offerings for people with disabilities; for example, the screen colour changes, for those who are colour blind. We look at it from a product point of view,” Irish Brown says. “Bloomberg journalists will ask everyone on air about diversity and inclusion, even if they are there to talk about another issue. It is the intent of our people to run with it and engage with it as a business imperative.”

On Wednesday May 17, Bloomberg lit up its offices with giant rainbow lighting to celebrate International Day Against Homophobia, Transphobia and Biophbia. This photo was taken at Bloomberg’s Australian office at One Bligh St.

Left to right: Erika Irish Brown, global head of diversity and inclusion, Bloomberg; Dawn Hough, Director, ACON; Emily Gordon, head of Australia and New Zealand, Bloomberg.

 

The urgency to address climate change will carry on, regardless of what the US government does, with investors, companies and world leaders sticking to the path of emissions reduction.

“The decision by the US is disappointing but it won’t derail progress on climate change,” says Fiona Reynolds, managing director of the Principles for Responsible Investment, in reaction to President Trump’s announcement that the US would withdraw from the 195-nation agreement on climate change reached in Paris in 2015.

“In fact, this move could strengthen the resolve of other countries to fulfil their commitments to the Paris Agreement,” Reynolds says. “Most world leaders understand the urgency involved in addressing climate change and want to leave a legacy for future generations. For example, China, which has taken the lead on green finance, has said it will continue its push in this area, regardless of what the US decides to do…We congratulate the other G7 countries that confirmed their recommitment to climate action, all of which would welcome the US back into the fold if and when [it chooses] to re-enter the accord.”

Momentum even in the US

Even in the US itself, momentum continues despite Trump’s announcement, with 83 mayors across the country honouring the Paris Agreement, including the mayor of Pittsburgh, Pennsylvania, whose city got special mention in Trump’s announcement. (“I was elected to represent the citizens of Pittsburgh, not Paris,” Trump said.)

California, New York, Washington and six other states have committed to cutting emissions by 26-28 per cent from 2005 levels, which was the reduction former president Barack Obama proposed under the Paris Agreement.

Paul Simpson, who is chief executive of CDP, which runs the global disclosure system that enables companies, cities, states and regions to measure and manage their environmental impact, says any country that fails to implement the Paris Agreement is increasing risks for itself, which increases the impetus for others to act.

“US cities and states are also at the forefront of the fight against climate change,” Simpson says. “New York and California are targeting 50 per cent renewable electricity generation by 2030, and they have ambitious targets in place to drastically reduce their greenhouse gas emissions. Leading cities and states are proving that huge leaps forward are possible, with or without the support of the federal government.”

In the private sector, the investor community is becoming increasingly vocal about climate change, as evidenced by the 282 investors, representing $17 trillion, who recently sent a letter to G7 and G20 leaders urging them to stand by the Paris Agreement, PRI’s Reynolds says. (Global-Investor-Letter-to-G7-G20-Governments)

Investors are also voting with their feet. Last month, ExxonMobil management was instructed by investors with a majority of shares to report on the impact of global measures designed to keep climate change to +2 degrees or less.

“This action shows that regardless of the US position on climate, the momentum around climate change is unstoppable.” Reynolds says.

Simpson adds that there are more than 260 major global corporations – including US giants Dell, Kellogg Company, PepsiCo and Walmart – that have joined the Science Based Targets initiative, committing to cutting their emissions in line with the latest climate science.

“Companies are driving a surge in demand for renewable energy, with Apple, Bank of America, Google and Starbucks among the growing number of influential corporations committed to 100 per cent renewable power through the RE100 initiative,” he says. “All of these key players in the global economy will continue taking action because they understand the economic opportunities on offer and the risks associated with continuing business as usual.

“Last year, 2000 companies disclosing to CDP reported cost savings of $12.4 billion as a result of emissions-reduction projects, while nearly 400 cities identified more than 1000 economic opportunities from climate action. Meanwhile, our data showed that $906 billion in annual corporate turnover is at risk because of deforestation. As the world moves closer to its zero-carbon goal, demand for sustainable investments, products and services from investors, purchasers and citizens will keep growing, further reinforcing the business case for swift and ambitious action.”

About 820 investors, with combined assets of $100 trillion, request information on climate change, water or forests from CDP.

Imagine a world where resources used in one industry are used again in another so that maximum value is extracted, recovered and used again. Or where consumers replace users as people lease – rather than own – products, through collective ownership or sharing platforms. Imagine renewable energy and the continuous cycling of materials have slashed reliance on non-renewable natural resources for good.

It’s called a circular economy – the alternative to today’s traditional, linear economic model of ‘take, make and dispose’. And far-sighted investors should embrace it for both long-term returns and impact, a new report urges.

The report, Investing in the New Industrial (R)evolution, comes from The Investment Integration Project (TIIP) and impact investment community Toniic. It builds on themes explored in TIIP’s 2016 Tipping Points report, which found more investors taking practical steps to incorporate global issues such as health, food and energy into their strategies, in a ‘systems-level’ approach.

The next evolutionary step in a systems-level approach is to adopt investment strategies to integrate circular-economy principles.

The report references compelling statistics. In 2014, America’s largest businesses sent 342 million metric tons of waste to landfills and incinerators in millions of dollars of lost value; each year, the global economy disposes of 95 per cent of plastic packaging, worth an estimated $80 billion-$120 billion; the average car in Europe is parked 92 per cent of the time and the average office is used only 35 per cent to 50 per cent of the time, even during working hours.

“Increasingly, a linear business carries risks. Just as there is a growing awareness of the risk of climate change to the economy, we can also see that not adopting circular principles will eventually lead companies to a lagging market position and decreased valuations,” argues Frido Kraanen, director co-operative and corporate sustainability at PGGM, the Dutch manager with $220 billion in pension assets under management and a member of the Circular Economy 100, a group dedicated to building the circular economy.

“Solutions often embrace new smart technology, sharing platforms or ownership models, giving us insight into potential investment opportunities,” Kraanen says. “The transition to a sustainable, circular business model will be increasingly demanded, not just as a nice extra for reputational purposes, but as a core tenet of business.”

A lens through which to invest

The authors of the TIIP/Toniic report urge investors to include circular-economy principles in their investment decisions, the same way some have included a systems-level approach – as a lens through which to invest, rather than an asset class in itself.

The report argues investors should state a commitment to the circular economy and prioritise it in stock selection and portfolio construction. They should screen to favour companies with innovative reuse strategies and investments in technology, products and services that will accelerate the adoption of circular-economy practices.

Active investor engagement with companies will encourage them to move from linear to circular operating models, and investors should introduce targeted programs and select managers that prioritise circular-economy practices.

Opportunities are emerging

The authors acknowledge “it may still be difficult” to identify circular economy opportunities in each asset class but believe they are beginning to emerge. Active stock selection could include companies such as clothing manufacturer and retailer H&M, whose circular policies include providing vouchers to customers who return used clothes, and reusing those items either as new clothes or in other industries.

Computer manufacturer and software developer IBM could be another choice. It sells so much refurbished equipment that, in 2014, 97 per cent of about 36 million tons of harvested computer scrap was resold, reused or sent to material recycling.

Opportunities in fixed income include the municipal bond market, where investors could target assets such as water utilities and waste-water treatment facilities, making progress on reuse and recycling. Real-estate investment could focus on properties with water recycling or that draw zero net energy from the grid.

More opportunities will emerge as investor pressure encourages incremental progress towards adoption of circular-economy strategies in large corporations or at an industry-wide level. Eventually, the investment universe will be immense.

“Given the wide applicability of the circular economy, its increased adoption will create investment opportunities that span asset classes, industries and geographies,” the report’s authors state. “The increasing need for capital will help meet the growing demand for investments in global systems. Investors and asset managers would benefit from investment opportunities that deliver both measurable impact and resilient financial returns.”

Obstacles to overcome

Developing a circular economy does hold many challenges. Materials can be hard to identify and separate after use and there are few cost-efficient ways to separate materials without degradation. For example, only about $3 worth of raw materials can be extracted from a smartphone that contains roughly $16 worth of raw materials. Also, unlocking the circular economy’s full potential will require the collaboration of multiple stakeholders; governments and other regulatory bodies must ensure the adequacy of legal frameworks and create incentives.

The road is long but PGGM’s Kraanen is clear: the potential for a new economic order is huge and investors need to get on board.

“The move towards a circular economy should not be a sub-divisional goal of some far-removed CSR [corporate social responsibility] department, but an integral part of investment strategy,” Kraanen says. “Through capital and engagement, financiers should be supporting, incentivising or otherwise promoting the shift.”

“Investing in sustainable infrastructure is the growth story of the future.”
• Global Commission on the Economy and Climate, 2016

The world needs more infrastructure, particularly in developing countries. But not just any infrastructure. To achieve the economic, social and environmental objectives embodied by the Paris Agreement and the Sustainable Development Goals (SDGs), this infrastructure must be sustainable, low-carbon and climate resilient. The New Climate Economy’s 2014 report, Better Growth Better Climate, estimates that from 2015 to 2030, the global requirement for new infrastructure assets will be $90 trillion, more than the value of the world’s existing infrastructure stock.

To meet these needs, annual investment in infrastructure will need to increase from current levels, about $3 trillion, to $6 trillion. At the same time, data from the Organisation for Economic Co-operation and Development and alternative assets researcher Preqin shows investors’ allocations to infrastructure are gradually increasing, driven by a combination of factors (such as low yields in traditional asset classes and inflation protection).

Together, these should be positively reinforcing developments. But are they? The Inter-American Development Bank (IDB) commissioned Mercer to assess the extent to which infrastructure investors – and other stakeholders, including governments, multilateral development banks (MDBs) and infrastructure industry initiatives – are focusing and collaborating on sustainable infrastructure. Our findings are somewhat mixed: the positive momentum of new initiatives focused on sustainable infrastructure is countered by the fact that sustainability concerns struggle to enter the core allocation strategies of mainstream investors.

Our initial report, published in November 2016, Building a Bridge to Sustainable Infrastructure, outlined the effort underway to raise awareness of sustainable infrastructure investment opportunities and develop tools to foster related investment analysis and monitoring. However, as outlined in the companion paper, Crossing the Bridge to Sustainable Infrastructure, we find that the level of investor awareness and engagement with these developments seems relatively limited. In addition, current allocations to infrastructure fall short of the levels required to support economic development, The New Climate Economy found in 2016. To overcome these barriers, we set out a call to action for investors, governments, MDBs and industry initiatives (see infographic).

What is sustainable infrastructure?

In a broad sense, sustainable infrastructure is socially, economically and environmentally sustainable. The specific application of this concept will depend on the relevant geographical and sector contexts. But ultimately, sustainable infrastructure is that which will enable the world collectively to meet the SDGs and the Paris Agreement.

Some investors have the misconception that sustainable infrastructure simply means more renewable energy infrastructure. Indeed, investment flows into renewable energy have been increasing; for example, in 2016, more than 40 per cent of new infrastructure investment went into renewables, data from Preqin shows. Although this is positive, sustainable infrastructure needs are broader. The New Climate Economy’s Better Growth Better Climate outlines in detail the change that is required across three critical economic systems: cities, land use and energy.

In addition, infrastructure needs to be resilient in the face of a changing climate. A 2016 study of public-private partnerships (PPPs) by Acclimatise found that “Among the sample of 16 national PPP policy frameworks examined, not a single one was found to mention a changing climate, climate resilience or adaptation.”

Investor interviews show lack of progress

As part of our research, we spoke with a number of infrastructure investors about the extent to which they consider sustainability in their decision-making. Despite growing attention to ESG considerations within investment organisations, we found that many infrastructure teams are just now developing a formal approach to sustainability in investment and, further, that such considerations are generally applied at the deal level. There is little top-down thinking about the transformational change and investment pathways that must accompany successful implementation of the Paris Agreement and the Sustainable Development Goals (SDGs), and the opportunities that they offer to investors. When considering the reasons for the lack of progress, we identify the following factors:

Lack of familiarity with the sustainable infrastructure business case and a related lack of experience in considering what might qualify

Limited standardisation of tools and approaches, with barriers to entry for investors

Lack of co-ordinated policy commitments across regions and sectors consistent with the Paris Agreement and the SDGs, which dampens investors’ focus on energy transition risk (that is, the risk associated with swift action to mitigate climate change)

Lack of tools and focus on climate resilience (that is, adaptation), which has seen little prioritisation to date. 

Investors noted an interest in learning more about the merits of a sustainable infrastructure approach and in gaining the know-how to achieve it. To date, industry initiatives have not been successful in providing such knowledge and would benefit from greater clarity about what constitutes sustainable infrastructure and its business case.

Call to action

Despite some high-level commitments to sustainable development by policymakers, and the significant efforts underway to leverage private-sector finance, there is still a lack of engagement from many infrastructure investors. Thus, a call to action is essential. We highlight three key initiatives, as outlined in the following graphic:

 

 

 

If you invest in infrastructure, we encourage you to review Crossing the Bridge to Sustainable Infrastructure and develop an approach that enables your organisation to optimise risk and return considerations for the long term, while being cognisant of the role your investments play in the transition to a low-carbon and sustainable economy.

Jane Ambachtsheer is partner and chair, responsible investment, at Mercer. Amal-Lee Amin is climate change division chief at Inter-American Development Bank.