Planet

The sustainability of our planet is becoming an increasingly central issue for the investment industry


Thinking ahead to create a sustainable tomorrow is a meaningful way to serve the needs of the end saver. Issues like climate change and biodiversity require participants in the financial system to consider how to achieve return on capital goals in the light of the physical, transition and liability developments present and just around the corner. This requires change such as: adopting a 3D investing mindset; cultivating sustainability and climate beliefs; developing net-zero action plans; generating ideas of what a +1.5°C portfolio looks like; and shaping organisational culture to drive climate action. This hub contains that research in various forms, from comprehensive research papers to short Investment Insight articles, podcasts and videos.

If we are serious about a +1.5°C objective, then transformational change is required, and our part will be to mobilise capital to secure a sustainable future.

Tim Hodgson

Featured

Pay now or pay later

This paper provides evidence and analysis to support the climate beliefs required to drive increased action on climate. To demonstrate to the industry that we must pay now to address climate risks, or we will be required to pay more later.

Systemic risk | deepening our understanding

This paper raises the prominence of systemic risk and underlines the importance of thinking of risk as intertemporal. Which means that risk management must be a continual, through-time process. This is particularly relevant for climate change.

The power of organisational culture to navigate climate change

It is received wisdom that an organisations’ greatest asset is its people, but it is less well understood how this asset can be applied to addressing our industry’s greatest challenge: sustainability and particularly climate change.

A six-step action plan for net zero

This is a framework to help asset owners establish and execute a pathway to achieve their climate ambitions. It signposts to six papers.

Research journey

Every investment decision we make has an impact on the economy and therefore wider society and the planet. We believe that the framing of investment and fiduciary duty has moved from the simple optimisation of risk and return to include a third dimension of understanding, measuring and communicating impact. Impact on people, planet and portfolios of the future. In 2018, we kicked off the Institute’s value-creation research and have worked with our members to dive deeper into the concept of sustainability, from defining purpose, to understanding impact and considerations of portfolio construction. As the catastrophic impact of climate change has become clearer we have worked to develop insights to guide investors’ behaviours to become the driving force in transforming the global economy to be compatible with net zero. Along the way we produced a series of research outputs that both provide evidence and analysis to drive climate action and usefully guide investors to establish and set a pathway to achieve their climate ambitions.

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Climate change

Culture and climate change

Sustainability

Focus on: Value creation

The Institute’s research into value creation is aimed at: developing a deeper understanding of the purpose of the investment industry and the agents within it; considering what it really is, how it evolves over multiple time horizons and the implications for stakeholders; and considering how the industry’s value proposition to end savers and wider stakeholders can be improved. Good stewardship is an obvious way to do this, specifically through having real-world impact. We explored this further with investment practitioners from around the world in conversations about how to do this through the enactment of their sustainability beliefs.

The fact that the UN is able to articulate 17 goals (SDGs) suggests that the world’s economic system is not working properly.

Professor Mike Berners-Lee

Impact, value creation and purpose

Beliefs to Action