Future of Sustainability in Investment Management

The future of sustainable investing requires balancing goals and interests of stakeholders. It is critical to the sustainability of investing, serving society by improving long-term outcomes.

The future of sustainable investing is in the balance.It involves balancing financial and extra-financial considerations, balancing the short term and long term to ensure that short-term goals do not compromise long-term goals, and balancing stakeholder interests and seeking fair outcomes for all.

None of this is easy. But sustainable investing is critical to the sustainability of investing.

Although the future of sustainable investing includes many unknowns, we advance three important tenets where sustainable investing goes further than its forerunners:

• It is additive to investment theory and does not mean a rejection of foundational concepts.
• It develops deeper insights about how value will be created going forward using environmental, social, and governance (ESG) considerations.
• It considers many stakeholders.

In many ways, we are moving from sustainable investing as a good idea to a reality that has implications for all investment portfolios. There is a growing recognition that some ESG factors are economically material, especially in the long term, and it is, therefore, important to integrate material ESG factors in investment decisions.

As we consider a 5- to 10-year time horizon, with input from 7000+ industry stakeholders including 23 virtual roundtables, our report’s structure follows the acronym “IDEA”:

• Influences: The accelerating demand for sustainable investing and scenarios for the future
• Drivers: How investment organizations are adapting and expanding their business models and investment models to meet investor expectations for sustainable investing
• Enablers: How the operating models and people models of investment organizations will facilitate growth in sustainable investing
• Actions: A rubric for investment organizations, investment professionals, and the industry to support the pathway of sustainable investing

We suggest that the next stage of development will depend very heavily on industry leadership and innovation in investment thinking and practice, as well as data management. Hear from some innovative leaders such as Elizabeth Corley, Hiro Mizuno, and Roger Urwin from the Future of Finance Advisory Council in this webinar. As they demonstrate, investors and the investment industry have a considerable role to play in shaping the future.

Download the full report (PDF): Future of Sustainability in Investment Management: From Ideas to Reality

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