The PRI’s upcoming guide to addressing system-level risks and opportunities will be released at this year’s PRI in Person alongside a plenary session on System-level investing: emerging practices, fiduciary duty and the evolving understanding of risk. The new guide aims to enhance investors’ strategies, analysis and practices by explaining concepts and highlighting tools and frameworks to support the integration of system-level risks and opportunities into responsible investment practice. The guide aligns with and supports Pathway B of the PRI’s new Pathways framework, which will also be released in November 2025.
What is the guide about?
System-level risks and opportunities refer to changes in economic, financial, environmental and social systems that influence the long-term value of investment portfolios. Unlike traditional responsible investment practices which have focused primarily on idiosyncratic environmental, social and governance risks at the investee or asset level, a system-level perspective recognises the significance of undiversifiable risks and feedback loops between investment decisions, real-world outcomes and the resources underlying investment value.
The PRI’s upcoming guide includes key concepts, frameworks, tools and case studies developed by signatories and industry initiatives aiming to explicitly integrate system-level risks and opportunities into investment processes.
Designed to be a practical resource, the guide presents a three-step approach to system-level investment as follows:
- identifing outcomes and developing strategy – this section includes methods for prioritising system-level issues, undertaking analysis and selecting appropriate interventions;
- taking action – this section includes tools and frameworks investors can use when integrating system-level considerations into investment decision-making and system-level stewardship activities;
- monitoring, assessing and reporting – offering general and issue-specific frameworks that can be used to monitor and assess progress against the system-level investing strategy, alongside case studies of different signatory approaches.
The framing of system-level risks and opportunities within the guide aligns with the analysis of fiduciary duties included in the Legal Framework for Impact study (2021).
While the guide includes recognition that policy and regulation are critical to the creation of a sustainable financial system that addresses system-level risks and enables economic transition, it notes the significant role investors and market-led initiatives can play in contributing to such changes. A range of examples that speak to such efforts are presented, spanning independent investor practices, collaboration and stewardship with investees, value chain members and policy makers.
The PRI acknowledges that this is a novel area of responsible investment and therefore the new guide should be seen as a means of supporting signatories to incorporate system-level considerations into their own strategies.
Why are investors interested in a system-level perspective?
The recognition that market-wide phenomena such as climate-related disasters, nature loss and growing social inequalities can inflict substantial economic and financial damage, with resulting effects on investor portfolios, has driven an evolution towards the incorporation of system-level considerations into investment practice.
A growing body of research by industry thought leaders emphasises that market returns (beta), rather than asset-specific outperformance (alpha), account for the majority of portfolio value. However, traditional investment models often overlook how investment activity can alter market conditions, sometimes exacerbating system-level risks. Clear examples of this can be found in regard to climate and nature, where physical risks and the erosion of ecosystem services impact economic stability and the resources from which financial markets derive value.
What other PRI work programmes address system-level considerations?
The PRI recognises the importance of a system-level approach through its work on:
- Pathways: the PRI’s Pathways B and C will support signatories in addressing system-level sustainability-related risks and opportunities and in the pursuit of system-level outcomes.
- Collaborative initiatives: PRI-led and PRI-supported collaborative engagements, such as Advance, CA100+, Spring and the Collaborative Sovereign Engagement on Climate Change, seek to address aspects of policy, industry standards and company-level activities related to climate, nature and human rights risks. They offer signatories a means of participating in system-level stewardship and demonstrate how an engagement methodology can address multiple aspects of a system-level risk.
- Global policy: the PRI’s Sustainable finance policy toolkit part 1: addressing investor challenges describes the challenges investors face in contributing to the creation of a sustainable financial system. It presents a roadmap for policy makers and regulators to cumulatively address the system-level factors influencing financial markets and the real economy. In addition, Investing for the economic transition: the case for whole-of-government policy reform identifies how policy frameworks can support the transition to a sustainable and equitable economy that benefits both economic growth and natural and social systems, enabling a greater adaptation to system-level risks and the generation of system-level opportunities.
What can signatories do?
Investors are encouraged to engage with these resources and look out for the guide on addressing system-level risks and opportunities being published at PRI in Person in early November. The PRI will announce further opportunities for investors and stakeholders to engage with this topic in 2026.
