Sustainable financial system (SFS)

The financial system is not operating sustainably and it often fails society. The PRI is working with investors, policymakers, regulators and others in the industry to realign the system with sustainable, equitable economies. To hear more about our sustainable financial system work, contact us.

Why the PRI is working towards a sustainable financial system

The financial system is not operating sustainably and it often fails society. We need to realign the system with sustainable, equitable economies. As investors, we need to go beyond ESG integration to achieve a sustainable financial system. Investors have a central role to play.

How the PRI is contributing to a sustainable financial system

The sustainable financial system (SFS) programme focuses on nine key risks and challenges that could undermine a sustainable financial system.

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Beyond modern portfolio theory – how investors can mitigate systemic risk through the portfolio

The near universally adopted modern portfolio theory (MPT) put forward by Nobel laureate Harry Markowitz in 1952 is blind to the effect of portfolio investment on the capital markets’ overall risk/return profile and on the macro systems upon which the market relies for stability.

Social issues RIQ

Long-term social issues drive economic growth, so why aren't investors behind the wheel?

Long-term social issues – the ‘S’ in ESG – matter for investors. They are key factors determining both long-term GDP growth and the level of equilibrium of interest rates.

Fintech: Reshaping the investment industry

Within the space of six years, finance technology – fintech – has gone from a technology that skirted the edges of the investment sphere to receiving billing at this year’s G20 summit where the world’s industrial leaders described its impact as something akin to a new industrial revolution.

How policy and regulation affect investment consultants' approach to ESG considerations

Globally, we’ve seen growth in ESG-related regulation for asset owners and investment managers, but not investment consultants.

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Investment consultants services review

Most consultants and their asset owner clients are failing to consider ESG issues in investment practice – despite growing evidence of the financial materiality of ESG issues to portfolio value.

Investment consulting and a sustainable financial system

ESG considerations seen as niche service offerings, often entailing extra costs, and only to be provided when explicitly requested by asset owner clients.

How market structure affects investment consultants approach to ESG considerations

Relationships between asset owners and investment consultants have a major influence on whether and how investment consultants take account of ESG issues in the advice that they provide.

How industry practices affect investment consultants approach to ESG considerations

Market structure issues are compounded by consulting practices and processes.

Potential improvements to how investment consultants approach ESG considerations

Our central conclusion is that investment consultants are unlikely to take action on ESG issues without stronger incentives to do so from their asset owner clients.