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.

Investment consultants services review cover

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.

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.

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.

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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.

ERISA plans and ESG incorporation

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Untangling stakeholders for broader impact: ERISA plans and ESG incorporation

The US accounts for the largest share of pension assets globally. Increasingly, US investors are incorporating ESG factors into their investment decisions. However, the country lags its peers in private sector retirement assets managed with explicit regard for ESG factors.