Sustainable investing is ballooning. The engine of the sustainable investing machine is fired up and ready to go, but roadblocks are holding back movement. Asset managers have an opportunity to respond to the market demands and modernize the investment landscape. If they do so, they stand to reap the rewards.
Data from the U.S. Forum for Sustainable and Responsible Investment, a leading voice advocating sustainable, responsible and impact investing across all asset classes, which counts hundreds investment management and advisory firms, mutual fund companies, research firms, consultants, foundations and other asset owners as members, says that $1 out of every $5 of professionally managed assets is now invested with some consideration for environmental, social and governance (ESG) factors. This represents a 133% increase in four years, accelerating a trend that began more than 15 years ago.
While market growth is clear, the field is still young. Key infrastructure—the “glue,” so to speak, holding the industry together—has yet to dry. Market holes prevent investors from fully embedding sustainability factors into practical decision-making.
But, as new research from the World Resources Institute lays out, there are three critical steps asset managers and other investment professionals can take to overcome these barriers:
1. Deliver actionable investment frameworks.
2. Build up reporting standards and data.
3. Strengthen the investment chain.
Originally posted at Foundation & Endowment Intelligence.