Encouraging Social Responsibility

Sustainability Value Creation Framework for Investors 🌍 The PRI’s new framework offers a clear structure to help investors in private markets translate sustainability into financial outcomes. Developed with Bain and NYU Stern, the Sustainability Value Creation framework reflects input from over 400 investors across regions and asset classes. Rather than treating ESG as a reporting exercise, the framework positions sustainability as a driver of operational efficiency, risk reduction and growth. It shows how sustainability can unlock financial value through improved customer trust, stronger employee engagement and increased resilience. The framework addresses both investment firm level actions and portfolio company strategies, recognizing that value creation happens across the lifecycle. At the firm level, the focus is on aligning sustainability with business objectives and embedding it in every stage of investment decision making. At the portfolio level, it is about identifying material ESG topics, prioritizing initiatives with financial relevance and tracking performance over time. Organisational enablers such as leadership buy in, quality data and aligned incentives are central to delivering results. The framework is part of a multi phase effort. Phase Two focuses on methodologies to quantify the financial impact of sustainability. Phase Three will assess how ESG contributes to real liquidity events. Evidence suggests that the financial relevance of sustainability will increase and that firms equipped with credible ESG strategies will be better positioned for the future. This is especially relevant for private markets where access to data and long term engagement allow for deeper integration and clearer accountability. The framework is an invitation to build stronger investment strategies using sustainability as a lever for performance rather than compliance. #sustainability #sustainable #business #esg

🚨 Redefining #ESG and #SustainableInvesting ✨ What’s new about Stuart Kirk’s theses? Recently, I had the pleasure to listen to his keynote speech at the FuW Forum Beyond #Sustainability in Zurich. You may remember the former HSBC Head of Responsible Investing from the Financial Times Moral Money Summit, where he famously downplayed the financial risks of climate change, referring to warnings as "unsubstantiated, shrill, partisan, self-serving, apocalyptic." This had caused quite a stir in the sustainable investor scene. So, how provocative are his theses nowadays? Here is my assessment: 1.    Input or output ESG (responsible versus sustainable) - ESG should be split in two Actually, ESG has already been split in three kinds of approaches: a.    For #ethical investors who want to sleep well (exclusions) b.    For #risk-aware investors considering ESG to be financially material additional data to assess investments c.      For #impact-oriented investors, who believe the full assessment of investments needs to consider the impact as well (#DoubleMateriality) The different approaches are enshrined in Art. 6 to 9 EU #SFDR, numerous regulations on fund names and recognised by labels such as Forum Nachhaltige Geldanlagen e.V. 2.    Admit you cannot have higher returns and lower risk This is a tautology from the Markowitz model. It holds true for the entire market or if you operate at the model’s “efficient frontier”. But most funds do not. So, if you can process additional financially material data, the potential for higher risk-adjusted returns is clearly there. 3.    Realise that sustainable investing does not focus on returns It does focus on returns by helping you to: a.    Identify truly future-proof business models b.    Consider additional risks emanating from global challenges c.    Engage with companies to bring a long-term view d.    Collaborate with other investors “to build the (regulatory) field” for sustainable companies to thrive 4.    Find sustainable funds that align with your values. This vindicates the EU SF Disclosure Regulation, which forces sustainable funds to disclose their approaches to help investors chose funds according to their values. 5.    If you are an equity investor, have an activist mindset. Vote! ...yes, and engage even more! That is common sense. What is maybe still new: you can engage with companies even if you don’t own them. It is the carrot you are holding.   6.    Don’t forget the power of credit and other forms of direct funding Agreed, but the impact you can have as credit investor in creating “rollover risk” has long been acknowledged. My summary: I am glad that the sustainable investing market is sufficiently developed and differentiated and transparent for everyone to find their preferred approach, from minimum exclusions to impact. radicant bank #InvestInSolutionsNotProblems Sasha, Nico, Eve Morelli, Arlette, Matthias 

Many people ask me, 'What is the real impact of #sustainableinvesting?' I am pleased to share an insightful paper that addresses this important question: 'The Impact of Sustainable Investing: A Multidisciplinary Review,' authored by Emilio Marti, Martin Fuchs, Mark DesJardine, Rieneke Slager, and Jean-Pascal Gond, and published in the Journal of Management Studies. Key insights: 💡 Three #Impact Strategies: Sustainable investors utilize three primary strategies to influence corporate #sustainability: portfolio screening, shareholder engagement, and field building. Each strategy plays a distinct role, with portfolio screening and shareholder engagement creating direct impacts on companies, and field building driving change through broader systemic influence. 🏢 Direct Impact on Companies: Portfolio screening and shareholder engagement primarily result in direct impact on companies by reallocating capital to sustainable firms and engaging directly with corporate leadership. This can lead to changes in corporate practices, from reducing carbon emissions to improving supply chain ethics. 🔗 Indirect Impact through Other Shareholders: Sustainable investors also influence other shareholders by shifting their perceptions and encouraging them to adopt sustainable practices. This indirect impact is crucial as it amplifies the efforts of early movers, creating a ripple effect across the investment community. 🏛️ Indirect Impact via the Institutional Context: Field building goes beyond influencing individual companies or shareholders. It reshapes the very institutional contexts in which businesses operate, through activities such as establishing voluntary standards, supporting regulatory changes, or delegitimizing harmful business practices. This broader impact is essential for driving industry-wide change. 🔄 Shareholder Impact as a Distributed Process: Sustainable investing is not a one-time effort. Impact emerges gradually, as different types of shareholders—both mainstream and peripheral—build on each other's efforts. This collaborative and distributed process underscores the importance of diverse investor involvement in achieving meaningful, long-term change. 📈 Implications and Future Research: The authors argue that understanding sustainable investing's impact as a distributed process opens up new avenues for research. Future studies should focus on the interaction between direct and indirect impacts, why shareholders choose different strategies, and the limitations of specific strategies. These insights will help refine our understanding of sustainable investing and its ability to drive systemic change toward a more sustainable economy. In my view, this paper offers a profound and multifaceted understanding of how sustainable investing influences not just companies, but entire industries and the institutional frameworks that shape corporate behaviour. #ESG #ImpactInvesting #CorporateSustainability #FutureofFinance

When we evaluate opportunities at the Cisco Foundation and Cisco Social Impact Investments, we look beyond the immediate need and focus on what it takes to build lasting resilience. That perspective shapes how we invest. We take a continuum approach to support, recognizing that organizations need different types of support at different stages: from early solution design, to validation, to scale, and ultimately transition toward long-term sustainability. A few principles guide this work: - Equity, by prioritizing under-resourced individuals and communities - Proximity, by investing in organizations closest to the challenges they are addressing - Impact, by strengthening measurement and learning from the outset - Continuity of support, because meaningful outcomes require sustained partnership This shows up across catalytic funding, technology donations, and strategic guidance, supporting outcomes in education, economic empowerment, and climate regeneration. The goal remains consistent: equitable, resilient, and empowered communities where everyone can thrive. You can view our full Theory of Change here: https://lnkd.in/gGvWxxCe

Investors are no longer asking how much they can gain but how they gain it. Are you one of them? The Principle of Responsible Investment (PRI) is at the heart of this shift, guiding the global investment community toward more sustainable and ethical practices. ♻️ As environmental, social, and governance (ESG) concerns become increasingly relevant, the PRI offers a framework for integrating these considerations into investment decisions. The PRI, launched in 2006 with support from the United Nations, is a voluntary commitment by investors to incorporate ESG factors into their investment processes. 📝 It is founded on six principles designed to encourage a more responsible and sustainable approach to investing. These principles range from integrating ESG issues into investment analysis and decision-making processes to advocating for greater ESG transparency and working together to enhance overall effectiveness. 🤝 Signatories to the PRI, which include institutional investors, asset managers, and financial institutions, pledge to consider the long-term impacts of their investments on society and the environment, not just short-term financial returns. ⚖️ This approach combines doing good with mitigating risks and enhancing returns. Ignoring ESG factors can expose investors to significant physical and transition risks that can affect financial return. 🌐 The PRI has grown into a global movement, with over 5,000 signatories managing over $121 trillion in assets worldwide! This growth reflects a fundamental change in how the investment community views its role in addressing global challenges, from climate change to inequality. #impactinvesting #responsiblefinance #ESG #sustainability

In all my conversations with executives since last year, there's no doubt about the new sustainability imperative: ROI and Value Creation. The global landscape has shifted dramatically: - New US administration reshaping policies - Cost of living pressures intensifying - EU Omnibus directive transforming reporting standards In this evolving context, sustainability without clear ROI and value creation is no longer optional—it's essential for business survival and growth. Recent research from Deloitte and The Wall Street Journal highlights that 27% of food companies achieve over 10% ROI from sustainability investments—proof that purpose-driven strategies deliver profits. But how do you quantify the full value of sustainability beyond cost savings? Two years ago, I was introduced by the great Karen L. Coyne to the Return on Sustainability Investment (ROSI™) framework from NYU Stern School of Business, an great model to bridge sustainability goals with financial performance. ROSI helps companies: 1. Monetize hidden benefits like brand equity, employee retention, and supply chain resilience. 2. Prioritize high-impact strategies across industries—from healthcare decarbonization to regenerative agriculture. 3. Build CFO buy-in by translating sustainability into tangible financial metrics. The Food & Agriculture Sustainable Strategies Framework, developed with companies like Ingredion Incorporated and Anheuser-Busch, identifies 12 value-driving practices—such as reducing water use and ethical sourcing—that cut costs and boost market share. Sustainability isn't a cost center—it's a growth engine. Tools like ROSI empower leaders to: - Turn risk mitigation into revenue streams - Align sustainability goals with investor expectations - Future-proof operations against climate disruptions Let's stop treating sustainability as regulation and a checkbox, and start treating it as a value driver. 💼🌱

What happens when investors exclude a part of the universe to create sustainable portfolios? We explore this question in our new paper 𝗧𝗵𝗲 𝗜𝗻𝘃𝗲𝘀𝘁𝗺𝗲𝗻𝘁 𝗜𝗺𝗽𝗹𝗶𝗰𝗮𝘁𝗶𝗼𝗻𝘀 𝗼𝗳 𝗦𝘂𝘀𝘁𝗮𝗶𝗻𝗮𝗯𝗹𝗲 𝗜𝗻𝘃𝗲𝘀𝘁𝗶𝗻𝗴 - which was published in the 𝘑𝘰𝘶𝘳𝘯𝘢𝘭 𝘰𝘧 𝘐𝘯𝘵𝘦𝘳𝘯𝘢𝘵𝘪𝘰𝘯𝘢𝘭 𝘔𝘰𝘯𝘦𝘺 𝘢𝘯𝘥 𝘍𝘪𝘯𝘢𝘯𝘤𝘦. Specifically, we tested how three common sustainable investing approaches - SDG Alignment; ESG Integration; and Carbon Reduction - affect diversification, factor premiums, and factor exposures. What we found: 🌍 Diversification holds up. Efficient frontiers for restricted vs. unrestricted universes are virtually identical over the long run. 🚀 Factor strategies stay intact. Value, Momentum, Quality, and Low-Risk premiums are not meaningfully affected, while factor exposures remain unchanged. 🥬 Sustainability integration can avoid controversies. Yet this applies to SDG alignment, and to a smaller extent Carbon Reduction - ESG Integration doesn't reduce controversies. Why it matters: These results suggest that investors can pursue sustainability objectives without sacrificing diversification or long‑run factor premia. Read the paper here: https://lnkd.in/e6pcAuny or the open access version on SSRN: https://lnkd.in/eBFiFuS5 Thanks to my great co-authors Joop Huij, PhD and Dries Laurs, as well as to Kees Koedijk and XIANG (Sean) GAO, PhD, CFA, FRM, CAIA, FAIQ (CII) for their feedback, and Anni Schleicher for editorial support.

Which sustainable investing strategies do academic experts think can actually make a difference for the climate? Not all approaches look equally promising. 📊 In our survey of 182 academic experts, we asked how likely it is that investors can contribute to fighting climate change through four different channels. A clear ranking emerges. The two channels experts view most favorably are: ✅ Shareholder engagement — voting shares and engaging with management 91% see a positive likelihood of climate impact ✅ Providing capital to green firms facing financing frictions 89% see a positive likelihood of climate impact Experts agree much less on the two classic tilting channels in efficient capital markets: ❓ Shifting portfolios toward green firms to reduce their cost of capital ❓Shifting portfolios toward green firms to raise their market value and incentivize firms to become greener Takeaway: ➡️ There is consensus among academic experts that sustainable investing can have a meaningful climate impact. But it is less through passive portfolio tilts and more through active ownership and providing capital where financing frictions are real. Paper: Beliefs About the Climate Impact of Green Investing with Julian Kölbel and Camilla Weder 👉 SSRN: https://lnkd.in/eefXxvXG   Leibniz Institute for Financial Research SAFE, MIT Sloan School of Management MIT Sloan Sustainability Initiative #SustainableFinance #GreenInvesting #ClimateFinance #ESG #AcademicResearch

The next module of the Sustainable Investing course at Harvard Business School, titled Public Markets, delved into the complexities of impact investing in public markets, exploring how institutions balance financial performance with environmental and social goals. We examined cases such as Generation Investment Management’s assessment of Schneider Electric for inclusion in their focus list, BlackRock’s approach to active impact equities, and the Ford Motor Company’s $2.5 billion green bond offering. We were joined by industry leaders like Miguel Nogales (Generation), Nedko Kyuchukov (Generation), Ryan Hershberger (Ford), and Zachary Fiore (Morgan Stanley)  who shared valuable insights into sustainability metrics, impact measurement, and the evolving role of public equity in advancing climate and social goals. Through these discussions, we explored how public market investments, from green bonds to active impact equities, can drive sustainable capitalism while balancing financial returns with the long-term goal of a net-zero future. The module highlighted the importance of strategic engagement and the growing influence of institutional investors in creating a sustainable, impact-driven economy.

ESG is not a constraint on growth; it is a catalyst for trust, stability, and long-term value. In today’s markets, Environmental, Social, and Governance principles are often misunderstood as compliance burdens or political narratives. However, when applied prudentially and contextually, ESG strengthens the core mechanics of capital formation abd enhances trust in capital by increasing transparency, aligning incentives, and reducing information asymmetries. This allows investors to price risk more accurately and provides institutions with clearer signals about long-term performance and resilience. For banks and financial intermediaries, ESG represents an opportunity, not a cost. By integrating ESG metrics into risk management, credit processes, and product design, banks can create durable, sustainable fee income while supporting economic sectors that are resilient, future-ready, and socially valuable. Transition economies should embrace ESG rather than shy away from it. When applied with prudence and contextual understanding, ESG does not hinder industrialization or growth. Instead, it improves governance, widens and diversifies funding and attracts higher-quality capital, and accelerates the structural reforms essential for global competitiveness. Moreover, ESG encourages a deeper understanding of profit—not to diminish it, but to comprehend it more fully. Profit grounded in transparency, stewardship, and long-term value is more resilient, investable, and sustainable. This type of profit strengthens markets, builds trust, and supports durable economic development. At the macro level, an economy that embeds ESG discipline grows stronger. Better governance lowers systemic risk, environmental stewardship reduces volatility, and social investment strengthens human capital. Together, these factors accelerate sustainable development and enhance a country’s competitiveness. ESG, understood correctly, is financial discipline applied to the real world. It transforms capital into an engine of sustainable and less volatile returns. #esg Qazaqstan Investment Corporation Clearbrook