Our new Investment Leadership Programme will help turn ESG leadership into long‐term results

This article is free, but to access more of our content, you can sign up for a no strings attached 28-day free trial here.

---

For many investors, the Covid‐19 pandemic has exposed the fragile and complex links between humans and the natural world and reminded us of the need for an evermore responsible approach to investing. 

We welcome this increased recognition of why responsible investing is so vital for the world’s citizens and the planet as a whole. However, what is needed now to effect tangible, long‐term change on some of the most critical challenges of our time – from climate change to social justice – is robust, collective leadership on the part of investors. 

In order to better support leading investors and boost ambition, UN Environment Programme Finance Initiative (UNEP FI) and the Principles for Responsible Investment (PRI) are launching the Investment Leadership Programme (ILP), to provide investors with the guidance and tools needed to raise the bar on responsible investment practices. The ILP will also work to develop leading practices across the investment industry linking the signatories of PRI with the signatories to UNEP FI’s Principles for Responsible Banking and Principles for Sustainable Insurance. Where relevant, the ILP will also foster dialogue between investors, banks and insurers to create a cross‐industry coalition of leaders. It will facilitate opportunities for the finance sector to work in concert to achieve crucial environmental and social targets such as those set out by the Sustainable Development Goals (SDGs) and Paris Climate Agreement. Because it is only by working together that transformational change can be realised across the entire finance sector. 

We hope to help investors shape sustainability outcomes in a number of ways, through improving regulation, piloting investment practices to drive sustainable impact, or re‐evaluating risk-return models

The partnership will capitalise on the close relationship that the two organisations have shared for the last 15 years. The ILP will bring together the UN’s convening power, the insight and resources of the UN Environment Programme, and the PRI’s extensive track record of actively engaging investors on a wide range of ESG considerations. We see this collaboration as a natural and seamless extension of our shared vision of working with investors and across the financial system on better implementation of responsible investment practices. 

The roots of our two organisations run deep and are intertwined. UNEP FI was established in 1992, when a group of visionary leaders saw that transforming private finance would be key to achieving sustainable development in the run up to the Rio Earth Summit. This marked the beginning of the partnership between the UN Environment Programme and the global financial sector (banks, investors and insurers) to mobilise private sector finance for sustainable development. Members now number nearly 400 representing some $80tn.

The PRI was launched with the support of then‐UN Secretary‐General Kofi Annan, by UNEP FI and the UN Global Compact, and swiftly became the world's leading proponent of responsible investment. From a small group of investors, the PRI has grown to 4,000 signatories representing in excess of $100tn in assets under management.  

Bringing together best practices and resources from UNEP FI and the PRI, we hope to help investors shape sustainability outcomes in a number of ways – for example, through improving regulation, piloting investment practices to drive sustainable impact, or re‐evaluating risk-return models in light of tangible sustainability and environmental risks and opportunities. 

In the last few years, UNEP FI and the PRI have collaborated on several game‐changing initiatives; most recently, the UN‐convened Net‐Zero Asset Owner Alliance (NZAOA), which UN Secretary‐General António Guterres described as the “gold standard” of the many commitments to Net Zero. 

Launched in 2019, the NZAOA comprises 42 of the world’s largest institutional investors, with nearly $6tn in assets under management, who are committed to achieving net‐zero emissions for their entire portfolios by 2050. They also agree to align with the most ambitious decarbonisation pathways set by the Intergovernmental Panel on Climate Change, and to adopt intermediary targets every five years, starting in 2021. 

The launch of the NZAOA has spurred a number of other net‐zero initiatives across the asset management, banking and insurance sectors. These ambitious programmes clearly demonstrate the benefits of collaboration between international organisations and the private sector in being able to change the sustainable investment landscape and raise responsible investor ambition. 

As Secretary‐General Guterres has further noted: “The private sector has a crucial role to play in building a more equitable and sustainable world. Our simple objective for 2021 is to make sure that we are able to build a truly global coalition for carbon neutrality by 2050.” 

We agree with that assessment, which is why we have been working hard for the last decade and a half, encouraging investors to use their collective financial firepower to move more decisively on making responsible investment practices an integral part of mainstream investing. 

The initiatives within the ILP will provide a forum for investors to identify, agree and implement leadership activities at an accelerated pace. It will become a trusted resource for investors looking for guidance and thought leadership on implementing the SDGs and the Paris Climate Agreement through their own investment initiatives, and encourage greater engagement with policymakers. 

Through the ILP, investors will be able to develop the best practices and foster the leadership initiatives and solutions that can lay the foundation for a more sustainable financial system and a more stable global economy.

Eric Usher is Head of UN Environment Programme Finance Initiative

Fiona Reynolds is CEO of the Principles for Responsible Investment