A new investor-backed, 10-point “blueprint” for implementing sustainable investment is being launched at the International Corporate Governance Network’s annual meeting in New York today (June 26).
The report was developed by Boston-based sustainability advocacy group Ceres with leading investors including State Street Global Advisors, New York State Comptroller Thomas DiNapoli, the California State Teachers Retirement System (CalSTRS) and the Florida State Board of Administration amongst many others.
The 21st Century Investor: Ceres Blueprint for Sustainable Investing was written by Ceres’ Peter Ellsworth and Kirsten Snow Spalding.
The 56-page document features 10 steps for integrating sustainability into investment beliefs, asset allocation strategies, corporate engagement, proxy voting and other areas (see full list below). Each step is accompanied by real-life case studies.
Step six calls for asset owners to require sustainable investment expertise in manager and consultant procurement, with the request for proposal (RFP) stage “a good place to start”.
“If the asset owner’s expectations are made clear, investment managers and consultants responding to RFPs will understand that ‘investing as usual’ is no longer acceptable,” the guide states. And trustees need to be clear with their investment consultants about their expectations on ESG integration. If the consultant can’t help “and is not committed to improving its capabilities”, trustees should issue an RFP for a new or supplementary firm.
“I urge you to read this valuable report and to add your voice to critically important discussions taking place within the investment community about how we can achieve long-term sustainable growth,” says New York’s DiNapoli, trustee of the $160bn New York State Common Retirement Fund, in the report’s foreword.The aim is for it to become an “owner’s manual” for implementing sustainable investments. Similar initiatives are underway elsewhere, for example in South Africa, where the finishing touches are currently being put to responsible investment guidance for institutional investors.
“If the asset owner’s expectations are made clear, ‘investing as usual’ is no longer acceptable”
Ceres says signatories to the Principles for Responsible Investment (PRI) should find the blueprint a practical tool for implementing the six PRI principles.
The 10 Action Steps:
1. Establish a commitment to sustainable investment though a Statement of Investment Beliefs
2. Establish board level oversight of sustainability policies and practices
3. Identify sustainability issues material to the fund
4. Evaluate asset allocation for material sustainability risks
5. Select an investment strategy & integrate sustainability criteria
6. Require sustainable investment expertise in manager and consultant procurement
7. Evaluate manager performance against sustainable investment expectations
8. Establish engagement strategies and proxy voting guidelines consistent with sustainable investment goals
9. Support policies and market initiatives that promote a sustainable global economy
10. Integrate sustainable investment criteria across all asset classes and strategies.