Responsible Investment

We are in the midst of multiple crises—global health, climate crisis, biodiversity loss, poverty, inequality, and other societal grand challenges. A typical first reaction is that it is the government’s role and responsibility to take care of these crises. Yet, government actions are often lacking or insufficient or bear externalities. This puts the spotlight and responsibility on the private sector to help mitigate these challenges. Accordingly, understanding how and to what extent (non- profit and for-profit) organizations and investors can grow and sustain their organizations over time while strengthening —instead of undermining—the very system in which they operate is important, as organizations can play a critical role in addressing the sustainability challenges our economies are facing.

While the private sector is increasingly incorporating environmental, social, and governance (ESG) considerations in their investment practices, key hurdles remain to make progress. The same applies to academic research. In particular, accounting, finance, law, and management scholarship is typically confined to estimate the portfolio- or firm-level sustainability performance. In other words, research typically does not take into account how asset allocation, strategic management, and investment practices impact society and the natural environment and, vice versa, how societal and environmental risks (and opportunities) impact firms’ business and investment practices. Yet, doing so is critical in order to foster a more sustainable world.

To foster research that goes beyond the portfolio- and firm-level, the ECGI’s Responsible Investing Program will encourage research that adopts a systems- focused approach and examines the relationship between investment and environmental, social, and economic risks and opportunities. Furthermore, it will foster research that analyzes whether investment practices can really move the needle in generating “tangible” sustainability improvements, and research on greenwashing, its economic and societal costs, and the implications for policy. To encourage new research that adopts a systems-focused, multi-disciplinary, and policy-oriented approach, the ECGI’s Responsible Investing Programme will organize conferences, workshops, and other research activities in the upcoming years.

Overview

Responsible Investment is transforming the international asset management industry. It comprises the incorporation of ESG issues into portfolios and active ownership (stewardship) that seeks to improve portfolio companies’ ESG performance.

Research Questions

What are the motivations of investors to adopt responsible investment strategies?

Are certain investment strategies more efficient than others at delivering sustainable impact and/or financial performance?

Do investors walk the ESG talk?

How can we identify those that engage in greenwashing and assess and mitigate greenwashing related externalities for our economies, societies, and the natural environment?