Assessing System-Level Investments

This guide is intended to assist asset owners in assessing their managers’ effectiveness in addressing systemic social and environmental risks and rewards.

Systemic social and environmental challenges such as climate change, income inequality, access to fresh water, and gender diversity are, among others, an emerging feature of today’s investment landscape— and will likely continue to be so. Because the long-term sustainability of their investments depends in large part on the health and preservation of these systems, asset owners will need, and be expected, to contend with these and other interconnected, complex issues.

To do so, they will need to identify and measure the performance of their managers in addressing these systemic issues. Implicitly, many managers already recognize this challenge when, in increasing numbers, they adopt environmental, social, and governance (ESG) integration, align themselves with the UN Sustainable Development Goals (SDGs), endorse stewardship codes calling for consideration of climate change and other systemic risks, or self-identify as long-term in their approach.