Trying to mix the notions of sustainability with investment has certainly captured the attention of many forward-thinking companies and corporate investors, but actually managing to find sustainable investments is creating a lot of issues of practicality.
A new Towers Watson and Oxford University study of the subject, "Sustainable Investing: We Need a Bigger Boat," finds investors around the world struggling with the problem, though they still believe that sustainable, long-term-minded investment will prove to be beneficial in the long run.
"While investors are finding this a challenging area, there are increasing rewards from investing sustainably," notes Roger Unwin, Towers Watson's global head of investment content. "At a time when the investment world is changing so radically, investors now need to incorporate longer time horizons coming from economic, environmental, social and corporate governance factors, to be successful."
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How, then, can investors continue to find new opportunities in a world which will eventually be seriously impacted by resource scarcity and climate change, not to mention ongoing political and economic instability?
The study delved into the issue and suggests that governments, asset owners and corporations will all have to work together to make sustainable investment work in the future.
The investment industry, it suggests, is just part of a larger chain and will act as a litmus test to figure out better ways to manage both retiree wealth accumulation and decumulation as well as handling the strategies required to manage wealth and transfer risk.
Some leading asset owners, including large pension funds, have begun to promote sustainable investment practices that focus on long-term investing that's both efficient and fair to coming generations.
Asset managers, in particular, play an important role in adopting business practices that are aimed at sustainable investing and by incorporating such thinking in their investment processes.
"Most of the world's asset owner governance is creaking under financial and complexity issues," Unwin adds. "The confusions in sustainable investing are crystal clear. Investors struggle with the long term when the short term comes first, and they ignore the extra-financial when it's the financial that directly counts."
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