A Sustainability Integration Framework for Institutional Investors

by | Oct 14, 2023

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A Sustainability Integration Framework for Institutional Investors

Author: UNCTAD

Year Published: 2023
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There has been a lack of widely accepted comprehensive frameworks and guidelines on sustainability integration for institutional investors, and related to this, a lack of consistent regulatory requirements at the national level. In order to address this challenge and better support institutional investors to address sustainability risks in a systematic and structured manner, UNCTAD and UNEP FI propose a framework for sustainability integration, based on international best practices and aligned with leading international initiatives.

The framework ensures that institutional investors have the appropriate governance, risk management and investment policies in place to mitigate the risks and capture the opportunities posed by sustainability factors. Additionally, institutional investors, such as SWFs and PPFs, should leverage their status as “universal owners” to encourage investees, external asset managers, regulators and service providers to improve their approaches to sustainability. As institutional investors that represent the future interests of a pool of beneficiaries, PPFs and SWFs are in a unique position to shape the direction of public policy on issues such as climate change that will have an impact on the lives of its beneficiaries (financial and otherwise). Finally, investors should report on progress, drawing on key metrics and targets