What is the Investment Leaders Group?
The Investment Leaders Group (ILG) is a voluntary initiative, driven by its members, facilitated by the University of Cambridge Institute for Sustainability Leadership (CISL), and supported by academics in the University of Cambridge and elsewhere. The ILG holds a unique position at the nexus of academic research and cutting-edge corporate leadership.
CISL aims to gather a small but influential group of leading investors, with a shared belief in the need for bold leadership in advancing the practice of responsible investment. Twelve leading investment managers and asset owners with over US $12 trillion under management and advice currently form the ILG. Companies in the ILG are represented by a C-suite level sponsor and a standing working group member (typically head of responsible investment or ESG).
The vision of the ILG is an investment chain in which economic, social and environmental sustainability are delivered as an outcome of the investment process as investors go about generating robust, long-term returns. The ILG believes that responsibility should be at the heart of the investment process in order to best serve clients and beneficiaries. Not a niche, but a strategic response by investors to social and environmental trends. The ILG’s maxim is to lead by example.
With our support, members co-develop tools and solutions to existing market barriers. In this way, members can pilot test our research and put this new thinking into practice ahead of the rest of the market. Through its engagement with external stakeholders including policymakers, the group seeks to create the necessary conditions for these practices to achieve scalable action.
Members
*HSBC Bank (UK) Pension Scheme
ILG work programme
On the basis of the gaps in knowledge, standards and practices, the following areas were selected for development in the ILG:
Measuring investment impacts
The ILG provides an overarching framework, for understanding and communicating the impact of investment portfolios. Our goal is to develop a set of impact metrics that translate the SDGs into measurable indicators that can be calculable, easily understood, and implementable by investors.
Promoting long-termism
The ILG developed a toolkit for investors who wish to design investment mandates that can help shift the investment chain towards responsible, long-term value creation. In addition, the ILG seeks to develop a checklist allowing asset owners to assess a fund’s long-term orientation as well as enable asset managers to review their own performance.
Understanding consumer preferences and behaviours
The ILG is developing a Virtual Investment Experiment (VIE), which tests investor preferences as to how they trade off financial performance against impact. The experiment is designed to simulate real investment choices and to test pension plan beneficiaries and retail client’s preferences, when facing both sustainability and financial information in standard fund factsheet format.
Climate risk and resilience
The ILG developed a model that quantifies the impact of potential climate and energy regulation on company profitability. In addition, the ILG has studied the economic and financial impacts of climate risk in order to identify opportunities for reducing climate-related investment risks through portfolio construction and diversification across different asset classes, regions and portfolios.
ILG foundation work
The ILG started by clarifying the purpose of its work in the 2014 report, The Value of Responsible Investment. This explored the ethical, financial and economic cases behind responsible investment, concluding that it is not only consistent with fiduciary responsibilities but, done well, can improve long-term returns while reducing systemic risks.
The Value of Responsible Investment: The moral, financial and economic case for action
