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New toolkit helps investors shift the investment chain towards responsible long-term value creation

last modified Jan 09, 2019 12:28 PM
16 May 2016 – Short-termism in financial markets has been widely identified as a cause of underinvestment and poor decision-making by corporations, which undermines long-term value creation. A new report from the Investment Leaders Group provides a toolkit for investors who wish to design investment mandates that can help shift the investment chain towards responsible, long-term value creation.

Since John Kay published his internationally acclaimed report on the UK equity markets and long-term decision-making in 2012, the debate as to the merits of long-termism and the pitfalls of short-termism has challenged policymakers, regulators, industry commentators and investment professionals alike from all around the world.

A new report from the ILG  provides a toolkit of 10 design features to develop active equity mandates with varying ‘strengths’ by adjusting the various characteristics to suit their needs, circumstances, and belief in the investment significance of sustainability issues. Such issues can range from investment time horizons to organisational culture, and from fund managers’ incentives to the portfolio’s contribution to society and the environment.

Investors will be able to use the toolkit to design investment strategies that can make a particularly strong contribution to responsible, long-term value creation – improving long-term returns for savers and clients, at the same time as contributing to the environment and society in which they operate.

"Integrating environmental, social and governance factors into the investment process sharpens the focus on the long term”, said Urban Angehrn, Chief Investment Officer at Zurich Insurance Group, which is a member of the Investment Leaders Group. “The relationship between asset owner and asset manager is absolutely critical in setting the right expectations with respect to that process."

Long-termism has the advantage of a general increase in economic output and efficiency across companies as a whole; higher returns from individual companies within a portfolio as a result of holding periods that allow the investor to capture longer term value; and the opportunity to enhance value creation through engagement built on strong relationships with companies.


Media contacts

Michael Hoevel | Media Consultant | c/o Marchmont Communications

| T +44 79 62 657 322

Adele Williams | Media & Communications | Cambridge Institute for Sustainability Leadership

| T +44 1223 768451


About the Investment Leaders Group

The Investment Leaders Group (ILG) is a global network of 11 leading investment firms convened by the University of Cambridge Institute for Sustainability Leadership. ILG members are: Allianz Global Investors, First State Investments, Loomis Sayles, Natixis, Nordea, Old Mutual, PensionDanmark, Standard Life Investments, TIAA Asset Management and Zurich Insurance Group. The ILG’s mission is to shift the investment chain towards responsible and long-term value creation, so that economic, social and environmental sustainability are delivered as an outcome of the investment management process as investors go about generating robust, long-term returns.

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Members

Investment Leaders Group members. Cambridge Institute for Sustainability Leadership.

 *HSBC Bank (UK) Pension Scheme

Contact

Kajetan

Kajetan Czyz, Senior Programme Manager, Investment Leaders Group