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Applying the Long View to Investment Funds: Introducing the Long-term Disclosure Framework

March 2019 – The Investment Leaders Group (ILG) has developed an original framework that can be used by institutional and retail investors, and by their advisors, to assess the long-term orientation of the investment funds that they are being offered.

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Applying the Long View

If investors choose funds with a longer-term orientation, they signal that long-term orientation is a characteristic that they value. This creates an incentive for investment managers to incorporate long-term trends into portfolio construction decisions and be able to offer more long-term oriented investment products. In turn, this will encourage companies invest in sustainability strategies and programmes that support the longer-term success of the company.

However, it is difficult for investors to tell whether funds really have a long-term orientation or the extent to which sustainability-related considerations are considered in investment practices and processes. To address this, the Investment Leaders Group (ILG), in co-operation with the University of Cambridge Institute for Sustainability Leadership (CISL), has developed a new Long-term Disclosure Framework that can be applied to all investment funds.

The framework identifies the key building blocks for long-term responsible and sustainable investment – including investment beliefs, performance measures and stewardship – and translates these into a series of assessable (yes/no) questions about the disclosures that should be provided by investment funds in order to enable their customers to assess the long-term orientation of the fund.

The ILG’s vision is that funds will adopt this framework, allowing financial consumers can make informed choices about how and where to invest. This new framework represents an important step in that direction.

Citing this report

Please refer to this report as: University of Cambridge Institute for Sustainability Leadership (CISL). (2019 March). Applying the Long View to Investment Funds: Introducing the Long-term Disclosure Framework. Cambridge, UK: Cambridge Institute for Sustainability Leadership.

Published: March 2019

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Author and acknowledgements

This report was written by Dr Rory Sullivan and reviewed by the ILG team.

Disclaimer

The opinions expressed here are those of the authors and do not represent an official position of their companies, CISL, the wider University of Cambridge or clients.