Resilient and Sustainable Portfolios

This report introduces WWF’s Responsible Investment Framework. It provides context around why the framework was developed, its uses and sheds light on the underlying indicators and sub-indicators the framework analyses.

Introduction

The 2015 Paris Agreement represented a landmark moment, when governments around the world recognized the need for urgent action to address climate change and prevent catastrophic consequences for both people and planet. Climate change is the result of unsustainable business practices, which are also causing deforestation and biodiversity loss and the degradation of other ecosystems, including freshwater basins and oceans. The combined effect is the degradation of natural capital—the stocks of natural resources such as air, water, soils, forests, plants and animals.

No single actor can resolve the crisis on their own. For this reason, leadership and collective action by the private sector are crucial, and significant shifts in capital flows towards sustainable development are required. Achieving the UN Sustainable Development Goals (SDGs) by 2030 will require investments estimated at US$12 trillion, of which US$5 trillion pertains to Asia, in four key areas: food and agriculture, cities, energy and materials, and health and well-being. The finance sector holds significant potential to address these challenges and drive sustainable development. It can influence mainstream businesses to improve their operational and supply chain sustainability or provide financing to scale up new businesses and technologies that offer much-needed solutions.

While all actors in the financial system have a role to play, this report focuses on asset managers, who wield considerable influence as shareholders over multiple companies across a range of sectors and geographies. Via financial decision-making processes, from stock selection, monitoring, engagement and proxy voting, through to the development of green investment products, asset managers can encourage companies to adopt science-based sustainability practices that will ensure businesses operate within planetary boundaries and contribute to sustainable development.

The goal of this report is to support the asset management industry in this regard by providing a framework that outlines WWF’s perspective on responsible investment for listed equities—one that is not only holistic in its procedural rigour but rooted in the scientific consensus and criteria underlying the environmental and social issues at hand. While we recognize its importance to responsible investment, this report and framework deliberately do not focus on corporate governance as asset managers generally already have significant experience addressing these issues. However, where relevant the framework does address the asset manager’s own sustainability governance.