Five Essential Resources for Advancing Responsible Climate Investment
As the impacts of climate change become increasingly apparent, aligning investment strategies with sustainable climate action is crucial. For trustees, pension fund asset managers, union members and leaders, and other stakeholders, understanding responsible investment principles empowers a commitment to creating lasting, positive environmental and social outcomes while maintaining financial returns. However, responsible investing and finance and pension systems are complex, covering a range of approaches like ESG integration, impact investing, and stewardship. Navigating these systems can be challenging without clear definitions and frameworks, especially as responsible investment terminology often overlaps and can carry varied interpretations across sectors.
Climate Finance Action (CFA) has curated essential resources that provide in-depth insights into responsible investment and climate finance to address this need. These resources clarify the most effective ways to implement ESG criteria, integrate climate risk management into decision-making, and understand how values-aligned investing can influence corporate behavior and foster resilience against climate risks. In addition to designing and curating a set of resources, CFA seeks resources from partners, collaborators, and other organizations working to empower stakeholders to make informed decisions, leverage public capital effectively, and contribute meaningfully to a sustainable and equitable future. Below are five such resources.
Investing in Our Future: A Guide for Climate-Conscious Pension Strategies
Author: Climate Finance Action
From wildfires and heat waves to extreme weather disasters, the climate crisis is destroying lives, community health, safe housing and workplaces, stable economies, and more. Yet, most of the finance world continues to barrel down a destructive path with its "business as usual" approach. But it doesn't have to be this way. With roughly $6 trillion in investor power from US public pension funds, working people can leverage their pension funds to be a powerful driver for more stable workplaces and jobs, secure retirements, and a safer climate future. The "Investing in Our Future" guide was made to empower public workers, pension trustees, and their allies to have a stronger voice in their pension fund's ability to protect workers' retirement from climate risk– and in the kind of future workers' retirement savings are funding.
Definitions for Responsible Investment Approaches
Author: CFA Institute Research and Policy Center, Global Sustainable Investment Alliance (GSIA), and Principles for Responsible Investment (PRI)
Growing global interest in responsible investment has led to innovative approaches and terms, yet clarity is essential for effective communication across the finance sector. The CFA Institute, GSIA, and PRI created standardized definitions for five key terms—Screening, environmental, social, and governance (ESG Integration), Thematic Investing, Stewardship, and Impact Investing—outlining each term's unique characteristics, practical applications, and essential elements. This guide is a resource for investors and stakeholders, promoting shared understanding and consistency in responsible investing.
Integrating ESG Factors in the Investment Decision-Making Process of Institutional Investors
Author: OECD iLibrary
The OECD Business and Finance Outlook provides a comprehensive look at how institutional investors integrate ESG factors into their decision-making. Highlighting the need for resilience post-COVID-19, it reviews diverse ESG approaches institutional investors employ to build stability in economic and social systems. This edition emphasizes the necessity of standardized, accessible ESG data to align investments with long-term sustainability, value, and risk management. It is a vital resource for institutions and investors seeking to strengthen financial and social resilience through responsible investing practices.
Does ESG Investing Improve Risk-Adjusted Performance?
Author: Véronique Le Sourd, EDHEC-Risk Climate Impact Institute
One of the ongoing debates in responsible investment is whether ESG metrics directly impact financial returns. In this report, Le Sourd investigates the relationship between ESG investing and financial performance, suggesting that prioritizing environmental and social impact may yield benefits beyond traditional financial returns. This report is valuable for exploring how responsible investing affects portfolios.
Accelerating an Equitable Transition: A Framework for Economic Equity
Author: World Economic Forum
Accelerating an Equitable Transition: A Framework for Economic Equity explores how climate change intersects with inequality, focusing on the effects of climate mitigation on workers, entrepreneurs, and consumers. This framework advocates for fair distribution of costs and benefits to secure social and political support, center people in the green transition, and shape a low-carbon future that benefits people and the planet.
Each of these resources focuses on the impact of blending financial goals with sustainable outcomes, providing a roadmap for aligning investments with climate resilience, social impact, and workers' rights. Explore more of CFA's resources here and contact us if you have questions or want to collaborate on future reports and guides.
