Traditional investing delivers value by translating investor capital into investment opportunities that carry risks commensurate with expected returns. Sustainable investing balances traditional investing with environmental, social, and governance-related (ESG) insights to improve long-term outcomes.

In many ways, sustainable investing can be seen as part of the evolution of investing. There is a growing recognition among industry participants that some ESG factors are economic factors, especially in the long term, and it is, therefore, important to incorporate material ESG factors.

There are three critical elements of sustainable investing:

• Sustainable investing is additive to asset management theory and does not mean a rejection of foundational concepts.
• Sustainable investing develops deeper insights about how value will be created going forward using ESG considerations.
• Sustainable investing considers diverse stakeholders, consistent with how companies are developing.

Interest in sustainable investing continues to grow, and the pressure is on for investment organizations to move toward the sustainable investing model. In an era when the investment industry is challenged by rising end-client and regulatory expectations and challenging economics, the alternative of maintaining the status quo leaves the industry vulnerable to decline.

The next stage of development will depend heavily on industry leadership and innovation in investment thinking and practice, as well as data management. If these are present, the future is exceptionally bright.

This report is informed by the views of more than 7,000 investment industry stakeholders. 

As the largest global association of investment professionals, CFA Institute has committed to the development of sustainable investing and ESG investing and analysis through a variety of efforts including the following:

• Educating investment professionals via a specialist certificate, professional development, practitioner-focused research, and the CFA Program curriculum: In the next edition of the curriculum, ESG content will increase by 130%.
• Performing ongoing research in the field of sustainable investing, with recent reports such as Climate Change Analysis in the Investment Process and ESG and Responsible Institutional Investing around the World.
• Creating standards to improve product transparency and comparability in investor reporting, with the CFA Institute ESG Disclosure Standards for Investment Products expected in late 2021
• Supporting company reporting efforts by providing the investor view on advisory committees and working with accounting standard setters to look for harmonization opportunities