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25 June 2019

ESG Integration: Progressive Solutions

The way we live on this planet is changing. This is now having an impact on the investment industry, with conversations starting on how inequality, climate change, loss of nature, water scarcity and poor health need to be dealt with, to avoid economic problems down the line. The industry is becoming more mature and looking to fund managers to logically explain positions within portfolios, specifically how the risks and opportunities related to sustainability are being managed.

Dr Jake Reynolds is currently tackling the problem of ESG integration and how to bring social and environmental perspectives into investment analysis in order to minimise risks, maximise opportunities, and understand how global trends (including regulation) will impact corporate performance. Dr Reynolds leads the Cambridge Institute for Sustainability Leadership’s (CISL) efforts with business, government and finance leaders to build a sustainable economy. As the architect of CISL’s Rewiring the Economy plan, his team delivers strategic collaborations with investors, banks and insurance companies to find solutions to sustainability problems, and put them into practice with key economic partners.

Speaking at this years ‘Reworking ESG’ thought leadership forum hosted by Style Analytics, Dr Reynolds outlined his approach towards better management of ESG data. In order to present complex data on ESG impact in a digestible form for financial analysts, Dr Reynolds has distilled the UN’s seventeen Sustainable Development Goals (SDGs) into six themes (three environmental, and three social), with the help of CISL’s investment collaboration, the Investment Leaders Group (see below).

Dr Reynolds’ work aims to help the investment industry to make the leap forward from the existing paradigm of ESG integration towards one in which capital is assessed in terms of its alignment with the SDGs. In the meantime, with the careful integration and analysis of ESG data, fund managers can more easily communicate these crucial issues to both asset owners and companies on a more comprehensive basis.