{"id":381919,"date":"2020-11-16T09:35:50","date_gmt":"2020-11-16T14:35:50","guid":{"rendered":"http:\/\/www.marketnewsdesk.com\/?p=381919"},"modified":"2020-11-16T09:35:50","modified_gmt":"2020-11-16T14:35:50","slug":"very-large-asset-owners-can-change-the-world","status":"publish","type":"post","link":"https:\/\/www.marketnewsdesk.com\/index.php\/very-large-asset-owners-can-change-the-world\/","title":{"rendered":"Very large asset owners can change the world"},"content":{"rendered":"

\nLeader funds usher in new era of ESG
\n<\/h2>\n
\n

ARLINGTON, Va., Nov. 16, 2020 (GLOBE NEWSWIRE) — The Asset Owner 100 (AO100) \u2014 the world\u2019s 100 largest asset owners \u2014 grew by 6% last year to reach over $20 trillion, according to research<\/a>\u00a0from Willis Towers Watson\u2019s Thinking Ahead Institute. Pension funds remain the single biggest group of asset owners accounting for over 60% of assets, followed by sovereign wealth funds (32%) and outsourced chief investment officers (OCIOs) and master trusts combined (7%).<\/p>\n

\u201cWith responsibility for over one-third of all asset owner capital globally, the AO100\u2019s influence on other investors and society is growing and becoming more important,\u201d said Roger Urwin, co-founder of the Thinking Ahead Institute.<\/p>\n

According to the research, the AO100 have become more prominent in integrating environmental, social and governance (ESG) and being more active owners, including aiming for real-world impacts in their investment strategies. These strategies increasingly include new elements, such as factoring in member views, adopting new investment benchmarks, reporting on the impacts of their investment strategies\u00a0(via the TCFD1<\/sup>[1] framework and the SDGs2<\/sup>[2]),\u00a0reducing carbon emissions from portfolio holdings and investing in assets that will support the transition toward a low-carbon economy, and devising and implementing climate transition strategies that align with the Paris Agreement.<\/p>\n

\u201cAt the larger end of the AO100, funds are pursuing so-called universal owner strategies, which contribute to safeguarding the financial system and addressing other systemic risks, including climate change, without sacrificing risk-adjusted returns. This is consistent with a new era of ESG \u2014 which we call ESG 3.0 \u2014 that is fundamentally different from previous versions in that it includes real-world impacts on the environment and society while delivering better outcomes for beneficiaries,\u201d said Urwin.<\/p>\n

The research indicates that universal owner strategies are highly collaborative and involve working through industry groups, such as the Principles for Responsible Investment (PRI) and Net-Zero Asset Owner Alliance, and improve long-term financial outcomes, through beta (market return) rather than alpha (securities relative return).<\/p>\n

\u201cIncreasing numbers of the AO100 are following nation states and corporations in declaring their intention to align with the Paris Agreement and be net-zero by 2050, via their investment portfolios. This is an ambitious goal and will require new types of investment mandates that explicitly incorporate a third dimension of investment after risk and return: impact. These three-dimensional mandates (3D mandates) will, of necessity, have to be highly innovative portfolios and engagement strategies if they are to deliver a combination of real-world impacts and improved portfolio outcomes,\u201d said Urwin.<\/p>\n

The research also highlights other current asset owner challenges, which include:<\/p>\n