14 September 2015: The UN Environment Programme (UNEP) and the California Public Employees’ Retirement System (CalPERS) – one of the largest public pension funds in the US – launched a report on ways for institutional investors to place sustainability concerns at the core of their policies. UNEP’s press release highlights the potential for the global financial system, worth more than US$300 trillion, to promote sustainable development through wise investment.

The report, titled ‘Financial Reform, Institutional Investors and Sustainable Development: A review of current policy initiatives and proposal for further progress,’ calls on governments, regulators and institutional investors to introduce policies that integrate sustainability as part of their fiduciary duty. The report suggests that governments could introduce formal sustainability obligations for state pension funds, sovereign wealth funds and other state investment institutions. It also suggests that regulators consider financial stability and sustainability when evaluating investments, and that state investors should be required to disclose and report on sustainability policies, for example, by disclosing their carbon footprint.

The report argues that institutional investors’ action to integrate sustainability concerns will increase the resilience of their investment portfolios, mobilize capital towards the low-carbon transition, and help restore public trust in investors and the financial system.

The UNEP Finance Initiative (UNEP FI) and the Principles for Responsible Investment (PRI) supported production of the report. The report is an initiative of UNEP’s Inquiry into the Design of a Sustainable Financial System. [Publication: Financial Reform, Institutional Investors and Sustainable Development] [UNEP Press Release] [UNEP Inquiry into the Design of Sustainable Financial System Website] [CalPERS Website]