Sustainability Community

Interesting report from the CFA Institute published yesterday on the Future State of the Investment Industry (cfainstitute.org), outlining megatrends shaping the world and profession, including insights into Sustainable Finance as a scenario, Investment Product opportunities, and principle recommendations for Investment Organisations and Investment Professionals.   

• See overview and key points summarised from the Sustainable Finance scenario and outcomes below.

Professional learning: one of the key recommendations for investment professionals is to stay agile and relevant, embrace a growth mindset and keep up to date, capitalising on new opportunities, especially where change is accelerating, and there are opportunities to build expertise where there are skills gaps. 

• There's no shortage of things to keep up as industry standards and best practice evolves in sustainable finance both in the UK and globally. For example, to name  just a few: International ISSB Sustainability standards for general sustainability and climate change, ongoing developments in the UK's SDR proposals, Green Taxonomy, Transition Plans, UK Green Finance Strategy and Net Zero/Energy security plans, and pending Nature-Related/ Bio-diversity related recommendations expected from Task Force for Nature Related Disclosures.

Question for community members/ discussion 

• the below sustainable finance scenario outlines a number of developments and ongoing challenges for the profession.  How do you keep up to date and what do you find useful to develop your skills, knowledge and expertise?  e.g. what publications, regular updates do you track/forums attend that are helpful such as CFA UK and others?
  
  

Overview of report

• The CFA Institute surveyed 3000 of its members and consulted with experts to see how they expect the investment industry and profession to evolve over the next 5–10 years and what they are doing to prepare for that evolution
• The "Future State of the Investment Industry" report is a road map for investment leaders and professionals. It frames the most significant developments that will affect the industry over the next 5–10 years, identifies the resulting opportunities, and provides insights to help industry leaders and professionals navigate the transition and improve client outcomes.
• Four key scenarios are identified: Diverging Worlds, Sustainable Finance, Digital Transformation, and The End of Cheap Money. These scenarios are explored in the context of the large-scale, interrelated forces impacting the world. These include deglobalization, geopolitical conflict, inequality, and demographic disruptions, all of which have created a more segmented world in which firms will need to create tailored and differentiated products.

Sustainable Finance scenario overview

• Sustainable Finance considers how climate change and environmental degradation will transform society and the roles government and regulation can play in mitigating their effects. Much of the business sector and investment industry takes a multistakeholder perspective. The industry is challenged to balance impact with returns; new business models, invest­ment models, and measurement models emerge in the face of increasing political polarization.
  
  

Sustainable Finance scenario outcomes

Investment product opportunities

• Investors' sustainability preferences and motivations provide additional demand for more per­sonalized and more actively managed products with different value and impact measurements, enabled by improvements in data and reporting frameworks.

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James Doyle
Director, Green Finance, Investment Management
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Hi James,

Thank you for sharing. I work in the front-office for a bank, managing our fixed income investments, and it's remarkable how much the entire organistion needs to upskill in terms of sustainability-related knowledge.

Over the past year, we signed a Green Credit Facility, proposed various sustainability linked Credits and Green Bonds to the Credit Committee, had to defend our exposures if traditional assets and were questioned what their Green/ESG initiatives were, and constant pressure from Auditors and Regulators on our ESG KPIs and reporting.

Embedding sustainability in our day-to-day management of the business is here to stay and will continue to evolve.

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Jonathan Quiogue
Treasury Manager
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Original Message:
Sent: 07-09-2023 17:06
From: James Doyle
Subject: CFA Institute - Future State of the Investment Industry report: - Sustainable finance / learning for investment professionals

Interesting report from the CFA Institute published yesterday on the Future State of the Investment Industry (cfainstitute.org), outlining megatrends shaping the world and profession, including insights into Sustainable Finance as a scenario, Investment Product opportunities, and principle recommendations for Investment Organisations and Investment Professionals.   

• See overview and key points summarised from the Sustainable Finance scenario and outcomes below.

Professional learning: one of the key recommendations for investment professionals is to stay agile and relevant, embrace a growth mindset and keep up to date, capitalising on new opportunities, especially where change is accelerating, and there are opportunities to build expertise where there are skills gaps. 

• There's no shortage of things to keep up as industry standards and best practice evolves in sustainable finance both in the UK and globally. For example, to name  just a few: International ISSB Sustainability standards for general sustainability and climate change, ongoing developments in the UK's SDR proposals, Green Taxonomy, Transition Plans, UK Green Finance Strategy and Net Zero/Energy security plans, and pending Nature-Related/ Bio-diversity related recommendations expected from Task Force for Nature Related Disclosures.

Question for community members/ discussion 

• the below sustainable finance scenario outlines a number of developments and ongoing challenges for the profession.  How do you keep up to date and what do you find useful to develop your skills, knowledge and expertise?  e.g. what publications, regular updates do you track/forums attend that are helpful such as CFA UK and others?
  
  

Overview of report

• The CFA Institute surveyed 3000 of its members and consulted with experts to see how they expect the investment industry and profession to evolve over the next 5–10 years and what they are doing to prepare for that evolution
• The "Future State of the Investment Industry" report is a road map for investment leaders and professionals. It frames the most significant developments that will affect the industry over the next 5–10 years, identifies the resulting opportunities, and provides insights to help industry leaders and professionals navigate the transition and improve client outcomes.
• Four key scenarios are identified: Diverging Worlds, Sustainable Finance, Digital Transformation, and The End of Cheap Money. These scenarios are explored in the context of the large-scale, interrelated forces impacting the world. These include deglobalization, geopolitical conflict, inequality, and demographic disruptions, all of which have created a more segmented world in which firms will need to create tailored and differentiated products.

Sustainable Finance scenario overview

• Sustainable Finance considers how climate change and environmental degradation will transform society and the roles government and regulation can play in mitigating their effects. Much of the business sector and investment industry takes a multistakeholder perspective. The industry is challenged to balance impact with returns; new business models, invest­ment models, and measurement models emerge in the face of increasing political polarization.
  
  

Sustainable Finance scenario outcomes

Investment product opportunities

• Investors' sustainability preferences and motivations provide additional demand for more per­sonalized and more actively managed products with different value and impact measurements, enabled by improvements in data and reporting frameworks.

------------------------------
James Doyle
Director, Green Finance, Investment Management
------------------------------