A legal framework for considering sustainability impact in investor decision making

It is crucial that assessing and accounting for sustainability impact becomes a core part of investment activity. That’s why PRI, UNEP FI and The Generation Foundation are leading our work programme “A Legal Framework for Impact.”

Firstly, we commissioned ground-breaking legal analysis, authored by Freshfields Bruckhaus Deringer to determine the extent to which legal frameworks enable investors to consider impact in their activities across 11 jurisdictions: the EU, Australia, Brazil, Canada, China, France, Japan, South Africa, the Netherlands, UK and the US.

The report found that while there are differences across jurisdictions and investor groups, where investing for sustainability impact approaches can be effective in achieving an investor’s financial goals, the investor will likely be required to consider using them and act accordingly.

It also provides an extensive suite of options for policymakers wishing to facilitate investing for sustainability impact, including changing investors’ legal duties and discretions, such as allowing the pursuit of sustainability goals as long as financial return goals are prioritised, and a presumption in favour of investor collaboration in tackling sustainability challenges.

Options for reform presented in the report will now form the basis of a multi-year work programme from PRI, UNEP FI, and The Generation Foundation that will include policymaker engagement and supporting investors via workshops and tools to advance their practice initially in five of the markets studied: the EU, Australia, Canada, Japan and the UK.

If you would like to know more, please contact Jes Andrews, Investment lead at UNEP FI, and Margarita Pirovska, Director of Policy at PRI.

The project is supported by a Reference Group which includes experts from investment firms that have developed, or are in the process of developing, a strategy for integrating sustainability impact considerations in their firm’s core strategy and investment decision-making. The group supports the research and implementation programme by sharing policy developments, questions, concerns and information on legal, regulatory and fiduciary implications of the management of sustainability impact in investment practice.

The work on A Legal Framework for Impact is undertaken collaboratively between the UN Environment Programme Finance Initiative (UNEP FI), the Principles for Responsible Investment (PRI), and The Generation Foundation.

For more project details, visit About.