Investors, capital markets and the wider finance community

A4S and capital markets

A4S works with investors, capital markets and the wider finance community to influence the integration of environmental, social and governance factors into investment decision making along the whole investment chain.

 

The role of investors, capital markets and the wider finance community

Mobilizing finance is the key to unlocking action on sustainability across the world.

Companies and Governments are increasingly recognizing that sustainable economic performance relies on an understanding of the interdependency between financial, social and environmental factors.

Evidence shows sustainability and shareholder value go hand-in-hand by creating more resilient business models. While awareness of these issues is growing, many mainstream investor practices go unaltered.

A primary failure of the capital markets in relation to sustainable development as one of misallocation of capital. As a consequence, the capital markets do not incorporate companies’ full social and environmental costs. This means that corporate cost of capital does not reflect the sustainability of the firm which is a significant risk.

One of the causes of this misallocation is instability of ‘quarterly capitalism’. Investors and capital markets have a decisive role to play in moving towards more sustainable, resilient business models and decision-making for the long term. This has the opportunity to increase returns and also to create a more sustainable economy and maintain the real value of retirement income.

A sustainable economy also provides a great opportunity for investors, an obvious example of this is the requirement for investment in renewable energy infrastructure, energy efficiency and adaptation projects.

 

How investors, capital markets and the wider finance community can get involved

There are plenty of ways for investors, capital markets and the wider finance community to get involved in shaping the future of finance, first steps include:

  • Contributing to CFO Leadership Network debt finance project and other A4S investor work streams
  • As a pension fund trustee or other liaise with A4S on joining the Asset Owner Network