What’s next in ESG? Asset managers, advisors, and asset owners are beginning to try to rationalize ESG products and strategies, no easy task given the diversity of definitions and motivations for ESG strategies. Beyond the immediate tactical issues of meeting booming demand, there is growing awareness of how investing interacts with environmental and social systems. CFA Society Boston, CFA Society New York, and CFA Society Philadelphia have joined to produce a series focusing on the next evolution of investment management: systems-level investing. These events will be online and open for members of all CFA societies.
Register for Events in the Series
- Part 1: 21st Century Investing: Foundations of System-Level Investing (hosted by CFA Society New York)
- Part 2: Integrating System-level Investing into Practice Management (hosted by CFA Society Boston)
- Wednesday, October 20, 2021, from 12:00 – 1:30PM EST – Watch recording
- Part 3: The Modern Portfolio Theory Myth: Easy to Understand, Powerful in its Explanatory Power, and Wrong (hosted by CFA Society Philadelphia Oct 27)
- Wednesday, October 27, 2021, from 12:00 – 1:30PM EST – Watch recording (passcode: Vf158?ju)
- Part 4: The Future of Sustainable Investing is Systems Thinking (hosted by CFA Society Boston)
- More details available soon
More About the Series
First investing was about security selection. Then with the advent of modern portfolio theory investors added the perspective of portfolio risk and return. Now the focus is turning to systems-level investing, accounting for the social and economic systems that make returns possible. The report from CFA Institute on “The Future of Sustainability in Investment Management,” which was published in December 2020, advises moving beyond traditional ESG practices to system-level thinking: “Systems theory is more than just an extra discipline to be studied; it is as much a way of thinking and communicating that needs a cultural grounding. The key principle is that there are multiple interconnected factors that drive the investment ecosystem that need to be recognized. This…calls for balance — the balance to our thinking that does not seek to oversimplify complex elements.”
In 21st Century Investing: Redirecting Financial Strategies to Drive Systems Change co-authors William Burckart and Steve Lydenberg provide a roadmap to help investors to integrate system-level risk and reward management into investment decision making. While ESG investing may consider social and environmental impacts, Burckart and Lydenberg show how investor decisions get reflected in the health of those essential systems, and what the implications are beyond current portfolio returns and risk profiles.
The movement of the investment industry to acknowledge ESG as part of investing has been impressive: the CFA Institute report “Future of Sustainability in Investment Management” reports that 85% of CFA Institute members now consider at least some ESG factors into consideration in their investing. New signatories to the Principles for Responsible Investment grew by 42% in 2020 and signatories now number in excess of 3,800 firms. But the challenges for investors to adapt foundational investment practices and philosophies to include consideration of systemic impacts is only in early stages.
21st Century Investing helps investors understand this new evolution of investment management, and this series of events will help them act on it. These events will be hosted by CFA Societies in New York, Boston and Philadelphia—with help from CFA Institute and The Investment Integration Project (TIIP)—and will provide an introduction to system-level investing, provide investors with insights into how they can integrate this new way of thinking into their current practice and support clients who are looking for smart ways to invest in an increasingly populated, complex and interconnected world. This series will help investment professionals be current and competitive, and position themselves effectively for the transition to system-level investing.
These events will be online and open for members of all CFA societies.
For more information: See also the CFAI blog interview by Matt Orsagh with William Burckart and Steve Lydenberg on “ESG Q&A: 21st Century Investing”; the Barron’s feature on the book “Future Returns: Moving From Sustainable Investing to Systems Change”; and “Sustainable Investing: System-Level Thinking and Financial Advice” by Burckart and Bob Dannhauser.