CFA highlights sustainable investment as major industry theme for the future

Investment organisations are encouraged to differentiate themselves through values and culture

The CFA Institute has released a flagship research paper identifying sustainable finance among four key narratives designed to assist practitioners and the industry in preparing their investment strategies for the years ahead.

The paper, Future State of the Investment Industry, draws on survey responses from 3,000 investment professionals globally to offer a macro perspective of the megatrends and scenarios shaping the future of the industry, and how current and aspiring investment professionals can best prepare for what is to come.

Alongside digital transformation, diverging worlds and the end of cheap money, sustainable finance is expected to play a crucial role in evaluating industry changes, as investors increasingly take ESG considerations into account in their decisions. Much of the business sector and investment industry is likely to embrace a multi-stakeholder focus with an emphasis on long-term sustainable practices and climate change mitigation.

Possible outcomes of an increase in focus on sustainable finance are projected to include greater consistency in alignment between investing techniques and the Paris Agreement as the investment industry prioritises net-zero pathways through new metrics, business models, and investment models.

Additionally, the investment industry is set to integrate sustainability in climate change mitigation and standard setting into its regulatory focus, and investment strategies are expected to increase their emphasis on social factors more broadly, including labour rights, supply chain oversight, DEI practices and social equality.

“The Future State of the Investment Industry survey findings show an investment industry at an inflexion point. Forces that have defined the sector for years, if not for the last five decades, have begun to shift or even reverse, with economies under strain as we enter a new, uncertain and transformational era,” commented Rhodri Preece, CFA and senior head of research at CFA Institute.

“Our analysis reveals several implications for firms, including opportunities for greater product personalisation, AI-driven productivity gains, and industry conditions that are more conducive for successful active managers to demonstrate their value. The challenge to the industry and to investment professionals will be to adapt quickly and to create a better, more integrated, more sustainable, and more client-focused sector.”

Research centre

The announcement also coincides with the launch of CFA Institute’s new Research and Policy Center, designed to engage and convene thought leaders, policymakers, decision-makers and a community of subject-matter experts on the most impactful themes facing the investment industry.

“The marketplace of ideas is all too often characterised by research or policy positions without practical value or skewed by bias or partiality. The CFA Institute Research and Policy Center offers a non-partisan forum for industry leaders, regulators and subject-matter experts to address unprecedented and often systemic challenges and opportunities that are facing the investment industry,” said Paul Andrews, managing director for research, advocacy and standards at CFA Institute.

“Our goal is for the Research and Policy Center to be a positive force for the industry, delivering and transforming research insights into actions and practical applications that strengthen markets, advance ethics, and improve investor outcomes for the ultimate benefit of society.”