Something remarkable happened on November 29, 2018 in Buenos Aires, Argentina. It was the G20 Investor Forum (the Forum), hosted by the World Bank and the Government of Argentina, held just before the start of the G20 Summit. For the first time ever, senior executives from the investment community in the private sector, holding over $20 trillion in assets under management, and senior officials from the public sector gathered to discuss how to better collaborate to ensure the capital markets earn the necessary long-term returns for their beneficiaries in a way that supports sustainable development. Comments from the investment community made it clear that they would appreciate more dialogue with high-level policy makers in the public sector.
As explained in the press release: “Heads of state, finance ministers, top global investment executives, and leaders of international organizations gathered on the eve of the G20 Summit in Buenos Aires to identify steps for boosting long-term, sustainable private sector investments that tackle development challenges and promote economic growth.
The first Investor Forum of its kind – hosted by the World Bank Group and the Government of Argentina –was comprised of investors holding over US$20 trillion in managed assets alongside key global leaders, including Argentine President Mauricio Macri and Canadian Prime Minister Justin Trudeau, along with ministers and regulators. Forum participants agreed on the key role that private sector investment can play in mobilizing much needed long-term financing to support sustainable projects in the developing world. Participants agreed that new solutions are needed to overcome obstacles to investment, particularly in infrastructure. This is even more important at a time when governments’ budgets are constrained and focused on priority social programs.”
The agenda for The Forum included informative speeches by global leaders, plenary panels of representatives of both the public and private sectors, and working groups of participants with diverse backgrounds. I was privileged to attend The Forum and lead the discussion of one of the working groups, but I should emphasize that the views expressed here are my own.
From its inception the Forum was intended to be more than a “talk shop,” but something that would results in concrete ideas that could be to put into practice. This was captured in the “Buenos Aires Call to Action: Shaping the Future of Global Private and Public Investments” which recommends seven actions, four for Sustainable Long-Term Investing and three for Investing in Infrastructure. These actions are very specific ideas of things to be done. Some are largely in the hands of the private sector, some in the public sector, and some involve both in roughly equal agrees. It will be possible to track the progress on each one. Exactly these actions will be moved forward and how progress will be monitored is the focus now.
My own work will be particularly informed by Actions 2, 3, and 4:
- “Action 2: “Address regulatory and reporting constraints that could limit advancement of long-term, sustainable investing, for example by adjusting capital charges to actual asset risk profiles; and rationalizing corporate ESG disclosures, including consolidating existing ESG disclosure standards; and promoting their use and incorporation into accounting norms.” In terms of this action, the work of CDP, Climate Disclosure Standards Board (CDSB) the, Corporate Reporting Dialogue (CRD), Global Reporting Initiative (GRI), the International Integrated Reporting Council (IIRC), the Sustainability Accounting Standards Board (SASB), and the Task Force on Climate-related Financial Disclosures (TCFD) are particularly important.
- “Action 3: Incentivize sustainable long-term investing by requiring asset owners, asset managers, investment consultants, and other intermediaries to disclose their long-term sustainability policies; and by asset owners and asset managers aligning their long-term value-creating goals, including through long-term mandates.” In terms of this action, the work of CECP’s Strategic Investor Initiative, the Embankment Project for Inclusive Capitalism (EPIC), FCLTGlobal, and the Principles for Responsible Investment (PRI) are particularly important.
- “Action 4: Open dialogue between asset owners, asset managers, development finance institutions, and policy makers to advance the adoption of harmonized Operating Principles for Impact Management to better define impact investing.” In terms of this action, the work of the Impact Management Project (IMP) is particularly important.
In preparation for The Forum, interviews were conducted with CEOs and CIOs of a global set of 34 asset owners and asset managers. The results of these interviews were published in a white paper “The Landscape for Institutional Investing in 2018: Perspectives of Institutional Investors—An Input Into the Investor Forum” written by Eric Bouye, Svetlana Klimenko, Daria Taglioni of the World Bank and me. These interviews in the private sector’s investment community were the basis for the agenda for The Forum. The seven action recommendations directly tie to a number of suggestions made in the interviews.
It is hoped that The Forum initiates an ongoing process of collaboration that will lead to more long-term oriented capital markets that incorporate material ESG issues into resource allocation decisions by both companies and investors. This will be enabled by clarifications around fiduciary duty in both groups, a globally accepted set of standard ESG disclosures, and clarity about the principles of impact measurement and management. It is also hoped that The Forum will contribute to an increase in sustainable infrastructure investing. This will be enabled by standardized approaches to project preparation, planning, contracting, and reporting; building infrastructure co-investment platforms for investors to ensure a large pipeline of sufficiently large and investible projects; and developing the necessary means of insuring political and other forms of risk.
The Forum was a good idea and sets an ambitious agenda. Whether it will make a real difference remains to be seen. Personally, I am optimistic and will make whatever small contribution I can to ensure that it does.
