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November 2007
A new handbook on responsible investing provides the blueprint for foundation asset managers interested in multiplying their organization’s impact on society through options that link mission with investments that create long-term value to society.
 Responsible investment – understood as the incorporation of environmental and social analysis into investment decision-making – is a growing discipline that offers opportunities for long-term value creation both for investors and society as a whole.
In recent years investors have increasingly turned to environmental and social analysis to identify long-term risks and opportunities related to their investments. At the same time, a broad range of investors – especially foundations – have explored alternative methods for creating social and environmental benefits consistent with their missions, while achieving market rates of return.
As investment in alternative asset classes (real estate, private equity, hedge funds, etc.) and the importance of diversification become increasingly accepted by pension funds, money managers, university and foundation endowments, and others, a question arises: How can investors identify and incorporate social and environmental information across their portfolios?
To answer these questions, the Institute for Responsible Investment (IRI) has created the Handbook on Responsible Investment Across Asset Classes. Written for foundation-based asset owners, money managers, consultants, and others seeking to institutionalize responsible investment principles across portfolios, it will help investors:
- Incorporate responsible investment methods into their investment mandate;
- Identify and evaluate opportunities for responsible investment; and
- Coordinate the vocabulary and metrics used to measure social and environmental outcomes.
Each chapter of the Handbook focuses on a single asset class – cash equivalents, public equities, fixed-income, real estate, private equity, hedge funds, and commodities – identifying three key issues and challenges for responsible investment, including real-world examples of responsible investment underway in each area. Each section includes information on how to:
- Design a responsible investment strategy for the asset class;
- Identify opportunities for market-rate responsible investments in the asset
class;
- Incorporate engagement strategies into the asset class investment strategy.
In particular, the Handbook will be useful to:
- Institutional investors who wish to address the financial implications of long-term social and environmental risks and opportunities in their investment mandate
- Asset owners, money managers, and consultants who see the creation of social and environmental value, and the mitigation of social and environmental damage, as increasingly important elements of their fiduciary concerns
- Foundation endowments who want to align their endowment investments with their institutional mission, in order both to further institutional goals and manage reputational risk
The Institute for Responsible Investment (IRI), an affiliate of the Boston College Center for Corporate Citizenship, works with investors, corporations, public sector organizations, and research institutes to coordinate thinking and actions around issues of strategic importance to long-term wealth creation for shareholders and society. The Handbook was made possible by a grant from the F.B. Heron Foundation, and is disseminated in collaboration with Eurosif and the Social Investment Forum.
> Download the Handbook on Responsible Investment Across Asset Classes
(pdf; 104 pages)
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