RAAI and PDI: London Roundtable
Together with the Responsible Asset Allocator Initiative (RAAI), PDI co-hosted a roundtable on “Adjusting Traditional Financial Benchmarks for Success in Sustainable Investing.” Benchmarks are a key tool used by Boards to communicate investment objectives and risk parameters to CIOs and their investment teams, who are incentivized to meet or exceed the returns of that benchmark. Yet, as traditional financial benchmarks price idiosyncratic rather than systemic risks, using them as the basis for measuring investment success can conflict with achieving forward-looking sustainable investment goals, for example, achieving net-zero carbon targets or addressing inequality. In this session, the participants discussed how asset allocators can manage this potential conflict, adjusting benchmark driven investing to account for externalities and incentivizing investment teams to allocate capital sustainably, aligning portfolios effectively with the broader stewardship goals of the organization. Presenters included Delilah Rothenberg and Scott Kalb (Director, RAAI; Chairman, Sovereign Investor Institute; Former CIO, KIC), and Arjen Pasma (Chief Fiduciary Investments, PGGM).