Workstream 4

Workstream #4:

Highlight regenerative investment structures and the risks of consolidated capital flows

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A key finding of PDI’s flagship ESG 2.0 working paper is that institutional investors are consolidating their investments with the largest fund managers and companies, which squeezes out opportunities for emerging fund managers and small- and medium-sized enterprises (SMEs) while also contributing to procyclical market behavior that leads to asset bubbles and credit crises. Investors have responded well to our proposals that more regenerative investment structures are needed and that they need to deconsolidate capital flows, but seek more examples of “what good looks like” and how to access these opportunities.

As such, we are continuing to produce research and thought leadership on regenerative investment opportunities that better avoid system- atic risks and more adequately account for value created by workers and other stakeholders. Recognizing that this is a nascent and emerg- ing field, our efforts aim to not only document what models currently exist, but also how they can scale with integrity to meet the allocation needs of institutional investors, as well as what practical opportunities exist for institutional investors to adjust their allocation practices. The video series featured below on “Reimagining Investment Structures” explains the context for this workstream in more detail.