Capital markets and the financial sector are central to our global economy. Globalization has brought many positive outcomes, including reducing poverty and enabling a better standard of living for millions of people around the world.

But with these benefits have come new challenges. International financial institutions are now so large that they fall beyond the scope and control of governments alone. In a globalized world, we must find new ways to ensure that capital markets are operating in the long-term interests of both investors and society.

The financial crisis and Great Recession of the late 2000s demonstrated the damage that can occur, both economically and socially, if capital markets are left unchecked. While the role of governments is critical, there is also a clear need for private sector leadership to address this challenge. Financial sector leaders and institutions need to be active players in the development of principles and practices that can underpin a truly sustainable capital market system.

Working with industry leaders and practitioners, HMI commissions research and supports industry-led initiatives working on this challenge.

State of Sustainability in Capital Markets

Since 2016, High Meadows Institute has tracked progress on the rise of ESG integration in capital markets, in our biannual State of Sustainability in Capital Markets reports. In that time, we have seen ESG go from the periphery of investment management to a core component of 21st century asset management.

Sustainability in Capital Markets: ESG Integration and Impact

As ESG continues to grow in popularity and develop into a dominant investment theme, there is now an increased focus on whether and how the integration of ESG is having a meaningful impact and contributing to progress on environmental and social challenges. Through expert consultations and extensive desk research, the 2022 State of Sustainability in Capital Markets report explores ESG impact and its central role in the major shift in sustainable finance. The report first assesses the current state of play of impact considerations in capital markets by reflecting on the evolution of sustainable finance, as well as drivers and challenges to change, and then digs deeper into the extent to which the world’s largest asset managers with the highest equity, credit and debt exposures have systematically integrated impact considerations into their investment approaches. To encourage a much-needed shift in mindset and practice, the report concludes with a review of what to expect next in the sustainable finance evolution.

Previous Reports:

The Future of the “S” in ESG (2021)
Investor Stewardship: The Path Forward
(September, 2020)
Reporting on Systemic Impacts: A Review of Current Progress
(February, 2020)
Sustainability in Capital Markets: A Survey of Current Progress and Practices
(March, 2019)
ESG Integration Across Asset Classes: A Report from the ESG Path to Value Forum
(March, 2018)
ESG Integration Practices of Sell-Side Analysts
(February, 2017)
Incorporating ESG Considerations into Engagement Practices
(December, 2016)
Charting the Future for Capital Markets
(January, 2016)

Related Resources:

Sustainability and Capital Markets: Are We There Yet? – Journal of Applied Corporate Finance
(Spring, 2019)
Sustainable Development Goals: An Overview for Investors
ESG Integration in Investment Management: Myths and Realities – Journal of Applied Corporate Finance
(Spring, 2016)