Institutional investors, such as pension funds and insurance companies, and Global Asset Managers – are key participants in financial markets, holding more than USD 100 trillion of assets at the end-2019. Most of these assets are invested in bonds and equities. The investments of institutional investors are usually regulated through quantitative investment limits – relatively common for pension funds – or a more principle-based approach, such as for insurance companies in many countries. While the pre-COVID-19 annual financing gap for the SDGs was estimated to amount to USD 2.5 trillion (UNCTAD, 2020) for developing countries, it increased by 50% in 2020 and reached USD 3.7 trillion. Reducing the financing gap for the SDGs requires shifting financial resources toward sustainable development, including from the private sector, as well as greater alignment of all the investment chain with the SDGs. Institutional investors can help by shifting only 3.7% of their assets towards sustainable activities in developing countries would be sufficient to fill the USD 3.7 trillion gap.
The session aims to discuss obstacles preventing global asset managers and institutional investors from increasing their contributions to sustainable development in IsDB MCs, despite the rise of the sustainable investment and ESG agenda worldwide. The event will discuss the catalytic role that MDBs can play as well as the regulatory and financial/capital market development measures that need to be taken to mobilize institutional investor resources.
Key Issues to be addressed:
- Increased Allocation by Investments Institutions towards Climate Action/Sustainable Investing
- Should Investors Rebalance Portfolios in line with Rising
- Role of Global Asset/Fund Managers to support MDBs Efforts to Address SDGs