Responsible Asset Allocator Initiative at the Fletcher School

There is growing interest among asset owners and allocators in reforming traditional asset allocation and benchmarking practices that restrict responsible investing and inhibit the effective management of system-wide risks. Fund-level financial benchmarks shape incentives and asset allocation decisions for investment teams, as they are expected to meet or exceed benchmark returns. However, externalities are not reflected in traditional financial benchmarking practices, especially in long-term risk and return expectations, providing little incentive for system-wide risks to be included?in future-looking investment decision-making. Furthermore, little guidance exists for asset owners and allocators on how to consider pricing and valuing these externalities. Over the last three years, the Responsible Asset Allocator Initiative at the Fletcher School and the Predistribution Initiative have hosted seven roundtables around the world with asset owners and allocators, as well as a diverse group of stakeholders and specialists, investigating alternative methods for addressing benchmark constraints and the lack of consideration of system-level risks in capital markets assumptions (CMAs). We invite you to a webinar, where speakers from the RAAI and PDI will share key takeaways from these discussions, as well as plans regarding the launch of the Responsible Financing Benchmarking Lab (RFBL) - a dedicated forum to support asset owners and allocators and their stakeholders to co-create related solutions. The RAAI and PDI thank the Surdna Foundation and the Tipping Point Fund on Impact Investing for their generous support of this work. Webinar speakers: - Scott Kalb?Director, Responsible Asset Allocator Initiative (RAAI) at the Fletcher School Former Chief Investment Officer, Korea Investment Corporation - Paul O’Brien Member of the Board, Wyoming Retirement System Former Deputy Chief Investment Officer, Abu Dhabi Investment Authority - Delilah Rothenberg (moderator) Co-founder and Executive Director, the Predistribution Initiative This webinar will be held twice to accommodate colleagues in different time zones: - First Session: March 25 20:00 hrs EDT / 17:00 hrs PDT / 09:00 hrs JDT (March 26) / 11:00 hrs AEDT (March 26) Registration Zoom Link - First Session (March 25): https://lnkd.in/g9AAys4N - Second Session: March 27 11:00 hrs EDT / 08:00 hrs PDT / 15:00 hrs GMT / 16:00 hrs CET Registration Zoom Link - Second Session (March 27): https://lnkd.in/g3Bkxgxr

Investors often say they can't calibrate future climate change impacts on portfolios but the evidence is all around us. In 2023, the US had 28 weather-related disasters that each cost at least one billion dollars in damage, the most recorded in a single year in our history, according to the "2023 Billion Dollar Disaster Report" published by NOAA. Total costs in 2023 to repair the damage was 93 billion dollars. The frequency and intensity of climate change related weather events, and the damage and risk they pose to our economy, have been accelerating. Since 1980 there have been 376 billion-dollar weather disasters, costing more than 2.6 trillion dollars in total damage. Almost half of these disasters and costs occurred in the last decade. According to NOAA, climate change is supercharging the extreme weather that leads to billion dollar disasters— drought, lengthening wildfire seasons, and extremely heavy rainfall. Sea level rise also is worsening storm surge flooding. Global trends are similar. In Europe, economic costs to repair climate damage were 300 billion Euros over the last decade, half of the total costs incurred since 1980 (European Environmental Agency). Globally, over the last two years the economic costs from extreme weather topped 450 billion dollars (International Chamber of Commerce). These figures understate the problem. They do not include increased costs from negative impacts on human health, loss of employment, loss of shelter, forced migration, or increased social services. They do not include impacts from higher insurance rates, depleted natural resources, supply chain interruptions, agricultural damage, infrastructure failures, and lower corporate earnings. Nor do they include the increased costs of climate-related inflation, estimated at 1.2% per annum by the Potsdam Institute. Climate change is not just an existential threat - it is impacting us every day and accelerating, as temperatures continue to rise. This has important implications for future pensions and savings. Unfortunately, despite widely available scientific data, and revised economic models that point to lower growth and increased costs over the longer-term, we find that asset allocators are not reflecting climate change in forward-looking risk and return expectations for capital markets over 10- and 20-year horizons, partly because the benchmarks they use are backwards looking. Until asset allocators price the current climate trajectory appropriately in risk and return expectations for the long-term, our pensions and savings are likely to be over-exposed to damage, risk, and legacy industries, and underexposed to opportunities presented by the future we are headed toward, a decarbonizing world. At the Sustainable Financial Benchmarking Lab, an initiative sponsored by the RAAI at the Fletcher School and the PDI, we are working to solve this challenge. Please join us. Delilah Rothenberg, Paul O'Brien, Jessie Duncan, Kelly Sims Gallagher

Institutional Investor is privileged to work with an exceptional group of Senior Advisors from across the Globe. With decades of experience spanning global markets, these distinguished professionals provide invaluable guidance. Diane Alfano – Former Chairman and CEO of Institutional Investor. Paul R. – Senior Advisor to Institutional Investor’s Family Office communities. CEO of Thamesis and Trusted Adviser to several families. Paul O'Brien – Senior Advisor to Institutional Investor’s Middle East Investor Institute. Former deputy CIO at Abu Dhabi Investment Authority. Cynthia Steer – Co-Chair & Senior Advisor, Institutional Investor US Institutes. A manager selection investment strategist veteran with stints at BNY Mellon, Roger Casey, Russell Investments. Thanos Papasavvas, CFA – Senior Advisor and conference chair for Institutional Investor EMEA. Former Fixed Income PM and Head of Currency Management at Investec and Credit Suisse, and UK Government Economist. Scott E. Kalb – Chairman, Institutional Investor’s Sovereign Investor Institute. Former CIO of Korea Investment Corporation. Jeffrey Plunkett – Chair, Legal Forum. Former EVP and Global General Counsel of Natixis Investment Managers & Former Partner at Goodwin Procter LLP. Jim McCaughan– Chair, Asset Management Institute. Former CEO at Principal Asset Management, Credit Suisse Asset Management Americas, & UBS Asset Management Americas, Former President & COO Oppenheimer Capital.? ? Working closely with each of them ensures all of our events cover the most important and timely topics relevant to each location and market segment. ? We’re proud to collaborate with such an accomplished group and grateful for the vision they bring to our company and the communities we serve. ? Click here to find out more about our global event offerings: https://lnkd.in/eD7qRAcp ? Institutional Investor #Leadership #Expertise #Innovation #Advisors

The Tipping Point Fund on Impact Investing (TPF) today announced that it will award grants to four organizations doing catalytic work to address shared challenges and opportunities within the sustainable and impact investing fields, including impact measurement, system-level investing, and public policy. The four grant recipients include: Impact Capital Managers, Lafayette Square Institute, Responsible Asset Allocator Initiative (RAAI), and Sustainable Investing Research Initiative (SIRI). CC Fran Seegull Jessie Duncan Amber Reese Learn more about these exciting projects at https://lnkd.in/guh8Rjfb