View source for Sustainable Portfolio Management

== Definition ==
'''Sustainable Portfolio Management''' (SPM) is the set of principles, tools, processes and management roles that pursue the management of a portfolio (meaning a collection) of financial positions (assets, contracts) while recognizing and integrating some or all of the [[Sustainable Development Goals]] or other related [[Sustainability]] frameworks. SPM is an emerging field in particular in the context of [[Sustainable Finance]].

Similar to more general [[Portfolio Management]] practices and tools, sustainable portfolio management approaches may  vary depending on: 
* the nature of the portfolio and its constituent instruments (e.g. credit portfolios, securities, derivatives etc.)
* the business model of the [[Portfolio Manager]] (trading, buy-and-hold investor etc.)
* the business values, objectives and constraints of the portfolio manager (e.g., financial return, impact investor, etc.)

== Elements of Sustainable Portfolio Management ==
Common elements of portfolio management practices are:
* Organizational Aspects
* Data Infrastructure
* Analytics / Measurement Tools and Models
* Policies and Other Management Tools


In more detail:

=== Organizational Aspects ===
* Identifying the roles and high level objectives of sustainable portfolio managers and the interaction with other stakeholders
* Defining the scope of activities (including which portfolios, asset classes) and which sustainability dimensions

=== Data Infrastructure  ===
* Position / Financial Data
* Environmental and Social Impact Data
* Historical Data 

=== Analytics / Measurement Tools and Models ===
* Risk Analytics
* Scenario Analysis, [[Stress Testing]]
* Risk-based Measures and Portfolio Valuation
* [[Model Validation]]

=== Policies and other Management Tools ===
* Portfolio Strategy
** [[Portfolio Steering]] Targets
** Portfolio Limits
* Concentration Risk Measurement
* Stress Testing Exercises
* Capital Allocation
* Portfolio Optimization

== Issue and Challenges ==
* Sustainable Portfolio Management is an emerging and rapidly evolving field<ref>D. Schoenmaker & W. Schramade, Principles of Sustainable Finance</ref> and suffers from many of the data quality, definitional ambiguities, poorly articulated objectives etc. of much of current sustainable finance

== See Also ==
* [[Paris Agreement Capital Transition Assessment]]

== References ==
<references/>


[[Category:Sustainable Finance]]
[[Category:Portfolio Management]]
[[Category:Risk Management]]