Difference between revisions of "Sustainable Portfolio Management"
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== Definition == | == Definition == | ||
| − | '''Sustainable Portfolio Management''' | + | '''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]]. |
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| + | 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 == | == Elements of Sustainable Portfolio Management == | ||
| − | + | Common elements of portfolio management practices are: | |
* Organizational Aspects | * Organizational Aspects | ||
| − | * Data Infrastructure | + | * Data Infrastructure |
| + | * Analytics / Measurement Tools and Models | ||
* Policies and Other Management Tools | * Policies and Other Management Tools | ||
| Line 18: | Line 18: | ||
=== Organizational Aspects === | === Organizational Aspects === | ||
| − | * Identifying the roles and high level objectives of portfolio managers and the interaction with other stakeholders | + | * 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 | * Defining the scope of activities (including which portfolios, asset classes) and which sustainability dimensions | ||
| − | === Data Infrastructure | + | === Data Infrastructure === |
* Position / Financial Data | * Position / Financial Data | ||
| − | * Historical Data and Risk Analytics | + | * Environmental and Social Impact Data |
| + | * Historical Data | ||
| + | |||
| + | === Analytics / Measurement Tools and Models === | ||
| + | * Risk Analytics | ||
* Scenario Analysis, [[Stress Testing]] | * Scenario Analysis, [[Stress Testing]] | ||
* Risk-based Measures and Portfolio Valuation | * Risk-based Measures and Portfolio Valuation | ||
| Line 36: | Line 40: | ||
* Capital Allocation | * Capital Allocation | ||
* Portfolio Optimization | * Portfolio Optimization | ||
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== Issue and Challenges == | == 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 == | == See Also == | ||
Latest revision as of 13:09, 16 June 2023
Contents
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[1] and suffers from many of the data quality, definitional ambiguities, poorly articulated objectives etc. of much of current sustainable finance
See Also
References
- ↑ D. Schoenmaker & W. Schramade, Principles of Sustainable Finance
