Universal Owners adapt their actions with the intent of improving long-term performance by benefiting the whole economy and market in a logical but ambitious extension of sustainable investing. They justify these actions on financial grounds.
As complexity and connectivity increase in investment, so the size and impact of externalities will increase. Probably the most important externalities are the environmental costs incurred by businesses due to climate change, resource depletion and pollution. The UN PRI estimates that the total cost of such externalities for listed companies exceeded $2.5 trillion in 2008. There are three avenues that Universal Owners may take to manage the risks associated with such externalities: active ownership, seeking to influence public policy and using an investment strategy influenced by ESG considerations.