The PRI and Willis Towers Watson have launched a new report Responding to megatrends: investment institutions trend index 2017, which outlines the key megatrends that are impacting the global economy, financial system and the UN Sustainable Development Goals (SDGs).

Over the past several months we have engaged with PRI signatories, market participants and other key stakeholders to gauge investor responses and strategies for dealing with current and future outcome volatility caused by the megatrends.

Using information collated from this outreach – as well as expert commentary and insight from Willis Towers Watson, the PRI, and industry experts – the report outlines a framework for understanding these megatrends. Specifically, it examines:

  • · The status of megatrends, potential evolutions and interactions.
  • · The potential impacts on the financial system, capital allocation and environmental and social conditions (including the ability to deliver the SDGs).
  • · The risks and opportunities for investors in terms of asset allocation, portfolio management, integration and active ownership.

The study finds that technological advances and environmental changes are seen as the most impactful global megatrends that represent major opportunities and threats to investment institutions. However it also shows that social inequality and global capital flow issues, including public sector deficits, emerge as rival concerns for senior global investment industry figures.

Willis Towers Watson’s Global Head of Asset Research, David Hoile, said: “It is increasingly apparent that these megatrends, and the ability to understand and manage them, should form part of all institutions’ investment processes. This report provides an important indication of the key megatrends affecting global investment institutions. A deeper insight into the risks and challenges facing investment institutions is crucial to building resilience and creating opportunities.”

“It’s not surprising to see environmental concerns featuring so highly in the list,” said PRI managing director Fiona Reynolds, “as they have figured in the top concerns of the World Economic Forum’s Global Risks Report. The widening economic inequality gap, which is a barrier to creating sustainable markets, is also one of the most pressing challenges we face, today.”

It’s not surprising to see environmental concerns featuring so highlight in the list as they have figured in the top concerns of the World Economic Forum’s Global Risks Report

Fiona Reynolds, PRI Managing Director

What next?

The release of the megatrends report is only the start of this work. The PRI is convening a Macro Economic Risks Advisory Group of investors to explore these trends in more depth and explore ways that investors, companies and policy makers can respond. More details can be found at www.unpri.org/sfs

The megatrends report can also be found on the website of Willis Towers Watson.