A real economy approach to integrated investing and portfolio management

How to invest for great financial and societal outcomes? Universal asset owners, like pension funds, play an allocational role in the real economy. At the same time, their long-run performance depends on a flourishing economy, underpinned by a thriving, livable world. Recognizing this two-way economic dependence, this chapter develops a two-step approach for asset allocation in an integrated portfolio.
In the first step, a company's social and environmental impact is measured to determine its capacity to be future-proof. In the second step, an integrated portfolio is built with positive-impact companies and negative-impact companies that can and want to improve. The real economy approach enables universal asset owners to accelerate the transition reducing social and environmental system risks.