The mood on responsible investment at the 16th in-person conference held by PRI (Principles for Responsible Investment) was overwhelmingly positive, whilst acknowledging the challenging geopolitical backdrop for ESG.

PRI is gearing up for its 20^th year (2026), and the event attracted delegates from across the globe to Toronto from October 8-10.

Speakers had a pretty easy ride, preaching to 2,000 converted delegates all eager to find out what’s next in ESG, which regulations will they should be concerned about, and most importantly, how to progress responsible investment to make a difference.

Greenpeace demonstrators appeared outside the event, calling for further regulation of the banking system – although this didn’t seem like the kind of crowd that needed convincing.

“You are the first generation of investors who understand the risks of climate change, and the last who will be able to do anything about it.”

Mark Carney, UN Special Envoy on Climate Action and Finance

Key themes and soundbites from the conference can be summarized in four powerful words: “regulation”, “urgency”, “progress” and “action”.

Regulation

Capacity and expertise are major issues that organizations are struggling with as they seek to comply with waves of additional regulation. Speakers noted that they should not be pulling resources away from those implementing sustainability to do this reporting. Reporting needs to involve more than just sustainability teams – it should include finance, risk, compliance, legal, and investment teams. Senior sponsorship is key, and people need to be trained.

A panel of global regulators, including the FCA’s Director of ESG, Sacha Sadan (a regular on the ESG speaking circuit), noted that what sustainable finance regulation needs now is assurance; confidence that disclosures are accurate. Not just limited assurance, but reasonable assurance. The market wanted labels, so the FCA created the SDRs – the market said the bar was too high, but the FCA is standing firm to maintain the quality and integrity of the framework.

Canada’s Deputy Prime Minister Chrystia Freeland announced the launch of Canada’s own Climate Taxonomy for Sustainable Investing (which sounds rather like the FCA’s SDRs) – guidelines to identify sustainable and transitioning investments, as well as mandatory climate disclosures for certain businesses.

Urgency

The keynote speech from Mark Carney, former Bank of England governor and now UN Special Envoy on Climate Action and Finance, highlighted that time is running out for capital markets to make a difference on sustainability. He said this transition has the scale of the industrial revolution at the pace of digital transformation. Current net-zero policies are insufficient to meet the pledges made by countries across the world (with the exception of Denmark, well done Denmark). There are major gaps in data, action and investment.

For investment returns, speakers emphasised the importance of going where the emissions are, and getting them down. Don’t overcrowd the companies and sectors that are already there, they stressed. And don’t just decarbonise the portfolio, decarbonise the real economy.

Clean energy investments are also rising – set to reach $2 trillion this year – but this is only half of what’s needed. CalPERS (the California Public Employees’ Retirement System) plans to double climate investments in the next six to seven years.

Of course the anti-ESG movement also came up. Speakers noted that while headlines in the US are indeed loud and prominent, markets are driven by environmental and social risks. When these factors break down, the markets break down. Ultimately, systemic risk results in non-diversifiable risk in capital markets, and investors want to improve the resilience in these systems.

Progress

Speakers were keen to highlight progress as well as ongoing challenges. Some key of the achievements mentioned included:

• The UK was the first G7 country to close its final coal-fired power plant this year.
• Canada’s carbon emissions fell for this first time since COVID this year.
• Norway has more electric vehicles on the road than petrol cars.
• More than 50% of new cars sold in China are now EVs.
• More than 50% of the world’s invested assets are committed to the PRI’s principles.
• More than 50% of banks are now signatories of the new Principles for Responsible Banking.

ISSB (the International Sustainability Standard Board) also got several mentions. Over 20 jurisdictions accounting for more than 50% of the global economy have now taken steps towards committing to ISSB. This includes G20, G7 and EM nations – the vast majority targeting full compliance with ISSB standards. Delegates were encouraged to push ISSB along by asking companies to report on ISSB, holding directors accountable to provide transparency.

Another newer framework, the Net-Zero Data Public Utility (NZDPU) received a warm welcome from delegates. The NZDPU platform will cover 10,000 major companies globally and acts as a centralized repository of company-level greenhouse gas emissions data. Launching in 2025, this is one to watch. In short, if a company is not in this database, it’s not taking climate action seriously.

Action

PRI is placing a strong focus on its new Progression Pathways framework. It reinforced that the framework is not intended to become a de-facto labelling regime (we think this is inevitable). The pilot framework will be released in 2025, and we plan to work on mapping signatories across to the Progression Pathways as soon as possible. We expect 2025 reporting to remain stable, 2026 to see new foundational reporting, and 2027 the introduction of Progression Pathways reporting.

The CSRD (Corporate Sustainability Reporting Directive) is the next big EU regulation, set to impact thousands of companies in the EU and beyond. The CSRD will require companies to undertake new processes such as a double materiality assessment plus a huge number of disclosures, contributing significantly to the already large regulatory burden they are facing.

Biodiversity is another growing topic. Company transition plans will need to include nature and biodiversity, as well as climate. A local case study explained that Quebec has 70% of the Maple Syrup market – what would happen if something happened to the Maple tree? While it may be harder to track and report on biodiversity risks and impacts, there are an increasing number of tools and frameworks available and we expect these to be integrated with climate focused tools as standard before long.

Greenhushing is on the rise, possibly becoming a bigger problem than greenwashing. This is when companies and investors stay quiet about their sustainability ambitions and initiatives to avoid scrutiny and negative attention. By downplaying their actions, companies lower the bar on climate ambition, causing momentum to dwindle and ultimately progress on delivering action to waiver.

While it may seem tempting to stay quiet on sustainability, we believe the benefits of telling your story and owning your narrative outweigh the potential challenges. We expect regulations like CSRD, SFDR and SDR to improve transparency and put additional pressure on companies to be clear about their sustainability actions.

Some organizations have now deprioritized DEI, with headwinds based on claims from a McKinsey study (which was based on corporate entities and is widely disputed). However, we see that allocators still very much care about DEI for investment managers. Some claim that having around 30% diversity on investment teams is valuable to avoid group think.

Regulation takes time to turn into action, a strong message was delivered that the industry doesn’t have to wait for regulators to make things happen. Investors, ESG ratings, and companies can push things to happen quicker.

And finally, all signs suggest that not having an emissions target in the next couple of years will be a problem.

I’m going to let Mark Carney have the final word on this note as this summarizes the spirit of the conference better than we can: “You are the first generation of investors who understand the risks of climate change, and the last who will be able to do anything about it.”