Wharton Pension Research Council Working Papers

Document Type

Working Paper

Date of this Version



Sustainable investing is growing into its moment. Funded pensions, which were among the first institutions to respond to sustainability concerns, are showing renewed interest in better ways to reflect responsible investing objectives, along with regulators, asset managers and shareholder groups. Looking back, the principal elements of sustainability—environmental, social and governance (ESG)—all have different origins and took different pathways. Looking across, sustainable investing developed differently depending on region and country. Viewing it today, we see the trend toward E, S, & G convergence—of definition, process and organization—toward a more integrated investment perspective and process. With growing asset size, funded pensions, sovereign wealth funds and other large institutional investors became ‘universal owners’ and, along with thought leaders and regulators, drove the evolution of sustainable investing toward the more systematic set of tools and policies we see today. Looking forward, questions remain, such as who will be most influential in determining the future of sustainable investing—pensions and other institutional investors, governments, shareholders and companies-- as well as what it will look like. As such, sustainability remains a work in progress and pensions are in a strong position to shape its evolution.


Pension Investing, ESG, Externality, Principal, Agent.

JEL Code

G18, G23, G28, G51, J32, L31, N20

Working Paper Number


Copyright/Permission Statement

All findings, interpretations, and conclusions of this paper represent the views of the authors and not those of the Wharton School or the Pension Research Council. © 2021 Pension Research Council of the Wharton School of the University of Pennsylvania. All rights reserved.

Included in

Economics Commons



Date Posted: 04 October 2021