The Bretton Woods II Leaders List: The 25 Most Responsible Asset Allocators Assessment Report

The initiative focuses on long-term asset allocators, who control over $22 trillion in financial assets and are uniquely positioned to "move the needle" in closing the SDG investment gap. However, the challenge lies in aligning the strategic interests of asset allocators with the attainment of the SDGs. The Responsible Asset Allocator Initiative is based on empirical evidence that responsible investing practices are associated with higher average returns and better management of long-term, non-financial risk. The initiative aims to create momentum around responsible investing by embracing emergent thinking and articulating comprehensive standards and accountability mechanisms for asset managers and companies. The initiative's primary additionality lies in its focus on long-term asset allocators, who have a long-term focus, a high assets under management to asset-holder ratio, and a relationship with their government. There are five key elements that must be in place to generate meaningful change within the asset allocator community: incentives, ambitious but attainable standards, focus on asset allocators, industry buy-in, and SDG integration. The Responsible Asset Allocator Initiative performs well against most of these success factors, though two key elements, a sustained rating system and engagement with asset allocators, will be important to realizing this effort's full potential impact. The initiative requires continued dialogue and solution development with asset allocators to drive improvements and raise the bar for asset allocators. USAID and other stakeholders can support this initiative to produce long-term impact by extending and refining the Leaders List, developing a learning and policy agenda, creating new products or initiatives targeting the needs of asset allocators, and promoting large-scale industry transformation. The Leaders List, which identifies the 25 most responsible asset allocators, has the potential to create industry-led transformation of investment practices. The list could be expanded into an index with non-binary criteria and more detailed and nuanced sub-criteria. The BWII Initiative creates tools to help channel part of the more than $22 trillion controlled by long-term asset holders towards social impact, sustainability, and good governance. The initiative strives to change the calculus of asset holders by demonstrating that properly targeted investments not only generate competitive risk-adjusted returns but also reduce broader exposure to long-term risks and volatility. A growing body of empirical evidence supports the idea that companies and projects with higher ESG performance generate higher financial and economic returns over time.