The passive investment market has grown dramatically in recent years, driven by factors including low costs, evidence of the relative benefits of passive versus active investing, and new financial products such as exchange-traded funds. This trend has combined with growing interest among investors in ESG incorporation, resulting in a parallel growth in passive ESG investing. The PRI is seeking to provide guidance to signatories and the wider market on the incorporation of ESG issues in passive rule-based investments, and regarding challenges faced by the market. As a first stage in producing this guidance, the PRI published a discussion paper titled How can a passive investor be a responsible investor? This was followed in the second half of 2019 with a consultation process undertaken by the PRI, which involved two industry events and a signatory survey. This report synthesises views expressed by participants in those industry events and respondents to the survey. It is divided into two sections, covering:
■ ESG incorporation (focused on the development of ESG indexes) and:
■ Active ownership (focused on engagement approaches across passive or quant-based investment strategies, including ESG indexes