“Building a Balanced and Scalable Strategic Asset Allocation to Meet Financial and ESG Impact Goals”

Bridgewater

Karen Karniol-Tambour

Research

4 Pages

Bridgewater explores how institutional investors can pursue financial objectives alongside ESG impact by embedding sustainability directly into strategic asset allocation. Its framework combines SDG aligned assets with All Weather portfolio construction, arguing that impact objectives can be incorporated without fundamentally changing the portfolio’s financial engine.

Key Takeaways

Strategic Allocation Matters: Roughly 90% of typical institutional portfolio risk comes from strategic asset allocation, making portfolio construction central to both financial and ESG objectives.
Broad Global Framework: The UN Sustainable Development Goals include 17 goals targeted for 2030 and have been ratified by 193 countries.
Stress Tested Approach: Bridgewater’s All Weather framework has been used for over 20 years and stress tested across more than 100 years of economic environments.
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