Does Sustainable Investing Need a Reset or a Revolution?

Sustainable investing is at a crossroads. After two decades of growth, the field faces mounting political backlash, rising regulatory burdens, and growing skepticism about whether ESG is actually delivering impact. Some argue that it’s time to course-correct—to refine frameworks, improve data, and restore trust. Others believe incremental fixes won’t be enough and that the system itself needs rebuilding.

Few organizations embody this tension more than the Principles for Responsible Investment (PRI). Once the driving force behind mainstreaming ESG, the PRI now faces questions about whether its mission—formed in a different era—still fits the realities of today’s markets. Is it still a catalyst for change, or has it become part of the bureaucracy holding investors back?

Meet the Experts

In this episode of Sustainability Wired, Lorenzo Saa brings together Fiona Reynolds and James Gifford—who together led the PRI for 19 years—to reflect on the movement they helped build. They explore whether regulation has helped or hindered progress, how the PRI must evolve to stay relevant, and whether technology like AI can revive the original purpose of responsible investment: allocating capital wisely to drive real-world outcomes.

The discussion is candid, at times provocative, and ultimately hopeful about what’s next for sustainable finance.

Listen now to hear the full conversation.

Key Moments

00:00 – 01:45	Introduction
01:46 – 05:24	Introduction to Fiona Reynolds and James Gifford
05:25 – 10:15	ESG Backlash
10:16 – 08:55	ESG has become a compliance industry
15:07 – 10:21	Is regulation hurting more than it helps?
23:12 – 12:16	What does resilience look like?
27:15 – 14:32	The Principals for Responsible Investing at 20
33:31 – 36:22	Collaboration on policy and investment
36:23 – 45:13	Rewriting the PRI principles
45:14 – 52:00	Can AI help investors close the gap between ambition and action?
52:01 – 53:01	What gives James and Fiona hope for the future of sustainable investing?
53:02 – 55:44	The art of sustainability
55:45	Closing statements

Notable Quotes and Insights

From regulatory fatigue to investment innovation, James and Fiona offered pointed reflections and uncomfortable truths about the direction of sustainable investing. These quotes capture the sharpest moments—where the system is stuck, what needs to change, and how investors can lead that shift.

1. ESG Has Become a Compliance Industry

Fiona challenges the idea that more regulation equals more impact. She argues the ESG movement has become too focused on reporting and labels at the expense of real outcomes.

“I don’t think investors create value by filling out forms. They do that by allocating capital wisely.  We need rules that drive clarity and accountability, but not red tape that just crowds out decision-making. And I read industry news…and all I ever read about, which drives me crazy, is the EU Omnibus, CSRD, SFDR. I don’t hear any discussion about actual ESG issues anymore, and that frustrates me a great deal.” 

James echoed that sentiment, explaining that the majority of jobs that remain in ESG after the recent backlash are largely compliance related.

“I saw at the banks the number of people involved in implementing SFDR and other EU sustainability regulation was literally 10x the number of people doing private market impact fund investments, and that is absolutely outrageous. And I saw, over the years, less innovation. I saw more ass covering, to be honest, box ticking, and all of the headcounts that remain at these banks after this shakeout are all regulatory and compliance headcounts in ESG.“

2. Regulation Without Additionality Is Failing Investors

James delivers a sharp critique of EU sustainability regulation, questioning whether it has delivered any meaningful capital shift. In his 

“I now think almost all of it is a complete mistake. And the reason is: number one there is no additionality lens to anything The EU has done. There is nowhere that says if all of this regulation actually is implemented, more capital will actually flow to the things we want it to flow to. It’s their theory, but there was absolutely no way that that was going to happen, given how badly drafted this regulation is.”

3. The PRI Must Choose Its Role

Fiona argues that the PRI’s long-term value depends on clarity of purpose—and that trying to be everything to everyone risks undermining its effectiveness.

“Does PRI want to primarily be a responsible investment organization—helping investors integrate ESG, use stewardship, and allocate capital into the real economy? Or does it want to be a sustainable finance body shaping frameworks and taxonomies? To me, those aren’t the same thing. Both matter, but PRI can’t do both well.”

4. Collaboration Needs to Move Beyond Policy

James makes the case for a more action-oriented future for the PRI—one focused on enabling actual capital deployment, especially in underfunded markets.

“Where I think the PRI needs to head—and I don’t know if it’s possible with the current signatory representation—but it needs to shift from a sort of a collaborative engagement and policy initiative to a collaborative investment initiative.

Now, a lot of the most difficult challenges in investment are frontier markets and early stage tech. Most signatories don’t do either. Because either because it’s difficult, it’s expensive, it’s a pain.

So, the PRI position, I think it is to actually facilitate that and lower the costs of those small-scale early-stage technology investments and frontier market high-risk investments to the point where it could be aggregated and fit in large institutional investor portfolios.“

5. AI Could Help With Accountability, But It Needs Guardrails

Fiona sees AI as both a massive opportunity and a looming risk, especially if lessons from the social media era go unheeded.

“AI could be the biggest accountability tool that we have, but I do think that there needs to be guardrails around it.

Because if big tech won’t own the impacts of AI in the way it hasn’t owned the impacts of social media, then society and investors are going to pay the price, and we need to make sure that we don’t end up paying that price in the way that we have already with social media, and I think investors definitely have to get involved.”

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