Sustainability and Systemic Risk in Portfolio Strategy

Sustainability and systemic risk are reshaping the foundations of portfolio strategy. Climate transition risk, demographic shifts, governance instability, and regulatory change are no longer isolated concerns but structural forces impacting global asset allocation. Traditional investment models, which rely on stable historical relationships among asset classes, are increasingly inadequate for capturing the uncertainty and volatility of a sustainability-driven future. Strategic portfolio design must now account for non-linear risks, dynamic correlation shifts, and emerging transition scenarios. Integrating sustainability and systemic risk into portfolio strategy strengthens resilience, improves long-term risk-adjusted outcomes, and positions capital to navigate a fundamentally changing investment landscape.