The Sustainable Investor is back
and we think better than before
What are we about - put simply, helping you to make the sustainable transitions financially viable.
We all know that if the planet is to achieve its decarbonisation and transition targets, we need to engage the private sector, in a big way. Just to deliver net zero, we need to invest $4-5 trillion every year out to 2030. This is over double what we invest now. On top of this we also need to invest to preserve and rehabilitate our environment, social systems, and biodiversity.
Governments and Society have an important role to play but they cannot do this on their own.
One massive challenge is that sustainability and finance sit in very different silo's. They not only use different words, they think differently, often very differently. We need to bridge these gaps. We need to transition sustainability into mainstream finance.
There are lots of people who say that it cannot be done, that sustainability and finance do not mix. A bit like oil & water (sometimes literally). They say that sustainability is woke and value destroying, and that investment should only be about creating financial value. That we should leave sustainability rules to governments and regulators, and let companies get on with making money.
The problem is that this approach is just not working. We have massive amounts of greenwashing, a lot of noise from governments and often very little action, and we have confusion about what sustainability finance actually means. And as a result we are continuing down a route that puts our economic, as well as our environmental and social future, at risk.
Now, to be fair, some of this confusion comes from what we call sustainability over reach. For instance, its wrong to ask companies to solve global poverty. You might laugh, but that is apparently in one companies sustainability materially map.
But that doesn’t mean that companies cannot make a difference to their stakeholders and still generate a fair financial return for their investors. Why might they do this?
One reason is risk reduction.
They see regulatory, social and political change coming down the track and they want to prepare. Not acting now is likely to be value destroying in the longer run. This makes good sense from a sustainability and financial perspective.
The other reason is new opportunities, new ways of meeting societies future needs.
It might be a new product, a new service or a new way of operating using new low carbon raw materials. This also makes good sense from a sustainability and financial perspective. Apple did not grow to the size it is by doing the same as everyone else - getting ahead of the curve and anticipating change can be a sensible strategic option, as can building new skills. It’s a way of building future value.
And, for many companies, change takes time. So starting now, even when the risk or opportunity is still not totally clear, is also good from a sustainability and financial perspective.
And even some of the softer issues can be value creating.
Take diversity. As the external world in which a company operates changes, then companies are going to need new ways of thinking about challenges and opportunities. Which means bringing in people who think differently - that is true diversity. Similarly, paying your workers at home or in distant countries, a fair wage and treating them well can build resilience, trust, and goodwill - to see both sides through what might be challenging times ahead.
And of course, our society is dynamic.
The political and regulatory changes that result from changes in attitudes among our society, among consumers, can push companies one way or another along this transition pathway. It might be the carrot of incentives and subsidies. It might be the stick of new regulation. If sustainability professionals better understand how and why companies react, then they are better placed to demand the type of change that generates the most positive response from the providers of capital. I describe it as thinking like a corporate raider, others might describe it as lobbying.
To us this is a journey of hope - there is a better way
I am hoping by now you will agree. There are lots of ways we can encourage and support companies to develop in a sustainable way, and still generate a fair long term financial return for their investors. And there are levers we can pull, politically, socially and regulatory, that can make these decisions clearer for them. Giving them certainty to invest in a way that might seem, to some investors, to be counter intuitive.
We still think its wrong to ask companies to fix all of societies ills, but with the right thinking together we can make some good progress on fixing a lot of them. And at the same time keep our economy alive, so that we can fund your children’s education, your healthcare, and your parents retirement.
If you want to learn more about how you can build the skills and knowledge to do this, why not subscribe. You can do this by clicking here. Our Premium subscription costs just £50 pa, so less than £1 per week. And our Professional subscription is just £250 pa, less than £1 a day.
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One last thing. We will be publishing in two places. Here and on our The Sustainable Investor blog platform on Ghost (why not check it out). So if you do get some blogs twice (we will really try not to do this, but we are human after all) then we are sorry.