There is strong agreement among the scientific community about the threat to human life from the deterioration of Earth’s ecological systems. A major cause of this is human activity. Any significant shift to a sustainable world safe for human life will require foundational changes to the current international economic model, with investment, and large and rapid shifts to low carbon and sustainable products and services, being important components.
Current investment vehicles include sovereign wealth funds, asset management funds, and banks. There are substantial problems with all three. Some case studies (Generation Investment Management, Highwater Global Fund, Banco Bradesco, and Westpac Bank) are described that illustrate these problems and point to some solutions. Generation Investment Management was set up by Al Gore and David Blood. It has good principles but the availability of information about its application of these policies is poor. What information is available raises some questions. Highwater Global Fund was established by Michael Baldwin and Paul Hawken. It does follow through on its principles, but it is not as transparent as Portfolio21. Banco Bradesco and Westpac Bank do not have sustainability policies. HSBC is the leading international mainstream bank, but many of its policies are not sustainable.
While the case studies provide insights into how to invest sustainably, the sector as a whole will not provide the means for the shift to sustainability without government intervention. The market can not require adequate principles and standards, direct change through incentives and taxes, and establish funds to counterbalance market failures. The market can neither assist developing countries to prepare and cope with the inequities nor provide the assets needed to adequately adapt to the consequences of ecological degradation and limited resources. A substantial percentage of Sovereign Wealth Funds is not investing sustainably, and this illustrates the difficulty of achieving commitment to sustainable investment at a global level. Investment strategies therefore need to include adaptation as well as mitigation issues.
|Keywords:||Ethical Investment, Financial Sustainability, Sustainable Investment|
CEO, Council for Socially Responsible Investment, Auckland, New Zealand
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