Will sustainable investing save the world?

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The rise of sustainability-themed exchange-traded and mutual funds marketed by investment and insurance companies bring about a sense of déjà vu. These “do good” funds remind me of the many corporate social responsibility (CSR) initiatives of the 1990 -2000s.

In those decades, CSR initiatives were mostly funded under corporate marketing budgets to support initiatives devoted to helping the less fortunate in society – providing them with opportunities or relief from their hardships. These “Do-Good initiatives” are often part of the corporate PR narrative. They occupied a fraction of the leadership’s attention and corporate resources while executives and shareholders continue with their main responsibility of maximising growth and profits unabated. They addressed societal ills but do not solve problems that threaten human existences as a whole.

In the current sustainability investing trend, a business or investor want to see their money go toward stocks, funds and investments that are both profitable and reflective of their values on environment, social and governance. Nevertheless, these investment funds operate within existing firms where the central narrative is share value growth and profit maximisation with a culture governed by performance benchmarks.

There is an emerging view that this economic narrative and framework is the problem. One wonders:  Are these funds not just marketing initiatives that help the bottom line, thus compounding the problem? Can climate crisis be solved by a firm’s investment allocation policy or are these distractions to the societal agenda at hand?

Our current economic system is operating at a huge cost to the planet, with its rewards very unfairly shared between groups. The complex issues we now face is a result of a collective behaviour to grow, innovate and live prosperous lives. There is some general agreement that what we do today is not sustainable. 

So here are some questions: Is this not a systemic problem? Don’t we have to address the cause of the problem instead of its symptoms?  If the market itself is the cause of the problem, can we rely on it to solve the problem? How do we change the system if we are operating within the system?