The past 25 years have seen a proliferation of investment movements promising to make capitalism sustainable. These include impact investing; socially responsible investing; corporate social responsibility; shared value; conscious capitalism; and environmental, social and corporate governance. Yet, all these movements, however promising, assume there’s no need for a trade-off between returns and social and environmental impact. They are grounded in the idea that investors and corporations can achieve commercial returns while fixing our biggest problems—that we can “do good while doing well.”
In a 2020 Harvard Business Review article, we argued that while there are indeed niche opportunities for this type of “win-win” investing at a firm level, the current regulatory framework won’t support anything close to the level of investment needed to address our social and environmental challenges.
For example, without a supportive regulatory framework, business would have to accept losses of about $10 trillion by 2030 to meet the Paris Agreement global warming target of 1.5 degrees Celsius. Whether it is global warming, loss of biodiversity, or poverty and social isolation, win-win investors simply are not willing to accept sub-commercial returns and will not make the required investments.
Please select this link to read the complete article from SSIR.