For long term investors sustainability is an obvious concern, but for some investors who look only for profits in the next quarter sustainability can be forgotten. The tide is starting to turn as companies that don’t have sustainable practices in place are being beaten by more efficient operations.
The Guardian has outlined why poor investors ignore the environment while providing good reasons to care about it from a financial standpoint.
As a first step, we need to recognise that rapidly declining natural systems are bad news for business. There is a two-way street between the economy and the environment: businesses damage the environment, and the damaged environment then creates risks to the bottom lines of businesses.
But why should members of the investment community care? After all, they are not trying to save the world; they have a fiduciary responsibility to generate returns to their shareholders. Three reasons explain why investors should include sustainability considerations in their decisions, and why doing so is compatible with fiduciary responsibility.
One thought on “Why Investors Care About Sustainability”
Unfortunately all this talk about sustainability is gibberish unless we tackle the issue of perpetual, exponential growth. When mankind consumes natural resources at 1.5 times the replenishment rate, sustainability linked to growth is cognitive dissonance at its worst.
Almost two centuries ago to the year mankind’s population first broke the one billion mark. At my birth we had grown to about 2.5-billion. In my lifetime that has tripled and we’re on our way to 9-billion plus. Now, consider per capita consumption in 1814 compared to 2014. Consider longevity increases from 1814 to 2014,
In two centuries we have gone from a geological epoch, the Holocene, into a man-made epoch, the Anthropocene. We’re only at the “early onset” stage of global warming/climate change and we’re already wobbly even if most of us don’t realize it yet. We don’t have to burn another SUV tankful of gas at this point. There’s enough atmospheric GHG to keep the planet warming and our oceans acidifying.
Sustainable growth? No, those are the lies that we, as a truly global civilization, tell ourselves. Here’s an example of our madness. I recently came across a report on food security written by leading Chinese experts. What caught my attention was mention that China’s per capita GDP would grow from $1,883 today to $16,000 by 2030! Just imagine that growth in economic activity in the context of resources, production, consumption, waste and pollution. China, it seems, is fully prepared to break the back of the biosphere all on its own.
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