Let's call a spade a spade: A plea for accountability

Can we speak frankly? In my humble opinion, the single greatest threat or impediment to environmental nirvana is not a runaway, frack-happy oil and gas industry, or the depredations of companies in the mining, forestry, or other high-impact sectors.

Nope. We have seen the enemy, and it turns out to be us.

More precisely, it is our seemingly endless capacity to either practice or tolerate self-delusion and hypocrisy on the part of the most important single group of actors in the push for global sustainability: the institutional investors and those who "serve" them (generally, unfortunately, it's the other way around, but that's a discussion for another day). Pension funds, foundations and endowments, mutual fund providers and hedge funds are far and away the most critical providers of financial oxygen to the major companies that are largely determining environmental and social outcomes on the ground. As a direct result, big investors' priorities very quickly become priorities for corporate boards and senior executives as well. For the past millennium or so, in practice, that has created at least two key priorities for corporates:

  • maximizing short-term profits, whatever the costs to the long-term viability and value-generating capacity of the company; and
  • ignoring, to the greatest extent possible, the environmental and social impacts the company might create, viewing any investment in improving their performance in those areas as an unmitigated drag on profits.

Investors, in turn, have generally regarded any investment by companies in improving their environmental and social performance as either fundamentally irrelevant to their financial returns (on a good day) or, more frequently, a drain on both the company's and their investors' financial returns.

My basic point is this: As long as these attitudes persist among major investors, substantial improvements in companies' sustainability performance will remain elusive and fragmented at best. And when you boil it down (and this usually gets lost in the commercial shuffle), "the investors" are, in fact, us! They're playing with our money: our pension savings, mutual fund investments, charitable contributions and so on. And if we're actually serious about comprehensive, systematic improvement in global environmental conditions, we must change — fundamentally — the basis upon which trillions of dollars (and euros, francs, renminbis, yen, kronor, and dinars) are invested in companies.

The good news, we are assured, is that all this is now changing dramatically. Investors are apparently experiencing a collective enlightenment that makes the Renaissance look positively small-time and retrograde by comparison! After all, isn't the Carbon Disclosure Project now supported by over $70 trillion in investable assets? The UN Principles for Responsible Investment, an even more tightly focused initiative, is a relative charity case with a paltry $32 trillion worth of investable assets solemnly pledging to integrate sustainability considerations directly into their investment processes.

Next page: Has sustainability nirvana arrived?