Transitioning towards sustainable investing

We stand on the brink of a great transition that is potentially planet-changing, at the end of which the societal and environmental impact of corporate projects will take over from their mooted financial return as the main driving force behind future investment. Dirk Schoenmaker, Professor of Banking and Finance at Rotterdam School of Management, Erasmus University, sees two main trends: sustainability is regarded as an issue in the financial world. And the time is coming for sustainability to be integrated into the investment decision-making process, alongside or even ahead of the traditional focus on financial returns.

'I see two main trends. One, because of general news coverage and academic influence, general acknowledgement would seem to be growing that sustainability should be regarded as an issue in the financial world. Accompanying this is an increasing awareness that sustainable investment is in itself a good thing.

Two, the time is coming for sustainability to be integrated into the investment decision-making process, alongside or even ahead of the traditional focus on financial returns. Financial returns will, of course, remain a consideration, but they should not be the only factor in the investment equation. Social value is equally important. Even more so, for those, like myself, who believe that time is running out to effect real positive change that will benefit society, humanity, and of course the planet.

Preparation and prevention

If we are to avoid reaching a tipping point in the next decade or so from which it would be extremely difficult to return, we need to prepare for the future, to prevent trends from reverting to simple short-lived fads, beginning now. Companies that do not take appropriate action will over time begin to lose their social licence to operate, in everyday practical terms if not in top-down government and regulatory terms....'

Read the article by Prof. Dirk Schoenmaker in RSM Discovery Magazine