The Sustainability of the Environmental, Social and Governance factors

With issues continuing to manifest from income and wealth inequality to climate change, expect these trends to only continue and strengthen going forward especially as sustainability strategies continue to add financial value for companies and their shareholders. Examples of environmental, social and governance (ESG) factors are numerous and ever-shifting. They include: Environmental: climate change; greenhouse gas (GHG) emissions; resource depletion, including water; waste and pollution; deforestation Social: working conditions, including slavery and child labor; local communities, including indigenous communities; conflict; health and safety; employee relations and diversity Governance: executive pay; bribery and corruption; political lobbying and donation; board diversity and structure; tax strategy One more concern remain, the SRI legal and its environmental challenges, ethical investment, or, SRI as this financing movement is more commonly known today, increasingly downplays ethics. Traditionally it championed an explicit ethical agenda, these investors addressed social or environmental concerns not for any financial reward, but for the moral desire and responsibility to improve the world. The renaissance of SRI in the mainstream financial markets since the late 1990s has problematically, somehow rather, have disavowed this ethical posture. Responsible investors increasingly pitch their case for taking social or environmental issues into account on business grounds, on the assumption that SRI will make them prosperous, rather than merely virtuous.

While business case SRI is becoming popular, it risks perpetuating business-as-usual and reducing the SRI movement’s capacity to leverage lasting change for environmental sustainability. Environmental problems have become the most important SRI cause today, yet it is doubtful whether present forms of SRI will make a significant difference to their resolution. Ethical investment to promote sustainability should no longer be a discretionary option for financiers, to follow only if there is a compelling business case. In a world facing grave ecological problems, the financial sector must shoulder some of the responsibility to shift economic activity towards sustainable development. UN Sustainable Development Goal (SDG) numbers Seven, Eight, Twelve, and Thirteen have strong proponents for this paradigm shift.