How Sustainable Investing is Fixing the Corporate World
By Nicole Schlichting
Standard investing in the 21st Century is not what it used to be. Back in the 50’s and 60’s, one of the most important factors in companies’ decision making process was long-term profitability; organizations generally strived to make choices that would benefit the company (and investors) over the course of time rather than in the immediate future. The pace of life back then was generally slower, the economy wasn’t nearly as massive as it is now, and both businesses and individuals just tended to be more patient — they were willing to wait for a while to see those financial returns.
Today, well…today is different — ever since the rise of ‘shareholder culture’ in the 1970’s, the focus in the corporate world has shifted to short-term profitability at the expense of employee wellbeing, the environment, and local and global communities. According to Grow’s Kia Fariba, “The shareholder culture influenced a narrow-scoped American economy, in which corporations discounted long-term objectives in favor of driving up immediate growth, unaware of or entirely disregarding the social and environmental impacts of their actions.” This shortsighted and superficial priority placed on quarterly earnings has led to a rise in greed, corruption, and neglect of what should ideally matter most to a company: long-term financial viability and socio/eco-conscientiousness.
Fortunately, help is on the way! Over the past few decades, the sustainable investing movement has been slowly but surely incentivizing companies to reevaluate their priorities, both for the sake of the environment/humanity and for their own long-term profitability. According to environmental advocate J.G. Speth, we have begun the shift to a “post-growth society where working life, the natural environment, our communities, and the public sector are no longer sacriﬁced for the sake of mere GDP growth, and where the illusory promises of continuous growth no longer provide an excuse for neglecting to deal generously with compelling social needs.”
So…how is that related to sustainable investing? Well, if you look at the definition, you’ll see that the entire premise of the movement is to counteract the imprudent corporate habits that have become all-too-common over the last 50 years. By choosing to invest only in companies that have good ESG scores, investors and shareholders are forcing companies to rethink their business practices so they make the most sense, both ethically and fiscally. So there ya have it — by being mindful to only invest our money conscientiously, we are changing the face of both the corporate world and restoring the values of businesses around the globe.
Interested in learning more about how you can be a part of this change? Check out Grow’s website for more info!
Speth, J. G. (2012). American passage: Towards a new economy and a new politics. pp 181–186