CALIFORNIA:California Public Employees’ Retirement System, a $307 billion retirement fund, said it will require its asset managers to factor environmental and social risks into their investment decisions. Norway’s giant national sovereign wealth fund, with $890 billion in assets built off its oil and gas reserves, is divesting from companies that mine or burn coal.
A majority of the world’s largest institutional investors pension funds, insurance companies, sovereign wealth funds incorporate considerations about a business’s environmental and social track record into their investment decisions.However, too many company managers are still under the spell of the myth that shareholders are the only stakeholders who count.
For decades, neo-classical economists suggested and business schools taught that sustainability investments unnecessarily raise a firm’s costs, creating a competitive disadvantage. Invest in anything but the bottom line, and you risk your survival we’ve been told endlessly.
Shareholder idolatry holds executives back from making the investments they should to benefit the planet and their businesses in the long-term. For every corporate leader there is a regiment of laggards.Sure, most of the Standard & Poor’s 500 companies issue sustainability or social responsibility reports each year, but try reading those reports they are a catalog of the tepid.
