What keeps people from recognizing the impact their investmernts have on the world them?
This was the question I needed to answer as part of my homework in the course, "Towards Aware and Values-Centered Investing." A timely question, on the heels of the recent Global Climate March, preceding the U.N. Climate Action summit.
Capital markets developed in order to allocate resources to people, companies and projects that created real economic value. But somewhere along the line we lost our way. Instead of judging our investments on the basis of their impact on our economy and on our society, we instead invest almost exclusively for financial return.
Companies, as well as individuals, are adapting their policies as they become more aware of the negative impacts of their investments. This week, it was announced that 130 banks, including Citigroup, Barclays and Deutsche Bank, have adopted new "U.N. backed" responsible banking principles to fight climate change, and to shift their loan books away from fossil fuels.
The Business Roundtable, an organization of 181 CEOs, announced this summer that they are redefining its "Statement on the Purpose of a Corporation." No longer do corporations exist primarily to serve shareholders; the responsibility is broadened to include all stakeholders, including customers, employees, suppliers and communities. This includes developing ethical supply chains by taking into consideration, among other things, an organization's sustainability and carbon footprint efforts.
The response by several corporations to the fires in the Brazilian Amazon is a good example of this. VF Corporation, the owner of Vans, Timberland and the North Face, said it will no longer source leather from Brazil since it can't guarantee that all its suppliers operate sustainably. H&M, the world's second largest fashion retailer, has placed a halt on leather imports as well, until they are assured that the leather does not contribute to environmental harm.
I am beginning to assess the impact that all my choices have on the broader community, including my investments. Want to join me?