Sustainability needs to be embraced by all investors and integrated across capital markets if the world is to address its most pressing problems, says the president of a leading U.S. investor coalition.
Mindy Lubber, president of Ceres, told financial advisors and others interested in socially responsible investing who gathered at The SRI Conference at the Mohegan Sun Conference Center in Connecticut that they had been extremely effective at making change, but they need to continue their efforts.
"We're still being driven by a fossil fuel industry. We still have slave trade in our workplaces. We still have unfair practices. We still have boards of directors who aren't listening to outside stakeholders. We still have an economy that's going from 7 billion to 9 billion people and we do not have enough resources. We do not have enough food. We will not have enough water, and climate change may never let us get to 9 billion people. Those are the world's leading economic issues, I would argue. They will drive our economy," Lubber said.
To integrate sustainability into capital markets, investors can no longer accept "one-off deals," when companies have done one good project. Instead, she maintained, a comprehensive approach is needed.
"How do you integrate sustainability at the board level? How do you tie it into compensation? How do you integrate it into R&D and into enterprise risk management, into facilities, into products, into the supply chain? And the only one who can make this happen is in this room and beyond," Lubber said.
She stressed over and over again that sustainable investing can't be regarded as a special niche."This is about the economy. It's about putting real prices on the economic issues that drive the economy, and we need to be thinking about how to bring more investors into it," she said.
In particular, Lubber maintains, real prices need to be put on carbon pollution and water. "The companies that are doing nothing have to begin addressing fossil fuels and water depletion, because there is no sector of our economy that can survive without enough water," she said. "Drought just this past year decimated the agricultural community in the middle of the country. Some people think the implications of climate change are only on the coasts. Well, the corn crop [that] died in Texas wasn't about the coasts."
These are reasons that sustainable investing needs to be driven into every asset class, she added.
"Every asset manager needs to know how to manage it, and think it through and ask the questions on the quarterly earnings calls," she maintained. "How do we move the levers around us? The stock exchanges are talking about calling for more information on ESG [environmental, social and governance] issues. We need all of us calling for that. And the ratings agencies are starting to look at how we integrate water risk and climate risk into what they do. It will work if we are all there, and the policy makers who are stalled in Washington need to understand that addressing climate, addressing water issues are the fundamental future of our economy."