As we report in this issue, investing is no longer seen as just a good cause, but at once a golden opportunity and a global imperative. Speaking at the UNDP’s Social Good Summit in Geneva in October, Marcus Neto, director of the UNDP’s Istanbul International Centre for Private Sector in Development, spoke repeatedly and unambiguously of a “pot of gold” waiting for investors in the UN Sustainable Development Goals. That doesn’t sound like the kind of language familiar from charitable appeals for donations. What is it telling us?

For one thing, the impacts we are talking about here are not just impacts on society and the environment; they are also reciprocal impacts on the value and long-term survivability of the investors themselves. This is absolutely not just a question of chasing popular sentiment. You only have to look at the effect on oil stocks in 2017 of Norges Bank’s recommendation to remove them from the Government Pension Fund Global’s benchmark index – and that was “based exclusively on financial arguments”. When corporations, stocks, and fund performances can be so impacted by just one institution’s calculations in the context of environmental impact, it should be a wake-up call for players far beyond the narrow petrochemicals sector.

This is no longer a face-off between naive, starry-eyed altruism and cynical pragmatism. The opportunity cost of not embracing impact could be devastating for any financial sector player. Pension fund liabilities extend over decades, and most other institutional investors look at long-term asset growth over similar timescales. Yet current financial sector metrics are just too narrow and short-termist to capture both the timelines vital to major asset owners, and the breadth of impacts involved. That must change. The same kind of benchmarks and pricing mechanisms already piloted in areas like carbon credits need to be extended across the entire financial system. It’s a simple risk over time calculation. Sustainability here is not about sentiment, but survival – period.

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