Sustainable Capitalism White Paper

While governments and civil society will need to be part of the solution to the challenges we face, ultimately it will be companies and investors that will mobilize the capital needed to address the problems of our age. The challenges facing the planet today are unprecedented and extraordinary; climate change, water scarcity, poverty, disease, growing inequality of income and wealth, demographic shifts, trans-border and internal migration, urbanization, and a global economy in a state of constant dramatic volatility and flux, to name but a few.

To address these sustainability challenges, we need a paradigm shift to Sustainable Capitalism; a framework that seeks to maximize long-term economic value creation by reforming markets to address real needs while considering all costs and stakeholders.

The economic case for mainstreaming Sustainable Capitalism highlights the fact that it does not represent a trade-off with profit maximization but instead actually fosters superior long-term value creation. There are five key actions that will accelerate the mainstreaming of Sustainable Capitalism

1. Identify and incorporate risks from stranded assets;
2. Mandate integrated reporting;
3. End the default practice of issuing quarterly earnings guidance;
4. Align compensation structures with long-term sustainable performance; and
5. Encourage long-term investing with loyalty-driven securities.

Five broader ideas that merit ongoing support and attention:

i. Reinforce sustainability as a fiduciary issue;
ii. Create advisory services for sustainable asset management;
iii. Expand the range and depth of sustainable investment products;
iv. Reconsider the appropriate definition for growth beyond GDP
v. Integrate sustainability into business education at all levels.

Ben Franklin famously said, “You may delay, but time will not, and lost time is never found again.” We have the opportunity to rebuild for the long term and an obligation to seize it. Sustainable Capitalism will create opportunities and rewards but it will also mean challenging the pernicious orthodoxy of short-termism. Now is the time to accelerate the transition.

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