Companies, Investors Band Together to Catalyze a Sustainable Economy
To some sustainable capitalism is an oxymoron. How could a system based on ever-expanding markets
possibly be sustainable?
I believe that not only can capitalism be sustainable, but also that it’s our best hope for the future on an
increasingly crowded, hot and resource-constrained planet.
Take a look at commodity prices, now at a 24-year high. Those peak prices strongly indicate that global
consumption is outstripping resources, from precious metals to oil, wheat and corn.
From Wall Street to business associations, recognition is growing that the long-term viability of business
depends on how quickly we develop and support solutions that use fewer resources and cleaner energy.
That’s what sustainable capitalism is all about: generating financial return in a long-term and responsible
manner. It’s about breaking the tether to quarterly profits, driven by unsustainable, high-polluting
Here’s an example: Two of the country’s largest investors —with collective assets totaling some $400
billion—have recently taken extraordinary steps toward sustainable capitalism.
The California Public Employees’ Retirement System has committed to fully integrate environmental, social
and governance (ESG) factors—a key tenet of sustainable capitalism—into all investment decisions across all
What’s that mean in practice? It means that CalPERS will take an issue like water scarcity and examine its
impact on the giant fund’s real estate portfolio, its public and private equities, and its fixed income holdings.
Maybe those municipal bonds financing pipelines to transport water hundreds of miles across the Nevada
desert won’t look so attractive anymore. Conversely, maybe it’s time to invest in that company innovating the
latest drip irrigation technology.
Integrating ESG may sound daunting but it’s not so difficult, says CalPERS senior portfolio manager Anne
Simpson. “It is absolutely no different than thinking about long-term finances and is, in fact, a buried and
hidden part of long-term financial success.” http://www.youtube.com/watch?v=QeL0cI_9dTc
The California State Teachers’ Retirement System has made a similar commitment to ESG integration, and
the combined action of the two pension giants raises the bar for other investors.
The funds’ announcements are part of a broad set of commitments issued by the newly formed Investor-
Business Roundtable for a Sustainable Economy, a group of prominent investors, companies and labor unions
that also includes the AFL-CIO, Levi Strauss & Co., software firm SAP and property giant Jones Lang
Each roundtable participant committed to deeply integrate sustainability into its governance and management
systems, and support policies that accelerate sustainable business practices while building long-term
SAP unveiled a new and enhanced energy management software tool with the potential for influencing one-
sixth of the planet’s collective human-made greenhouse gas emissions.
The AFL-CIO is working with the Clinton Global Initiative, public pension funds and private investors to
create new financing instruments to boost energy efficiency investments – a move that would reduce pollution
and create jobs.