A More Impactful Strategy for Sustainable Investing

  • Emilio Marti Emilio Marti
  • Jean-Pascal Gond Jean-Pascal Gond
  • Mark DesJardine Mark DesJardine
  • Martin Fuchs Martin Fuchs
  • Rieneke Slager Rieneke Slager

The effectiveness of sustainable investing has been challenged, with critics like Tariq Fancy describing it as a mere placebo. Amidst rising skepticism and stricter disclosure requirements, a deeper dive reveals that traditional methods of influencing companies, namely “voice” (shareholder engagement) and “exit” (portfolio screening), are not exhaustive. Through a comprehensive review of over 3,500 research papers, a new approach — “field building” — emerges. This tactic acknowledges the interconnected web of stakeholders around companies, termed “fields”, that profoundly influence corporate behavior. By reshaping these fields, investors can indirectly drive sustainable change in firms. Five tactics are highlighted: (1) Shifting other investors’ evaluation of issues, (2) Sharing expertise, (3) Delegitimizing certain business activities, (4) Establishing voluntary standards, and (5) Supporting regulatory changes. While promising, field-building presents challenges like profitability and political exposure. Yet, by embracing this expanded toolkit, investors can magnify their positive impact and appeal to an increasingly conscious investment clientele.

Netspar, Network for Studies on Pensions, Aging and Retirement, is een denktank en kennisnetwerk. Netspar is gericht op een goed geïnformeerd pensioendebat.

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