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The global economy is at a crossroads. Can finance fix it? Proponents of environmental, social, and governance (ESG) investing say yes. They claim that new financial strategies that consider all stakeholders are essential tools for addressing runaway carbon emissions and stark income inequality, among other ills. ESG-integrated investments already encompass more than $120 trillion in financial assets. Is this approach really leading to better social and environmental outcomes for all? If not, how can it be improved?
In Sustainable, a finance-industry veteran offers an insider's look at the promises, prospects, and limitations of ESG investing and provides comprehensive solutions that would promote more optimal outcomes. Terrence Keeley argues that too many ESG advocates have been overly optimistic about what it can accomplish. Divestment threats are ineffective tools for altering corporate behavior, and verifiably "good" companies do not systematically generate great returns. Most importantly, business and finance cannot achieve inclusive, sustainable growth on their own: regulators, public policies, civil society, and individuals must all play specific, complementary roles to shape the future we need. In particular, Keeley recommends reallocating capital from some indexed ESG and other products toward an emerging class of strategies with more verifiable social and environmental benefits. He identifies dozens of alternative "impact investing" strategies that could generate true double bottom lines. The book also highlights civic organizations with proven methodologies that can promote more inclusive, sustainable economic growth at scale.
Proposing practical and actionable solutions to social and environmental problems, Sustainable offers an incisive vision of the roles business and finance can play in building a flourishing society.
The global economy is at a crossroads. Can finance fix it? Proponents of environmental, social, and governance (ESG) investing say yes. They claim that new financial strategies that consider all stakeholders are essential tools for addressing runaway carbon emissions and stark income inequality, among other ills. ESG-integrated investments already encompass more than $120 trillion in financial assets. Is this approach really leading to better social and environmental outcomes for all? If not, how can it be improved?
In Sustainable, a finance-industry veteran offers an insider's look at the promises, prospects, and limitations of ESG investing and provides comprehensive solutions that would promote more optimal outcomes. Terrence Keeley argues that too many ESG advocates have been overly optimistic about what it can accomplish. Divestment threats are ineffective tools for altering corporate behavior, and verifiably "good" companies do not systematically generate great returns. Most importantly, business and finance cannot achieve inclusive, sustainable growth on their own: regulators, public policies, civil society, and individuals must all play specific, complementary roles to shape the future we need. In particular, Keeley recommends reallocating capital from some indexed ESG and other products toward an emerging class of strategies with more verifiable social and environmental benefits. He identifies dozens of alternative "impact investing" strategies that could generate true double bottom lines. The book also highlights civic organizations with proven methodologies that can promote more inclusive, sustainable economic growth at scale.
Proposing practical and actionable solutions to social and environmental problems, Sustainable offers an incisive vision of the roles business and finance can play in building a flourishing society.
Foreword
Introduction
Part 1: The Promise . . .
1. The Stakes
2. Stakeholders Versus Shareholders
3. Activists, Their Arguments—and a Little Engine That Could
4. C-Suite Insurrectionists
5. What if +1°C = −$100 trillion?
6. What’s the United Nations Got to Do with It?
7. Materiality
8. A Few Words About Indices
Part 2: The Perils . . .
9. Values Versus Valuations
10. Hardwiring Corporate Goodness
11. Inside the ESG Arms Race
12. Crowded Trades
13. Let’s Speak Privately
14. Fight or Flee?
Part 3: Solutions
15. Civics Lessons
16. Impact Investing at Scale
17. The 1.6 Percent “Solution”
Conclusion (or How to Avert Our Failed Future)
Acknowledgments
Appendix: Exemplars of Hope
Notes
Index
Terrence Keeley has been an adviser to the world’s largest sovereign wealth funds, national pension plans, endowments, foundations, and asset managers for more than three decades as a senior client officer at BlackRock and UBS Investment Bank. In 2021, he was named a leading global “Knowledge Broker” by Chief Investment Officer.
A strategy for real change calls for rethinking processes in their
entirety.
*Pope Francis*
If you’ve been looking for the definitive book on how ESG investing
does and does not work—you’ve found it. Sustainable not only
describes how more of your portfolio can do well and do good but
also reveals in illuminating, fast-paced detail why many current
ESG strategies will not. Keeley explains clearly what business and
finance can and cannot do to promote better social and
environmental outcomes on their own.
*Paul McCulley, former chief economist of PIMCO and UBS
Americas*
Sustainable is a book for our times. It has valuable lessons for
investors, corporations, and policy makers alike.
*Stanley Fischer, former vice chair of the Federal Reserve*
How can capitalism work better for the majority? How can we uplift
our forgotten communities, and maximize human potential? Keeley’s
Sustainable says markets, government policies, and civil society
all have important roles to play—and none can succeed without the
others. If you are looking for a comprehensive roadmap for progress
and sensible solutions that can be implemented right now, read this
book. You will be inspired.
*John Hope Bryant, chairman and CEO, Operation HOPE*
In a world where so many advocates sell ESG with no holds barred,
claiming benefits for all involved, this book stands out, with well
thought through and balanced arguments for incorporating virtue
into business and investing decisions and the trade-offs involved.
While ESG as an acronym may and perhaps should fade, the question
of how to balance profits and virtues will stay with us. This book
will help us work our way to an answer.
*Aswath Damodaran, Kerschner Family Chair in Finance Education and
professor of finance, New York University Stern School of
Business*
SUSTAINABLE by financial advisor Terrence Keeley is a well-written
treatise on a complex topic: ‘Moving Beyond ESG to Impact
Investing.’ It is accessible to a wide range of readers.
*Book Talk … A Conversation*
The importance of Sustainable is reflected in the authorship of its
foreword, which is by BlackRock’s CEO, Larry Fink.
*Rupert Darwall, RealClearFoundation “Books & Culture”*
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