The Financial Ecosystem
Description
Long term asset owners and managers, while seeking high risk-adjusted returns and efficiently allocating scarce financial capital to the highest value economic activities, have the essential and formidable role of ensuring the sustainability of return. But generally accepted financial accounting methods are ill-equipped to provide clear signals of the risks and opportunities created by scarce natural and human capital. Hence many investment managers in global financial markets, while performing due diligence on portfolio companies, examine metrics of non-financial performance, especially environmental, social and governance (ESG) indicators.
Broken into three sections, this book outlines the rationale for and methods used in six areas where financial acumen has been harnessed to the goal of combining monetary return with long run sustainability. The first section offers an introduction to the role of finance in achieving sustainability, and includes an overview of the six areas-sustainable investing, impact investing, decentralized finance, conservation finance, and cleantech finance. The methods section of the book illustrates analytical tools and specialized data sources essential to those interested in increasing the level of social responsibility embedded in economic activity. The applications section describes and differentiates each of the six areas and their roles in advancing specific measures of sustainability.Reviews / Votes
"The benevolent intermingling of the 'ecosystem' - public and private systems 'embracing the heterogeneity of investor and stakeholder perspectives' - can be an all-encompassing force for good. Citizens, workers, savers, consumers and investors need to work together in spheres of overlapping interests. If one financial handbook is needed to guide these communities on their journey, Bose, Dong and Simpson have provided it." (David Marsh, Chairman, OMFIF)
"Disruption in the 21st century has skirted finance, until now. Bose, Guo, and Simpson peak behind the financial curtain to spotlight what's obsolete about how capital is invested, and how sweeping change is benefiting citizen investors and the planet as a whole. Transformation is vital and urgent; Bose, Guo, and Simpson apply ground-breaking ecosystem thinking to show just why and how." (Stephen Davis, Associate Director, Harvard Law School Programs on Corporate Governance and Institutional Investors)
"This book is exciting and ambitious. It is a comprehensive and readable account of one of today's most important questions. How to make corporate functioning compatible with human welfare. It introduces us to a new language of responsibility-expansion of the scope of traditional accounting thereby reducing much of the need for regulation. It is a joy to encounter so many new ideas and imaginative solutions. Buy it! Read it! And keep it close at hand." (Robert A. Monks, Chairman, Value Edge)"Essential reading for all those interested in sustainable investing, or concerned about the role of finance in human rights, global warming and ending corruption. A wonderful guide for students, practitioners and activist alike." (Kerry Kennedy, Founder and President, Robert F. Kennedy Center for Justice and Human Rights)
"Unless we can better understand and harness the financial ecosystem we have little chance of sustaining the planetary ecosystem. This means giving adequate weight to our non-marketed but essential natural and social assets. This book is an insightful tool and guide in that endeavor." (Robert Costanza, Vice Chancellor's Chair in Public Policy, The Australian National University)
"This book, which argues that the financial ecosystem should be seen as a global common property resource for all stakeholders, tackles new and interesting questions on the topic such the importance of broad-based sustainability disclosure standards for organizations and the systemic value of diverse networks of governance. The Financial Ecosystem is an insightful and timely contribution on how we can design the mechanisms we need to ensure all voices in the process of sustainable capital allocation are represented." (Alyson Genovese, Director of Regional Hub: USA & Canada, GRI)
"To make the transition to the green economy that we need now, the bankers have to integrate an understanding of our precious natural ecosystems into investment decision-making. This book showcases the frameworks, tools and examples that academics and practitioners of sustainable finance can draw upon to hasten that transition. The authors have uniquely combined a masterful command of the academic research with a focus on the analytical tools and specialized data sources critical to serious practitioners." (Steven A. Cohen, Senior Vice Dean, Columbia University)
"The way that companies create value and investors capture that value has fundamentally changed. Yet, the way we measure and report on the activities that drive value has remained largely unchanged. In order to incentivize, maximize and sustain value creation for shareholders and stakeholders alike over the long-term, we must understand and measure the interconnected relationship between financial, social and natural capital. The brilliance of this book lies in using existing tools and research to properly frame and elevate the conversation around this challenge so as to strength the financial ecosystem's role in delivering a more Inclusive Capitalism."(Lady Lynn Forester de Rothschild, Founder, The Coalition for Inclusive Capitalism)
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Guo Dong is Associate Research Scholar and Associate Director of the Research Program on Sustainability Policy and Management at Columbia University's Earth Institute. Dr. Guo teaches courses on Microeconomics and Quantitative Methods for masters students in Columbia's School of International and Public Affairs. Dr. Guo's expertise lies in impact and evaluation methods and his research interests include sustainability metrics, sustainable development, environmental policy and Chinese education.
Anne Simpson is Director of Board Governance and Strategy at the California Public Employees Retirement System (CalPERS), where she led the development of the fund's sustainable investment strategy, and previously headed the corporate governance program. She is a member of about the SEC's Investor Advisory Committee, and the Leadership Council of the RFK Center for Justice and Human Rights. She serves on the Senior Advisory Board at the Center for Responsible Business, in the Haas School, Berkeley, California.
Simpson writes in a personal capacity and the opinions expressed are the author's own. They do not necessarily reflect the views of her current employer, CalPERS.