Why investors have fiduciary duty for the environment

There is a growing movement among company directors and investors to put their money where their mouths are when it comes to sustainability, not only for the sake of the environment, but for the sake of their long term financial goals.

The Rising Tide

The sustainable investing tide continues to rise as more investors incorporate sustainability criteria into equity shareholder issues and consider sustainability criteria as part of corporate lending and credit risk. The net effect for corporations? Greater scrutiny and use of environmental disclosure data, as investors aim to uncover quantifiable links among environmental performance, risk and company value.

It is not only attractive sustainable businesses getting the attention of the business world, but but across all industries including energy.

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“To be clear, there is no passive decision here...Holding an index with significant exposure to hydrocarbon is an active decision on risk...there is no reason for long-term investors to hold them. It’s just not worth the risk.”

David Blood, former CEO of Goldman Sachs asset management

See CFA Institute Interview

In Europe, the European Commission is considering whether to clarify that institutional investors’ duties include taking into account sustainability risks. As paraphrased by the Commission, the HLEG recommended it “clarify that the fiduciary duties (duties of loyalty and prudence) of institutional investors and asset managers explicitly integrate material environmental, social and governance (ESG) factors and long term sustainability”.

The next generation of business leaders

MBA students at Harvard Business School are now asked to investigate the breadth of impact climate change will have on large businesses and what steps those businesses are taking to future proof themselves.

“We all came away with a deeper understanding of the ubiquity of climate change as a challenge for business leaders of the future”

MBA student, Harvard Business School

A good investment

We at eWater Systems know well that investment in sustainability is not only good for our health and environment, but also good for business, and the economy as a whole. Sustainable investments such as waste and chemical reductions solutions by eWater Systems have been proven to make a meaningful sustainable impact while returning a better ROI than conventional business practices.

If you want to talk to us about how eWater Systems can future proof your business, get in touch with us today. (link to contact page)