Is there anything individuals can do to protect the world from disaster?
These are not new questions. The 20th century saw two world wars, the Cold War, and the ever-present threat of nuclear conflict. Today, that existential anxiety is compounded by new crises, among them, climate change and the devastating toll of the opioid epidemic.
And yet, for all the headlines, one group still has real leverage: investors.
While the answers to our most complex global challenges rest with experts, climatologists, physicians, sociologists, policymakers, and more, investors are not helpless. In fact, the way capital is allocated today can have a measurable impact on the direction of tomorrow.
The need for action is especially urgent when it comes to climate change. According to renowned climate scientist James E. Hansen and his colleagues, global warming may accelerate by more than 50% in the coming years, with widespread implications for weather, food systems, public health, and human life.
2024 may mark the hottest year in recorded history. And if nothing changes, that trend will continue.
But it’s not just about temperature. Climate change introduces massive systemic risks to markets, insurance volatility, agricultural disruption, energy instability, and long-term damage to global GDP. In this sense, sustainable investing is not just ethically sound, it’s also a growing economic imperative.
At first glance, these challenges may feel overwhelming. But individual and institutional investors have tools at their disposal. Through Socially Responsible Investing (SRI) and Environmental, Social and Governance (ESG) strategies, they can screen out harmful sectors and invest in organizations actively working toward a more sustainable future.
One powerful tool is impact investing, the practice of directing capital toward ventures that generate both measurable social or environmental benefits and a financial return. Originating in 2007 with the Rockefeller Foundation, impact investing puts purpose on equal footing with profit. While returns still matter, social impact takes precedence.
The principle is simple: allocate funds where they can do good.
This is not a new idea. Religious groups were among the first to engage in values-based investing, divesting from the slave trade and later from what are often called “sin stocks,” companies profiting from alcohol, gambling, tobacco, or arms manufacturing.
Today, that ethos extends to environmental concerns. Investors can divest from companies that produce or rely heavily on fossil fuels, or those that fail to meet accepted ESG standards. Conversely, they can positively screen for companies with strong sustainability practices, or use a “best in class” strategy to prioritize those leading on ESG performance in their sectors.
These actions are about more than market positioning; they’re about moral clarity.
The good news: This isn’t a fringe movement anymore. In recent years, sustainable investing has become increasingly mainstream.
According to PwC, ESG-related assets under management are projected to nearly double to $33.9 trillion by 2026. And 70% of investors say a company’s environmental practices, social impact, and governance policies matter to them.
That number rises among younger generations, many of whom believe they can use their capital to influence corporate and government behavior on climate, equity, and accountability.
The COVID-19 pandemic only accelerated this trend, reminding investors just how interconnected public health, business resilience, and global systems truly are.
The honest answer, no one knows. But time is undeniably short.
Whether it’s through divestment, positive screening, or active ownership, investors can still act. They can choose to support companies pursuing clean energy, transparent governance, and ethical labor. They can choose to avoid those who don’t.
While an individual can only reduce fossil fuel consumption by degree, choosing public transit, reducing waste, or installing solar panels, an investor can influence hundreds of millions in capital flows with a single portfolio strategy.n
The problems facing humanity are serious. But despair isn’t a strategy. And in the world of finance, apathy is a choice.
Through thoughtful, principled investing, individuals can act not just in pursuit of return, but in pursuit of justice, sustainability, and collective well-being.
Because investing should be about more than profit, it should be about influence, and ultimately, impact.
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Reference:
Chris Mooney and Shannon Osaka, The Washington Post, 12/26/23, Is Climate Change Speeding Up? Here’s What the Science Says
Sparkes & Cowton, 2004; Ransome & Sampford, 2010). Hochstadter & Scheck (2015)https://www.pm-research.com/content/pmrjesg/1/1/10.full.pdf
Zach Stein, Carbon Collective, What is Sustainable Investing? (4/22/24)https://www.carboncollective.co/sustainable-investing/what-is-sustainable-investing
Zach Stein, Carbon Collective, What is Sustainable Investing (4/22/14)