The Financial Ecosystem: The Role of Finance in Achieving Sustainability

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.
   The 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.
   “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)