#50: Will the New US Administration Be a Sustainability Blessing in Disguise?

Many people in the sustainability field are concerned that the new US administration will scale back environmental and social protections built up over the past 50 years. Doing this at a time of rapidly growing environmental and social challenges can seem counterintuitive. Denying climate change and other problems and increasing fossil fuel production seem dangerous for business and society.

However, could these anti-sustainability approaches be a blessing in disguise? This post explores the idea that the new administration might be just what we need to make sustainability more effective.

Reality is the Great Teacher

Over the past 25 years, responsible investing and corporate sustainability became mainstream. These movements provided many environmental and social benefits, often while enhancing profits and investment returns. The world would be far worse without them. But were they enough?

Even with mainstream sustainability, climate change and other Sustainable Development Goal (SDG) problems are rising rapidly. As the California wildfires show, these problems already are severely impacting business and society, imposing huge financial costs.

What happened? Why did SDG problems get worse, despite strong sustainability programs? The answer largely is that these programs did not adequately address root causes. The focus was mostly on changing companies, instead of the economic and political systems that control them.

Flawed systems are the root causes of SDG problems. As results so far have shown, it is impossible to solve these problems under systems that created them in the first place. System change is by far the most important action needed to resolve major challenges and protect business and society.

Why could scaling back sustainability programs drive system change and problem resolution? Because reality is the great teacher.

Nature and reality implicitly do not care about human philosophies, opinions or systems. Whether humans believe in climate change is irrelevant to nature. Climate change and other SDG problems are facts. They exist in reality. We have entered a phase of accelerating consequences. We are approaching or have surpassed many environmental and social limits.

Since the dawn of the Industrial Revolution, companies could profit by harming the environment and society. But degrading the environmental and social systems that enable business and the economy to exist was never going to last. At some point, these systems inevitably would change through voluntary or involuntary means. We probably are very close to that point now.

Why is scaling back sustainability programs potentially a good thing? Because what we were doing was not working well enough. Conditions were getting worse fast. There were some regional and issue-specific successes. But sustainability programs overall only slowed the rate of descent.

Scaling back sustainability could be a blessing in disguise. Pain caused by this ignoring of reality could drive us to make the systemic changes we apparently were unwilling to make over the past 40 years.

System Change Investing

In the absence of US and other government pressure to address rising environmental and social problems, the corporate and financial sectors will have to pick up the slack. Companies operate in the real world. Climate change and other problems do not simply disappear because people don't believe in them. Many companies know these problems are impacting them financially, and these impacts will increase rapidly. For their own well-being, they must address them.

Sustainability leaders often outperform financially, mainly because they are well managed. Companies that understand the complex sustainability challenge usually do many other things well, and thereby outperform. Understanding the need for system change is a strong indicator of superior management and stock market potential.

Investing potentially is the most powerful lever for driving system change, especially in the absence of government sustainability pressure. SCI uses investing to drive system change. Responsible investing became mainstream when investors made more money with it. SCI uses the same strategy.

SCI reduces investment risk and increases return potential by effectively addressing the most important sustainability issue. Based on existing ESG strategies, it is easy to implement and broadly applicable in the capital markets. It provides the highest possible sustainability benefits, which enhances reputation and attracts new investment.

For more information about SCI, visit our website SystemChangeInvesting.com or listen to this recent SCI podcast.