How do we guide transformative investments towards achieving both monetary and non-monetary value, such as societal and ecological resilience? This digested read of a pivotal Deep Transitions Lab paper summarises key research findings for investors seeking to advance transformative impact.
In it, the authors argue that to address the climate crisis, biodiversity loss, and inequality, the world needs a new approach to financing transformative change that prioritises long-term sustainability over short-term profits, expands the definition of fiduciary duty to include system change and long-term value, and accounts for the uncertainties associated with the deep societal and environmental challenges we face. These changes require a shift in mindsets within the financial sector, including the development of new metrics and indicators, and recognition that the true value of an investment is inseparable from its long-term impact.
The blog is based on the 2023 article, ‘Transformative Investment: New Rules for Investing in Sustainability Transitions‘ by Caetano Penna, Johan Schot, and Ed Steinmueller, which critically analyses the current financial regime and its implications for sustainability transitions, proposing a new set of rules grounded in socio-technical sustainability transitions and a theory of Deep Transitions.
Citation
Laurence, N. and Penna, C. (2023). New rules for financing transformative change. Deep Transitions Lab. Available at: https://tipresourcelab.net/resource/new-rules-for-financing-transformative-change
