Ursula Finsterwald: «Sustainability Needs to Be Redefined»

Ursula Finsterwald

Ursula Finsterwald

The success of a company today depends ever more on whether it takes on board its environmental and social responsibilities, argues LGT bank's Ursula Finsterwald in her essay for finews.first.

finews.first is a forum for renowned authors specialized on economic and financial topics. The texts are published in both German and English. The contributions appear in cooperation with Pictet, the Geneva-based private bank. The publishers of finews.ch are responsible for the selection.

Sustainability is now where it deserves to be: at the center of things. The business success of a company today depends ever more on whether it takes on board its environmental and social responsibilities and adheres to the principles of good corporate governance. However, the wide-ranging changes taking place in our economic life, some of them radical, demand new answers for future success.

At the beginning of the millennium, most companies were still handling social and environmental issues on the «do no harm» principle. This meant that they followed a compliance-related risk-based approach.

However, this was often in response to a scandal that had damaged the company's reputation. In addition, they pursued charitable purposes – a kind of moral obligation to give something back to society.

«Business models are becoming disruptive»

These actions were often based purely on marketing considerations though, and corporate citizenship remained a luxury for those that could afford it or wanted to profit from a positive image. These simple and modest approaches to sustainability have since been overtaken by reality.

Globalization, digitalization and networks have now heralded a new epoch in our economic life. Interrelated megatrends and transformational changes are redefining opportunities and risks in business and society: demographic change is eroding proven social models, the gap between rich and poor is growing ever wider, urbanization is advancing, the distribution of power in society and the guarantee of security are becoming more difficult to see clearly in an ever more fragmented international sphere.

At the same time, the working environment and its employment models are changing rapidly and business models are becoming disruptive, while finite natural resources and the consequences of past economic activity are constantly forcing new changes upon us, for example the shift to new energy sources.

«In the age of a networked world questions of sustainability need to be answered anew»

The Global Risks Report produced by the World Economic Forum does not paint a rosier picture. According to the report, the five biggest risks for the next ten years revolve around water supplies, failure of climate change mitigation and adaptation, extreme weather events, food crises and profound social instability.

This means that in the age of a networked world questions of sustainability need to be asked and answered anew.

The answer from the international community is called Agenda 2030, approved by all member states of the United Nations in the fall of 2015. This sets 17 Sustainable Development Goals that incorporate all the issues mentioned above in a comprehensive approach.

«The financial industry in particular has an important role to play in Agenda 2030»

These ambitious goals can be achieved only if all actors make their contribution: governments, business, local communities and each individual.

The financial industry in particular has an important role to play in Agenda 2030. It is the lever of the capital market, which also finances and scales up environmental and social effects. Under Agenda 2030, every investment needs to produce a social or environmental impact in addition to the financial returns.

Approaches that have evolved in recent years include impact investing, microfinance and green bonds. Models that fit the Agenda 2030 paradigm will necessarily lead to an economic system that ensures long-term prosperity and global balance in the networked future.

The opportunities presented by the new system are very wide-ranging. We just need to know how to seize them.

Ursula Finsterwald is the group sustainability manager at Liechtenstein's LGT. She is writing about all kinds of issues regarding sustainability. Originally from the canton of Aargau in Switzerland, Ursula Finsterwald likes to be in the nature where she finds the inspiration for her articles. LGT put in place comprehensive sustainability management years ago, which incorporates the non-financial criteria in asset management. It is also one of the major impact investors and brought the venture philanthropy approach into being a number of years ago.

Previous contributions: Rudi BogniAdriano B. Lucatelli, Peter Kurer, Oliver Berger, Rolf Banz, Dieter Ruloff, Samuel Gerber, Werner VogtWalter Wittmann, Albert Steck, Alfred Mettler, Peter Hody, Robert Holzach, Thorsten Polleit, Craig Murray, David Zollinger, Arthur Bolliger, Beat Kappeler, Chris RoweStefan Gerlach, Marc Lussy, Samuel Gerber, Nuno Fernandes, Thomas Fedier, Claude Baumann, Beat Wittmann, Richard Egger, Maurice Pedergnana, Didier Saint-George, Dieter Ruloff, Marco Bargel, Peter Hody, Steve Hanke, Andreas Britt, Urs Schoettli and Maurice Pedergnana.



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