Cutting through the hype: a realistic assessment of sustainability

Wednesday 19 April 2023

Masja Zandbergen-Albers
Author: Masja Zandbergen-Albers

There’s plenty of hype and not enough realism and leadership around sustainability goals, says Masja Zandbergen-Albers, Head of Sustainability Integration at Robeco.

The topic of sustainability has rightly engulfed financial rhetoric in past years, and success has certainly been forged from it. Investors and regulators alike are quick to point to where their influence around sustainability has been successful in financial markets. However, amongst the hype, there is a pragmatic assessment that sells less well.  

Climate change is the central driver for action, yet the numbers do not display the effects of sustainability-conscious financial markets. Even with the ongoing noise around net-zero pledges, green technology adoption and new regulatory frameworks, carbon emissions continue to increase alongside economic growth.

Whilst there is an ongoing list of reasons as to why emissions have not subsided, even with the tools, capital and know-how of modern economies, a less touted and realistic assessment in the lack of change is a lack of leadership in exemplifying change. 

Time sensitive goals, targets, and courses continue to be created and chartered, and at the same time, cannot be achieved or adhered too. Who, then, is going to lead the sustainability push and break this cycle that has become embedded in both the financial and political sectors?

Missing Targets

Many frameworks can be flawed, failing to achieve their intended goals and simply becoming tools for sales teams rather than sustainable investors.  The UN’s SDG framework, for example, runs into the problem of not being realistically achieved by 2030. One reason for this is the setbacks due to the Covid pandemic, but also the goals themselves are inconsistent, overlapping, and even run counter to each other. For example, SDG 8 (decent work and economic growth) cannot be realistically achieved without coming into conflict with SDG 13 (climate action), SDG 14 (life below water) and SDG 15 (life on land).
The market for services provided in space is expected to grow significantly. Companies will offer things like helping satellites get to their correct position faster, fixing broken satellites, and making communication between satellites and customers faster. Orbital tugs get satellites to the right orbit faster, so they start generating revenue sooner. In-space communications get satellite imagery into customers' hands quicker for which they are willing to pay a huge premium.

Although a realistic assessment of sustainability goals and frameworks highlight inconsistencies, it does not mean that their underlying premise are invalid. They remain extremely critical. But to come back to the concern over proper leadership - governments, companies, and investors together need to provide a heavily weighted effort in ensuring their success. Unfortunately however, even amongst the misleading corporate marketing sprees and political campaigning, this has yet to be seen in a great enough collaboration to enact change. 

It is also important to note that certain sustainability factors beyond just climate risk, such as biodiversity, are not yet widely assessed to the same degree by the investment and business community. Certainly not to the same level to which investors consider climate, or to that in which businesses examine social factors such as governance and diversity. This is a concern, not least because it neglects the protection of our environments, but more so that without biodiversity, there would be nothing of the climate or society to assess. 

Adopting A Realistic Lens

So, by adopting a realistic assessment on sustainability, we’ve established that the factors that spur the drive for change have yet to be addressed and continue to worsen. At the same time, there are too few leaders, and the frameworks established to make improvements are, in practice, unreliable. So what, therefore, is a realistic assessment on the way in which investors, companies and governments can actually reach sustainability goals without failing and falling back into the safety of another strategic sustainability narrative to kick the can further down the road?

On the government side, improved, more precise, and better globally policed regulation is essential. Realistically, it is currently just not effective enough in its power. My suggestion is finding a way in which regulators are able to put a financial price on sustainability issues, such as climate risk and biodiversity, to make sure investors and companies internalise these as costs whilst they continue to be neglected. This is important as abrupt changes to climate and biodiversity will come to be significant financial costs if they are not addressed. It is evident that investors and corporates alike are still yet to be aware of the future benefits of sustainable development to their operations and must, therefore, begin to measure it as a part of their already existing financial metrics. 

A further way of doing this is to alter the structure in which investment has traditionally operated by moving beyond just delivering returns, but to deliver impact as well. The impact investing market has grown well over the past decade, especially with its focus on emerging and frontier markets, but it is far from where it needs to be. If the impact that companies and entities make were to be assessed in the same way as profit and growth are, then sustainable development could not only be enacted faster, but more efficiently. 

Whilst problems continue to persist and worsen it feels that we, as investors, companies, and governments, are still trying to construct the tools capable of making our global practices more sustainable. It is perhaps time now, therefore, to start allocating our resources and focus on building those tools, and to shift away from the hype of campaigns, reassuring rhetoric and the creation of unreachable goals and targets. 

Masja Zandbergen-Albers is Head of Sustainability Integration at Robeco 

Masja Zandbergen-Albers

Related Articles

Sep 2023 » Investments

The ascent of primary research

Sep 2023 » Investments

Investment Opportunities in Biotechnology

Sep 2023 » Climate Change

Are hedge funds stepping up on climate transition?

Aug 2023 » Investments

Value for money: a more holistic approach is needed