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Forbes
31-03-2025
- Business
- Forbes
Redefining Investor Responsibility In An Age Of Systemic Risk
Across the financial sector, fiduciary duty is most often defined narrowly as a responsibility to maximize financial returns. But as growing economic, racial, gender, and climate inequities destabilize communities and markets alike, this traditional interpretation is facing serious scrutiny. A more expansive and forward-looking view is emerging—one that recognizes how ignoring social and environmental costs introduces significant long-term risks to both portfolios and society. The effects of climate change is where this has been discussed the most. In its Financial Stability Report (FSR) released, the US Federal Reserve has recognized climate change as a 'significant financial stability risk'. The Network of Central Banks and Supervisors for Greening the Financial System, established in 2017 and composed of 114 central banks and financial supervisors, has emphasized on multiple occasions climate change will result in significant disruption to society and the economy. In this view, fiduciary responsibility must account for not just profits, but the structural forces that threaten the well-being of beneficiaries and the long-term viability of financial systems. I recently had a discussion about this topic with Julianne Zimmerman, Co-CEO at Adasina Social Capital and in particular how the topic of diversity, equity and inclusion are essential to consider as part of companies' fiduciary duties. Julianne argues powerfully that diversity, equity, and inclusion are not optional add-ons to responsible investing—they are essential fiduciary concerns. As she explains, unpriced externalities tied to racial and gender injustice, economic exclusion, and environmental degradation impose real and escalating costs. 'We believe there is more than ample evidence that advancing racial, gender, economic, and climate justice leads to improved corporate innovation and top and bottom-line performance, as well as more stable, more prosperous communities and nations,' Zimmerman notes. She described how Adasina works at the intersection of social justice and financial systems, striving to make those externalities visible and actionable for investors. A key part of their approach is partnering with grassroots organizations and publishing datasets that illuminate hidden risks; beyond incorporating the data in their own products, the firm empowers investors to act in alignment with a broader conception of fiduciary duty—one that includes the long-term well-being of people, communities, and the planet. Their campaigns have mobilized hundreds of investors in campaigns representing more than $1.3T in assets around key issues—from eliminating the subminimum wage to ending forced arbitration in sexual harassment cases—signaling that more stakeholders are recognizing the materiality of justice. This is not a matter of choosing values over value; it's a recognition that long-term financial health is inseparable from systemic social health. As Zimmerman argues, there is no fiduciary calculus that can justify poisoning a community's water supply or ignoring widespread exclusion from economic opportunity. These are not abstract moral concerns—they are foreseeable, material risks to human and market stability. Rather than prescribing one-size-fits-all solutions, Adasina's approach is collaborative and data-driven. It invites investors to see how their strategies intersect with broader justice concerns and to take action appropriate to their own mandates. As markets confront intersecting crises of inequality and climate instability, this kind of informed, systemic perspective may not just be prudent—it may be indispensable. Read more about Adasina's approach to fiduciary duty in the interview below. Christopher Marquis: Adisina's work focuses on racial, gender, economic, and climate justice. How do you respond to traditional investors who might claim these considerations fall outside the scope of their fiduciary duty? Julianne Zimmerman: At Adasina we believe that the winner-take-all model has been catastrophic for most people and communities, and has concentrated wealth and power to a very tiny few. Further, we believe that there is ample evidence that racial, gender, economic, and climate justice externalities carry unpriced risks and costs that investors have the right — and some have the fiduciary duty — to take into account. We try to communicate plainly and directly about the materiality of these social justice concerns, the ways in which unpriced social justice externalities sow harm for everyone, and how we believe that transforming finance to advance social justice creates the conditions for a healthier, safer, more just, more resilient, and more prosperous future for all. Personally, I find the premise that expensive unpriced externalities are somehow outside the scope of fiduciary duty to be disingenuous at best. I believe we have more than ample evidence that advancing racial, gender, economic, and climate justice leads to more robust corporate performance, and more stable, more prosperous communities and nations. I believe we also have more than ample evidence that unpriced racial, gender, economic, and climate externalities produce sharp disruptions — not to mention avoidable human suffering — in the short term and suboptimal market performance in the long term. In total, I believe that not taking these material social justice considerations into account results in a status quo that is unnecessarily risky, volatile, and extractive. Specifically regarding fiduciary duty, I personally don't know how anyone can justify defining fiduciary duty as making 'strictly pecuniary' decisions that ignore readily foreseeable negative ramifications for the beneficiary's health, wellbeing, economic stability, life expectancy, or other dimensions of life — or organizational viability, in the case of institutions rather than human persons. The definition of a fiduciary is clear: the person with fiduciary responsibility is obligated to act in the best interest of the beneficiary. Certainly, it is easier to only count dollar signs, but making the fiduciary's job easier doesn't enter into the duty of care for the beneficiary's best interest. One of the ways I sometimes talk about this is that there is no amount of money that would be sufficient to compensate a person or community for irreparable poisoning of the local water supply. And yet we have multiple examples of poisoned water supplies. Intellectually, I accept that there are those parties who want to obfuscate these commonsense considerations for their own self-interest, but I find it perplexing that there could be any grounds for debate whether investors should value any dimensions of their assets beyond (particularly short-term) financial returns. Marquis: Can you outline how Adasina is working to help others see the importance of this broader perspective on fiduciary duty? Zimmerman: We educate and mobilize our fellow investors to take informed action, using the tools of finance to improve corporate performance and raise market standards. We educate by publishing datasets and sharing other information that highlights the costs, risks, and opportunities associated with material social justice concerns that are not well disclosed, tracked, or priced in the market. We also mobilize investors around specific issues by articulating why those issues are in investors' interests, and inviting investors to take whatever actions are appropriate to their strategies. Those actions may include, for example, shareholder advocacy, divestment or exclusion, public advocacy, and further research. Adasina doesn't purport to do this work alone. Just the opposite: we believe that investors' power lies in collectively protecting our ability to serve our beneficiaries, whether those beneficiaries are our family members or our clients. We believe that by sharing material data that makes the costs and risks of 'externalities' less opaque, we help other investors exercise their rights and fiduciary duties, and improve the market for all. For example, we currently have two investor mobilization campaigns, Ending the Subminimum Wage and Ending Extractive Agriculture. Both highlight ways in which certain corporate practices exploit missing risk and cost information — or disinformation — in the market to extract value to the detriment of investors and their beneficiaries. To date those two campaigns have attracted signatories representing over $1.25T in assets. That level of participation signals to us first that investors see the materiality of those issues in particular and greater transparency in general; and second they value their prerogative to make their own informed decisions and take associated actions to safeguard the value of their portfolios from hidden costs and risks. We previously led an investor mobilization campaign to End Forced Arbitration for Sexual Harassment. Informed by social justice partners #MeToo, #ForcetheIssue, and others, we issued an investor statement that was signed by investors representing $54B in assets who recognized that the issue was material to their interests as investors. One of the outcomes of the campaign was 396 companies voluntarily discontinued the practice; another was a new law making forced arbitration for sexual harassment illegal in the United States. In each of our campaigns, we identify specific social justice investment concerns; other investors sign onto those campaigns because they recognize the materiality of those concerns, and they take actions they consider appropriate to address those concerns. Unlike those who want to dictate what investors can and cannot evaluate, we don't force anyone to agree with our assessment, and we don't prescribe what actions they may take if they do. Marquis: How do you determine what these broader interests are among your diverse sets of stakeholders and investors? And do the areas of focus change over time? Zimmerman: At Adasina we don't dictate what people should care about, or how they should manage their investments. We take in the guidance of our social justice partners and translate those insights into social justice investing criteria, in terms that investors can use. We apply those social justice investing criteria in our products, we share datasets for other investors to use, we provide investor education content, and we lead investor mobilization campaigns which signatories join because they see their own interests at stake. I believe that one of the main reasons our campaigns gain such traction is because we don't attempt to dominate or control our peers: we invite signatories to take action appropriate to their strategies, as they see fit, and they do just that. Investors are not a monolithic group, and just like any other population or professional segment, investors are people who hold an assortment of priorities that can be congruent, conflicting, or divergent, and often all three at once. Moreover, whenever there is turbulence, priorities and behaviors shift. So yes, I am observing shifts occurring in real time, and I believe we will continue to see shifts in investor behaviors and priorities not only in response to political disruption and uncertainty but also in response to the effects of climate change, generational wealth transfer, and other systemic, institutional, and personal stimuli. To the extent there is good news to be had in this moment, I believe the good news for investors is that turbulence offers potential for positive change: as familiar norms are destroyed and previously stable systems are destabilized, the instability and demolition also create the opportunity to elevate market standards and raise performance expectations. We don't have to passively accept whatever happens, or what we are told to ignore. We can exercise our rights and our power as investors — and again, some hold a fiduciary responsibility — to create better outcomes that encompass financial returns as well as the economic, social, and environmental conditions in which those financial returns have real value.
Asia Times
21-03-2025
- Business
- Asia Times
The still-hopeful future of sustainability
There are cycles for the effectiveness of global ideas. If an idea has to overwinter politically for a while, that doesn't mean it's over In today's world, even the most enthusiastic advocates of the idea of sustainability express one fear: we have to discuss whether the era of sustainability, which started in the 1990s and came to a first global peak in 2015 with the release of the Sustainable Development Goals (SDGs) is stagnating – or even coming to an end. This fear is understandable. Opposition is indeed coming in the first months of 2025, both on a large and small scale. On a large scale, it is the US National Bank's withdrawal from the Network of Central Banks and Supervisors for Greening the Financial System (NGFS), as well as Donald Trump's radical break with the Paris Climate Agreement, the US sustainability investment program Inflation Reduction Act of his predecessor Joe Biden, and his own US Environmental Protection Agency and their safeguarding programs. Trump has announced to turn most sustainability programs down without any compromise and to start to drill in environmentally protected areas, as he put it in his inaugural address on January 20, 2025: 'We will drill, baby, drill!' More or less simultaneously on the other side of the Atlantic big pond, it is the European Union's softening of its announced end of the fossil fuel combustion engine, the declaration of nuclear and gas energy as sustainable energies and the outcry of business associations and enterprises about the declining competitiveness of European companies in international comparison also due to environmental regulations. Their assertion is that in the neo-conservative to hyper-authoritarian age of Donald Trump, Vladimir Putin and Xi Jinping, almost only Europe and some single countries like Canada are seriously implementing them. On a smaller scale, there are increasing protests from local and regional communities against further regulatory steps to protect the environment and a generally noticeable weariness with the words 'sustainability' and 'participation', which, from the point of view of many citizens, have been used too inflationary over the past few years, being imposed by elites through the instruments of political correctness and wokeness. This procedure, in the views of many, has set an 'absolute truth' from above on which no dissent was possible anymore, ultimately limiting personal freedom and harming free choice by implicit and explicit pressure. In addition to these phenomena of satiety, there have been most recently technology offensives from the fossil mobility sector, such as the production of more efficient combustion engines, which are expected to compete with electric mobility in a more tied race over the years to come. Last but not least, global signature events such as the recent UN Climate Summit COP29 in November 2024 Baku, Azerbaijan, have recently also meant setbacks rather than progress for the global sustainability drive. For example, regarding the payment of climate compensation between the Global North and South, the core outcome was that Europe should essentially shoulder this alone because, with a few exceptions, no one else declared themselves ready for binding measures to jointly raise the required US$300 billion. China and South Korea did not, continuing to declare themselves developing countries and not paying a cent; Russia did not, because it finances its wars from the export of fossil raw materials, on which its internal magnate power system is built; the US did not, because under the Trump 2.0 administration it is focusing more than ever on the extraction of fossil raw materials; and the Arab self-declared 'future-oriented states' did not because they also still widely off oil and are less interested in social change than in 'leapfrogging' technologies. By most of these powers, technology is increasingly seen – rather one-sidedly – as 'the' solution regarding future sustainability and planetary protection, and new technologies are thus increasingly positioned in competition or even as a replacement for sustainability. The motto in many areas outside Europe and some affiliated nations in 2025 seems to be: We only have to wait until technology no longer causes pollution or even makes everything so clean that it is okay, which will inevitably happen sooner or later due to the inherent laws of auto-evolution of technology. Yet, in the meantime, we don't have to do without anything and certainly not reduce growth. The consequence: growth stabilization or 'degrowth' discussions, in essence, currently only exist in Europe, home to only 5-7% of the world's population, and hardly anywhere else in serious and systemic ways. Yet also in the EU, resistance against 'strong' sustainability pathways is growing with the politically conservative shift that is taking place in many European countries. Some progressive observers are therefore worriedly asking themselves: Was the sustainability idea perhaps too ambitious for our time? And is it now coming to an end with Donald Trump – or at least experiencing a historical break from which it could take years to recover? However, on closer inspection, these fears are due to rather simplistic, linear ideas of development and time – an approach that should actually have been obsolete for a long time. Because we know by now that ideas have risen in history; they then materialized in a certain period up to a certain form and peak, which was always context- and time-dependent. And sooner or later, after this period, they had to reach a limit, after which they were either relativized, transformed into something else, or indeed displaced or even seemingly destroyed by opposing forces when the pendulum swings to the 'other side', which always did and does in historical cycles. These cycles, in essence, correspond to those 'hermeneutical circles' that modern philosophy describes as creative spirals consisting of the interplay between opposites. For some pessimists, within such pendulum movements, ideas appear as a historical phase that only lasts for a while and then disappears to make way for other ideas. In reality, however, the rise and fall of ideas occur in recurring cycles. It is a kind of circular movement of death and rebirth, figuratively speaking. Many ideas in history that were born out of a high degree of maturity of their time, like sustainability, can have their period in which they have a strong effect. Then they can have to temporarily take a back seat, or even fail indefinitely. In the first case, these ideas have to 'overwinter,' which they usually do on their own by retreating into niches or below the surface of public debate and prominence. Later, after the overwintering phase, they may return – mostly if they were not superficial but reflected the substance of historical evolution and development. This has always been the case with the more profound zeitgeist ideas. Their representatives, for example, artists, often rose to fame and were traded at high prices, only to be forgotten for decades in the following epoch and fall in price – only to be rediscovered in the subsequent era and rise again. The most interesting thing about this implicit law of circular decline and resurgence is that ideas disappear or are pushed into the background, but when they come back, they usually have become much stronger than they were, although they often have changed form or phrasing. When ideas come back, they usually also last longer and have greater stability than during their original rise. That is, after the overwintering phase, the resurrection phase can make ideas even more influential, although often more differentiated and 'wise' than they were in the first place. It is exactly for these reasons that history must be considered as something superhuman that is made by humans, which is where its creative paradox lies. Those ideas that are historically 'defeated' by superhuman laws of alternation, when they do come back – and nobody knows beforehand if, how and when exactly this occurs – often do so after metamorphoses and are therefore much more difficult to completely defeat again. Ideas, one could summarize, basically must go through death and resurrection, like nature in the course of the tides, to reach their destiny. It could be assumed that this is exactly what is happening – or will happen – with the sustainability idea. The good thing about its temporary trimming could be that its ideological appropriation – the transformation of an idea into an ideology that answers everything and that one is no longer allowed to contradict, which was at least temporarily the case in Europe – is reduced. Then the sustainability idea can restore itself more freely and with more participants: namely as the original power of something right that needs no moralization and no ethical formalization to be right because it is felt, sensed and supported by ordinary people with emphasis simply because it makes sense. The recent shift in the US towards a – presumably also only temporary – anti-sustainability stance cannot change that fact. And neither can the people who are driving opposition forward, like some currently prominent politicians steering their nations away from the path-breaking sustainability pacts of 2015 (SDGs), 2016 (Paris Agreement) and 2024 (United Nations Pact for the Future). In our era, politics is always the balance between the individual moral feeling regarding a righteous livelihood and the collective formalization of a compromise between different ideas about it, a social pact called 'democracy.' If today there are politicians in the White House – and elsewhere – who continue to underscore at any occasion that they are nothing more than just 'dealmakers,' they thereby admit that they have nothing to do with the effort to integrate values with serving the general public, of which democracy consists. It is humanly foreseeable that such an attitude against the very substance of politics consciously will be replaced by 'pure business logic', as for example Donald Trump displayed in his now (in)famous public White House conversation with Ukrainian President Volodymyr Zelensky in February 2025, cannot last. What does all this mean if we try to sum up the teachings? It means ideas can only apply and work cyclically – even if they are right and historically at the time. If we are convinced that the sustainability idea was and remains right to achieve a better world, we should also come to the conviction that this idea will be resurrected with transformed appearance and strength in the coming years, as history never stops but continues to develop, unfold and ramify. All those who believe in sustainability perhaps may not sleep soundly in the Trump-Putin-Xi era, but should remain optimistic in principle. Because what we have seen over the recent years teaches us mainly four things. First: Developments always consist of cycles and circuits, not of beginnings and ends. Second: An idea whose time has come remains right, regardless of ideological appropriations or rejections. Third: Practical initiatives based on long-termism – such as the 'International Decade 2024-35 of Science for Sustainable Development' – will remain in place against all odds, even if they may require constant new supporters and intellectual and solidarity-based infusions of confidence. And finally, fourth: Moral courage and intellectual honesty for what is right is needed not so much in easy times, but first and foremost in difficult times: in times of overwintering and metamorphosis. Eventually, the deeper feeling of many people today, particularly of young people around the world, should give us courage. Because there is hardly a 'normal' person who doubts, in her or his honest feelings and thoughts, that we should not take better care of the planet, pollute it less and lead it into a more 'natural' future protecting its unparalleled beauty, value and dignity. Who who still feels any connection to her or his living environment in which she or he moves, and to the people who exist in it, would doubt this in the slightest? In sum and looking forward, the sustainability idea is and remains right in 2025, and far beyond, because it is both consciously and, perhaps more important, instinctively shared by every person who is still connected in any way with her or his natural environment, her or his body and the destiny of both and thus of us all. Roland Benedikter is an internationally renowned political scientist and sociologist with specialization in global development who co-coined the term 'reglobalization' since 2019 (see Ephrat Livni in The New York Times ). He is co-head of the Center for Advanced Studies of Eurac Research Bolzano, Italy, UNESCO Chair in Interdisciplinary Anticipation and Global-Local Transformation and Full Member of the European Academy of Sciences and Arts. He was a Full Member of the 'Circle for the Future' of the Federal German Ministry of Education and Research Berlin advising the German Federal Government 2019-23, has co-authored two US Government White Papers on Advanced Technologies and one Report to the Club of Rome, is the author and editor of more than 30 books and more than 200 publications and on the advisory and editorial board of Harvard International Review, New Global Studies, Global-e and the Brill book series 'Global Populisms.' He teaches at Sapienza University Rome I and previously worked at Stanford, Georgetown and UC at Santa Barbara Universities. In 2024-25, he was a consulting member for the Dubai Global 50 Future Opportunities Report 2025 of the Dubai g overnment.
