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21st Century Investing

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21st Century Investing

Redirecting Financial Strategies to Drive Systems Change

Berrett-Koehler,

15 min read
7 take-aways
Audio & text

What's inside?

Here’s a new idea: Investors prosper when everyone in society prospers.

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Editorial Rating

8

Qualities

  • Innovative
  • Well Structured
  • Concrete Examples

Recommendation

If you find yourself shaking your head at Wall Street’s myopic obsession with quarterly numbers, or shaking your fist at free-market acolytes who disavow any social responsibility on the part of corporations or investors, this is the book for you. Investment advisers William Burckart and Steve Lydenberg make a case for a new type of investing. In their “system-level” approach, allocating assets isn’t about short-term profits but about making societies and economies more just and, ultimately, more stable. While the authors don’t offer a precise playbook for changing the prevailing mind-set on Wall Street, they do explore the many institutional investors that are placing their values first.

Summary

The conventional model of investing is broken.

Historically, investors have focused on their returns, dismissing other factors as irrelevant. But the downsides of traditional approaches to investing are becoming obvious. Economic inequality has provoked nationalistic urges and paved the way for protectionist trade policies. Climate change is accelerating. Once these monumental issues pass a point of no return, they will prove catastrophically destabilizing – and that threatens investors’ returns. However, many investors remain mired in the conventional approach of maximizing short-term returns while tuning out systemic risks. According to this old-school view, sustainability is drivel, and environmental, social and governance (ESG) metrics are a waste of time.

Despite this reluctance, change is underway and going through a set of phases. In the first stage, traditional investment models are hyperfocused on financial returns. A second phase of institutional investing incorporates sustainability as a consideration. In the third stage, large investors increasingly accept the notion that their decisions guide the overall direction of societies and economies...

About the Authors

William Burckart leads the Investment Integration Project and is a fellow at the High Meadows Institute. Steve Lydenberg is the founder of the Investment Integration Project and a partner at Domini Impact Investments.

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