“Nature is not a place to visit. It is home.”
― Gary Snyder

Public discourse on climate change in the United States is evolving to align with countries across the globe that already have more advanced dialogue and policies. This is a good thing. Those of us that are practitioners in the sustainable investment industry have known for many decades that it is important for the private sector to also be involved. After all, private sector investment will be crucial to moving the needle on climate change. Especially since the lion’s share of pollution can be attributed to corporate activity.

The discussions around climate change began to heat up in the U.S. over the summer and continues into the fall.

First, in August a consortium of CEOs from major U.S. companies organized as the Business Roundtable,  took action to expand the definition of a corporation. The Business Roundtable announced that they will focus on delivering value to customers, invest in their employees, deal fairly and ethically with their suppliers, and support the communities in which they work. Further, they stated that the purpose of a corporation should promote “An economy that serves all Americans,” eclipsing shareholder primacy as the dominant paradigm. They state that corporations should now “ share a fundamental commitment to all of [their] stakeholders.

Then in September, Climate Change got two televised events.  The Central News Network (CNN) hosted a 7-hour town hall meeting on climate change with 10 presidential candidates in early September. Building on the momentum of the CNN town hall and public demand,  MSNBC hosted a candidate forum at Georgetown University’s Institute of Politics and Public Service on September 19-20 that overlapped with the date of the global climate strike. MSNBC’s forum focused on questions from young voters.  Americans are now observing a political environment, and perhaps in the near future, a regulatory environment that will support a shift in American economic priorities to complement the actions all global citizens need to take on climate change. These events are significant because they challenge us to talk about the role of the private sector and investment capital in helping to solve the climate crisis and the social challenges these crises create.  

Photo by  Markus Spiske

Photo by Markus Spiske

Governments and civil society have been working to address social and environmental issues with varying levels of success, but for too long the private sector has focused primarily on profit margins with less regard for the natural resources and labor it exploits to generate profit. 

Milton Friedman famously said, that in a free market, a public company exists solely to serve shareholders. That view has dominated American business for a few generations. At Etho we are encouraged by the continued reflection and refutation of Friedman's viewpoint.

As Joseph Stiglitz points out, the shareholder first viewpoint has contributed to inequality. Stiglitz is pointing out the obvious that was ignored in "modern" business theory. The private sector has ignored the wellbeing of the resources, both human and environmental, that create profit. In many cases, business "growth" is dependent on exploitative labor that destroys the social fabric of society.

To address these issues, and to protect the long-term interests of shareholders and all stakeholders, it has become clear that it is time for a paradigm shift in the broader economy in general and in the financial markets in particular. This investment perspective and approach is not new, as many recent entrants in ESG and Impact investing often suggest. Rather, it is an approach that is interdisciplinary in its focus and has deep roots in the social and life sciences. The growth and preservation of investor capital are predicated on our ability to reform markets to address our societal needs while considering all costs to all stakeholders - which includes the planet and its people. 

Photo by  Markus Spiske

Photo by Markus Spiske

Now, society is challenging business leaders to create long-term value over short-term profits.  The short-termism of profit over sustainability has eroded our holistic bottom-line. Although sustainable investment has existed for more than two centuries, (beginning with the Quakers) historically it has been the exception, not the rule.  

As Tricia Griffith, President and CEO of Progressive Corporation, and a member of the Business Roundtable stated, “CEOs work to generate profits and return value to shareholders, but the best-run companies do more. They put the customer first and invest in their employees and communities. In the end, it’s the most promising way to build long-term value.” 

She is correct. 

Again, the Business Roundtable’s position is not new, but builds on a perspective has been discussed in the US for decades. This announcement highlights the importance of the shareholder advocacy and engagement work that has been done by ESG and impact investors over many generations to change corporate attitudes and behavior of groups like the Business Roundtable

What the CEO consortium has done with their declaration is give credence to what long-time practitioners of ESG and impact investing already know: 

Economic growth and sustainability are interdependent. It is not possible to have sustained economic prosperity without the efficient management of natural resources.” 

That is why it is important to assess risk more holistically by evaluating companies based on key environmental, social, and governance (ESG) metrics. This allows us to measure corporate performance and how that performance helps or hinders shareholder value as well as the environment and our society.

What the CNN climate change town hall and Business Roundtable demonstrate also, is that there is a key role for the private sector to play. The CNN town hall was held less than two weeks after the Democratic National Committee rejected a resolution that would have allowed candidates to participate in a debate focused on the climate crisis.


When the US withdrew from the Paris Accords in 2017 and American companies committed to following through with the pledge creating the “We Are Still In” campaign. This seemed to be a significant step toward progress. That event coupled with the recent statement by the Business Roundtable demonstrates the private sector’s new willingness to take action and leadership on key environmental and social issues.

That the Business Roundtable has declared that they are now going to consider how their business activities may impact the broader society could be a good thing. However, as George R.R. Martin famously wrote, “Words are wind.” It is up to us as investors to hold firms accountable to ensure that their words become positive actions.

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