Should business and finance play larger roles in resolving the great social and environmental challenges of our time? Proponents of environmental, social, and governance (ESG) investing say yes. They argue that ESG financial strategies can help reverse runaway carbon emissions and fix income and gender inequalities, among other ills. ESG-integrated investments already encompass more than $120 trillion in financial assets. Are they working as promised? If not, how can they be improved?
In Sustainable, a finance-industry veteran offers an insider's look at the promises, prospects, and perils of ESG investing. Terrence Keeley argues that many ESG advocates have been overly optimistic about what it can accomplish. Divestment threats are ineffective tools for altering corporate behavior, and verifiably "good" companies do not systematically generate great returns. Most importantly, business and finance cannot cure social ills on their own: regulators, public policies, civil society, and individuals must all play specific, complementary roles to shape the future we want. Keeley provides comprehensive solutions that would promote more inclusive, sustainable growth. In particular, he recommends reallocating capital from some indexed products toward an emerging class of strategies with more verifiable social and environmental benefits. Keeley identifies dozens of alternative "impact investing" strategies that could generate true double bottom lines. He also highlights promising civic organizations with proven methodologies for achieving widely shared benefits at scale.
Proposing practical, actionable, and in many cases, profitable solutions to social and environmental problems, Sustainable offers an incisive vision of the roles business and finance can and should play in building a flourishing society.
Part 1: The Promise . . .
1. The Stakes
2. Stakeholders Versus Shareholders
3. Activists, Their Arguments—and a Little Engine That Could
4. C-Suite Insurrectionists
5. What if +1°C = -$100 trillion?
6. What’s the United Nations Got to Do with It?
8. A Few Words About Indices
Part 2: The Perils . . .
9. Values Versus Valuations
10. Hardwiring Corporate Goodness
11. Inside the ESG Arms Race
12. Crowded Trades
13. Let’s Speak Privately
14. Fight or Flee?
Part 3: Solutions
15. Civics Lessons
16. Impact Investing at Scale
17. The 1.6 Percent “Solution”
Conclusion (or How to Avert Our Failed Future)
Appendix: Exemplars of Hope
Terrence Keeley has been an adviser to the world’s largest sovereign wealth funds, national pension plans, endowments, foundations, and asset managers for more than three decades as a senior client officer at BlackRock and UBS Investment Bank. In 2021, he was named a leading global “Knowledge Broker” by Chief Investment Officer.
"A strategy for real change calls for rethinking processes in their entirety."
– Pope Francis
"If you've been looking for the definitive book on how ESG investing does and does not work – you've found it. Sustainable not only describes how more of your portfolio can do well and do good but also reveals in illuminating, fast-paced detail why many current ESG strategies will not. Keeley explains clearly what business and finance can and cannot do to promote better social and environmental outcomes on their own."
– Paul McCulley, former chief economist of PIMCO and UBS Americas
"Sustainable is a book for our times. It has valuable lessons for investors, corporations, and policy makers alike."
– Stanley Fischer, former vice chair of the Federal Reserve
"How can capitalism work better for the majority? How can we uplift our forgotten communities, and maximize human potential? Keeley's Sustainable says markets, government policies, and civil society all have important roles to play – and none can succeed without the others. If you are looking for a comprehensive roadmap for progress and sensible solutions that can be implemented right now, read this book. You will be inspired."
– John Hope Bryant, chairman and CEO, Operation HOPE
"In a world where so many advocates sell ESG with no holds barred, claiming benefits for all involved, this book stands out, with well thought through and balanced arguments for incorporating virtue into business and investing decisions and the trade-offs involved. While ESG as an acronym may and perhaps should fade, the question of how to balance profits and virtues will stay with us. This book will help us work our way to an answer."
– Aswath Damodaran, Kerschner Family Chair in Finance Education and professor of finance, New York University Stern School of Business
"Sustainable by financial advisor Terrence Keeley is a well-written treatise on a complex topic: 'Moving Beyond ESG to Impact Investing.' It is accessible to a wide range of readers."
– Book Talk ... A Conversation
"The importance of Sustainable is reflected in the authorship of its foreword, which is by BlackRock's CEO, Larry Fink."
– Rupert Darwall, RealClearFoundation "Books & Culture"