Week 2: For the World's Profit, How Business Can Support Sustainable Development

Dear all,

This newsletter is a special one. It highlights the book I co-authored with a number of remarkable individuals over the course of 2024. My contribution includes Chapter 6, titled "Scaling Sustainable Finance: The Role of Asset Owners." The book’s title, For the World’s Profit, clearly reflects its purpose while emphasizing the urgency of taking action.

We find ourselves at a defining moment where the paths of capitalism and sustainable development converge. For centuries, private enterprise has been a driving force in reducing poverty, fostering economic growth, and addressing societal issues. Through the mechanisms of profit-driven activities—such as resource allocation, innovation, competition, and production—businesses have delivered countless goods and services that enhance quality of life. Yet, while markets have succeeded in many ways, they have also fallen short, often amplifying or even causing some of humanity’s most pressing challenges and environmental crises.

This book gathers insights from leaders across the corporate, investment, governmental, academic, and nonprofit sectors to explore how business can better align its efforts with societal and environmental needs. It examines how businesses can collaborate with governments, financial institutions, and civil society to manage risks—not only those facing their enterprises but also those threatening people and the planet. The book also delves into mobilizing private resources, innovation, and networks to generate value by addressing critical social and environmental issues. Equally, it considers what forms of accountability are necessary to establish clear boundaries, ensure oversight, and incentivize responsible business behavior.

The role of business in society is far from a new debate. Adam Smith, regarded as a foundational thinker in modern capitalism, addressed these issues as early as 1759 in The Theory of Moral Sentiments. He championed the virtues of justice and benevolence, arguing that while justice prevents harm, benevolence encourages the pursuit of collective happiness. Smith was deeply concerned about fairness, particularly in the distribution of wealth between labor and capital. He observed that persistently high profits often indicated monopolistic practices rather than healthy competition or good business practices. In his seminal work, The Wealth of Nations (1776), Smith contended that good governance and effective taxation required vigilance against employers who overlooked the negative consequences of excessive profits.

Smith’s philosophy implies that individuals and businesses should pursue self-interest, but always within a framework of ethical conduct. His focus on justice, compassion, and effective governance remains relevant to modern debates about the responsibilities of business. While the environmental and social challenges we face today were not on Smith’s radar, one could reasonably infer that he would advocate for mitigating harm to others and compensating for damage to the environment—principles now embedded in tort law across many jurisdictions.

In today’s business context, Smith’s ideas resonate with the evolving focus on risk management, value creation, and accountability. These dimensions are at the core of ongoing debates about where to draw the line between corporate responsibilities and the roles of governments and other stakeholders. Finding coherent and actionable strategies across these areas remains central to tackling the world’s sustainable development challenges.

I sincerely hope that you will find this book and my contribution insightful and encouraging.

Chapter 6 “Scaling Sustainable Finance, The Role of Asset Owners”

As providers of capital, institutional asset owners are at the top of the investment chain. Pension funds, sovereign wealth funds, insurance companies, endowments, and foundations are all entrusted with vast pools of capital, making them pivotal actors in the pursuit of sustainable development. Their fiduciary responsibilities position them as influential voices in global markets, investment policies, and standards. How asset owners interpret and act on their fiduciary duty is crucial to shaping prosperous societies, including the pursuit of the Sustainable Development Goals (SDGs), net zero greenhouse gas emissions, and broader environmental, social, and governance (ESG) priorities.