There is a growing agreement about the need for indisputable change. Economic actions need to be brought into conformity with natural laws, taking into account that our behavior, corporate activities and investment decisions are harming the earth and all of its inhabitants.
When the core perception of investment performance is expanded to include environmental and social impact, not just financial returns, investments can drive sustainable development.
The current financial system is mostly based on a short-term return horizon. As stated in an EY business report, “short-termism behavior is particularly visible in the case of public companies, which are often under pressure from their shareholders to deliver short-term outcomes.” Essentially, many executives look to show great quarterly or semi-annual performance to their investors at the expense of long term value creation for the company and long term consequences for themselves and society.
This short term focus means that companies don’t invest in things like product development, employee wellbeing, and environmentally conscious practices. Prioritizing short term returns and neglecting sustainable practices is a recipe for losing future competitiveness and self-inflicted challenges down the road.
We believe that by creating a platform that allows people to learn and invest in sustainable investments, we can empower everyone to contribute to the creation of a sustainable economy. Physis investment helps moving capital towards companies that enhance positive environmental and social impact.
When individuals are investing in non-sustainable investments, it often leads to negative externalities like environmental and social damage. This damage can make future investment returns harder to achieve. For example, investing in non-sustainable forestry projects leads to short term profit and growth at the expense of lumber being over-harvested. This unsustainable immediate gain makes it harder for any forestry projects to make a profit in the future due to possibly irreversible environmental damage. On the other hand, when capital flows into sustainable investments, it creates a positive relationship between investment returns and positive externalities. These externalities benefit communities and the environment. In the latter example, a current investment helps the environment while also contributing to future returns.
If we successfully overcome the challenge of sustainable development by investing in companies and projects that do good for the planet, we can attain significant benefits for the economy and our society.
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