The scientific scrutiny of sustainability | Insight Investment

We will accept a claim uncritically if it confirms what we would like to be true. This can be a particular challenge when it comes to sustainability and investment. If an investment fund claims that it has achieved long-term financial returns, as well as helped to decarbonise the economy and promote board diversity, we might be tempted to accept such claims uncritically.

But to avoid greenwashing we need to assess such claims scientifically. To assess the actual impact and implications of achieving sustainability outcomes, we need to answer two questions:

1. How do you measure sustainability?
2. How do you confirm that sustainability drives financial performance?

Read more on this topic by Alex Edmans, Professor of Finance at London Business School.