Is the World Getting Better or Worse?


”The progress that we have made as species in improving our circumstances gives hope that we possess the ability to tackle our contemporary challenges.” Kristian Roed Nielsen

Text by Kristian Roed Nielsen, post doc researcher at Misum specialized in sustainable consumption, sustainable innovation, crowdfunding and behavioural science and policy

All things considered, is the world getting better or worse? If you were to read the papers and peruse the latest headlines you would be hard pressed to believe in anything but a slow and gradual decline. Many indeed engage in nostalgia about the past and bemoan our fall from grace blaming a variety of undefined groups from the lazy youth, to the elite, the unemployed, or the foreign. Even in academia – where all things should be treated with reasoned scepticism – I cannot escape the sense of dread about the future that many of my colleagues feel. In the end very few people think that the world is getting better – and if you are one of those in tiny minority who argues that the world has improved vastly – be prepared for a bombardment of what can politely be called scepticism. We are for some reason willing to accept bad news on whim, but remain strongly critical of good news. That the world is increasingly poorer, more violent, and even dumber seems for many as a fact – I will try to convince you otherwise.

”We are for some reason willing to accept bad news on whim, but remain strongly critical of good news.”

In an event-obsessed world, the positive developments that our species have made in ensuring richer, more peaceful, and less oppressive world is often lost to us due to its slow pace (Roser 2018a). Instead our attention is drawn to the steady stream of single news events like terrorist attacks or natural disasters. Single events thus become our barometer for measuring the state of the world and we lose sight of the bigger picture. But let us have a closer look at a period of time that we often have a positive association with: the booming post-WWII world.

If you were born in 1950 you would, looking at the then present day statistics, face a 72 percent chance of being born into extreme poverty, your child(ren) would face a one-in-five chance of dying before reaching age of five, and you would most likely live in autocratic or colonial political regime. You would also in all likelihood be illiterate, not vaccinated, and live in an exceptionally violent time – oh, and because of that probably live to an age of around 48. Now let us compare with 2014. There is now a 9,6 percent chance that you are born into extreme poverty, your child(ren) would face a one-in-twenty chance of dying before reaching age of five, and you would most likely live in a democratic political regime. You would in all likelihood be literate and if in the majority have a lower secondary education or above. You would be vaccinated and live in one of the most conflict free times in human history. You could now expect to live to an age of around 71,4 year.

Now – and I for some reason always have to say this – my argument should not be mistaken as blind optimism. I am well aware of the enormity of the challenges that we as a society face. The very progress that we have made has undeniably challenged our planets ability to sustain the current equilibrium we have so long enjoyed (Rockström et al. 2009). Challenges like climate change, loss of biodiversity, and interference with the nitrogen cycles have already crossed their “safe operating space” and thus require “factor 10 or more improvements in environmental performance, which can only be realized by deep-structural changes in transport, energy, agri-food and other systems” (Geels 2011, p.24). We face a situation where we need to make better use of our increased welfare, for example, by using the vast resources and increasingly educated global body to find ways to decouple economic growth from CO2-emissions. However, we also need to restrict and rethink our current consumption levels and find alternative means of ensuring that these positive trends continue without compromising the welfare of future generations.

”I believe we should look at history with clear eyes to understand how far we have come in solving previously thought intractable problems.”

These challenges are massive, but the progress that we have made as species in improving our circumstances gives me hope that we possess the ability to tackle these challenges. Some say we should look to grassroots organisations for hope and inspiration – I believe we should look at history with clear eyes to understand how far we have come in solving previously thought intractable problems. In the words Max Roser (economist and researcher at Oxford University), who inspired this blog-post, in a “perverse way the histories of decline give us comfort. They allow us a perspective of helplessness and are absolving us of our personal responsibility. We need to know what we achieved over the course of history to understand that we can achieve more” (Roser 2018a).

Kristian Roed Nielsen, post doc researcher at Misum specialized in sustainable consumption, sustainable innovation, crowdfunding and behavioural science and policy.

Follow Kristian on Twitter: @RoedNielsen


Geels, F.W., 2011. The multi-level perspective on sustainability transitions: Responses to seven criticisms. Environmental Innovation and Societal Transitions, 1(1), pp.24–40. Available at:

Rockström, J. et al., 2009. A safe operating space for humanity. Nature, 461(7263), pp.472–475. Available at:

Roser, M., 2018a. The short history of global living conditions and why it matters that we know it. Our World in Data. Available at: [Accessed May 1, 2018].

Roser, M., 2018b. Our World in Data. Available at:

Is the reputation Scandinavian investors have for being on the forefront of sustainable investing deserved?


Text by Robert Eccles, Visiting Professor of Management Practice at the Said Business School, University of Oxford, a former Professor at Harvard Business School and a current member of the Misum board.

Given the well-deserved reputation Scandinavian investors have for being on the forefront of sustainable investing, it is not surprising that seven of them are in the data base of The Investment Integration Project (TIIP). These funds are the Swedish AP2, AP3, and AP4; Denmark’s pension funds ATP Group and PFA Pension; Norges Bank Investment Management (NBIM), Norway’s sovereign wealth fund; and the Finnish pension fund Varma Mutual Pension Insurance Company (Varma). In this blog, I will explore the extent to which this reputation is deserved using a database of 100 asset owners and asset managers developed by TIIP.

TIIP is a research services firm under the leadership of Steve Lydenberg (Founder and CEO) and William Burckart (President and COO). It’s mission “to help institutional investors understand the feedback loops between their investments and the planet’s overarching systems that make profitable investment opportunities possible.” Just as modern portfolio theory extended analysis of individual stocks to a basket of stocks, TIIP helps investors to move their level of analysis beyond just portfolios to include the context in which these portfolios exist. This is important because failure to do so will lead to dramatic disruptions (e.g., the Financial Crisis of 2008) and steady or even dramatic degradations (e.g., from climate change and inequality) that will make it impossible for investors to earn the returns necessary to meet the expectations of their beneficiaries and clients, respectively.

TIIP is a very welcome initiative since it is the first one to look at systems-level considerations from an investors perspective. The database, which can be used by investors as a guide for what their peers are doing to contribute to the system level, is just one aspect of TIIP’s efforts. The organization is developing a significant body of research and analysis regarding the importance of systems-level thinking and how to ensure its viability. In addition, TIIP fosters collaborations among investors interested in addressing common issues, works with other organizations that have complementary goals and objectives, and provides customized solutions for investors.

Underpinning all of those activities is TIIP’s framework on the “Tools of Intentionality”—a set of 10 strategies investors can use to have a positive effect at the system-level:

  1. Additionality: Invest to add to the wealth-creating potential of systems.
  2. Diversity of Approach: Offer diverse products or use numerous approaches to address systems-level issues.
  3. Evaluations: Place a non-financial value on difficult-to-quantify wealth-creating elements of systems.
  4. Interconnectedness: Increase the flow of information about systems-level considerations.
  5. Locality: Invest in the development of resilient systems in targeted geographic areas.
  6. Polity: Engage in policy debates about systems-level risks and rewards.
  7. Self-Organization: Build organizations to increase investors’ capacity to address systems issues.
  8. Solutions: Utilize vehicles that target specific systems-level challenges
  9. Standards Setting: Limit investments that transgress the bounds of normative conduct.
  10. Utility: Align asset classes with systems-level concerns.

TIIP has also identified five “on-ramps” to system-level investing: ESG integration, impact investment, investment stewardship, long-term value creation, and universal ownership. These are stepping stones to investing in a more system-focused way. Finally, TIIP has the “key investment activities” for each investor in its database: investment belief statement, security selection and portfolio construction, corporate engagement, targeted investment program, and manager selection, directives, and monitoring.

”The second major finding is that with this group of asset owners, the Swedish funds (AP2, AP3, ad AP4) and NBIM are relatively more advanced. Possible reasons for the Swedish funds are Swedish financial regulations and the fact that they are all raising the bar for each other.”

In terms of the “Tools of Intentionality,” the overall pattern is the relatively limited number of them being practiced as shown by the simple ratio of the number of tools being used by all seven investors (18) to the total possible (10×7) which is .26. This suggests that even these advanced asset owners are in the early stages of thinking about their investment strategies in the context of system-level considerations. Not a single one of these asset owners is using Additionality, Evaluations, Locality, or Utility. AP2 is the only one using Solutions. Diversity of Approach (AP2 and AP4) and interconnectedness (AP2 and NBIM) are being used by two. Three are using Polity (ATP, NBIM, and PFA). The most popular tools are Self-Organization (all but PFA and Varma) and Standards Setting (all).

Seen from the perspective of the investors, AP2 is using five of these tools, NBIM is using four, AP4 and ATP are using three, AP3 and PFA are using two, and Varma is using only one. This raises the question of whether only a limited number of these tools can be used, perhaps as a function of size and investment strategy, or whether all of these investors have substantial room for improvement.

The pattern is different for the on-ramps, with relatively more of them being used (a ratio of .40). The most popular one is long-term value creation which is being used by all except for PFA, followed by ESG integration being used by five (the exceptions are AP3 and PFA). AP3 and NBIM are using universal ownership, only AP3 is using investment stewardship, and none are using impact investment. The latter is probably due to the fact that “impact investing” still largely connotes small, private investments in specific projects at funding levels too small to be of practical significance to these large asset owners.

In terms of key investment activities, all seven are integrating system-level investment strategies into their security selection and portfolio construction. All except for ATP and PFA have targeted investment programs—that is investment programs specifically targeting system-level challenges. Only the Swedish funds of AP2, AP3, and AP4 are using corporate engagement to address system-level challenges. None of these investors have included system-level considerations in their investment belief statements (easy to do if the will is there) or have incorporated system-level thinking into their manager selection, directives, and monitoring processes (harder to do because this is a complex process).

Finally, in terms of addressing specific environmental, societal, and financial systems-level themes, the pattern, like with the Tools of Intentionality, is one of relative sparseness with a similar ratio of 0.36. Not surprisingly, the theme of climate change is of relevance to all investors, six (AP2, AP4, ATP, NBIM, PFA, Varma) of which have leveraged the Tools of Intentionality (Diversity of Approach, Polity and Standards Setting) to address this. Human rights is another theme that all seven investors are addressing. All seven are doing so using the Standards Setting tool in their security selection and profile construction, and some are also using the tools of Self-Organization (AP2, AP3, AP4, NBIM) and Interconnectedness (NBIM).

After that, five (AP2, AP3, AP4, NBIM and PFA)—all through the Standards Setting tool in their security selection and portfolio construction—are addressing corruption. There are four investors addressing natural resources (AP2, AP3, AP4 and NBIM), consumer health and safety (AP2, AP4, NBIM and Varma), corporate governance (AP2, AP3, AP4 and NBIM) and employment, labor rights and working conditions (AP2, AP3, AP4 and PFA), and three addressing oceans (AP2, AP3 and AP4), renewable energy (AP2, NBIM and Varma), and transparency (AP2, ATP and NBIM). Only two investors are addressing water (AP3 and NBIM) and social equality and diversity (AP2 and AP4).

On environmental themes, sustainable land use is the focus of only AP3 and on financial themes, stability is the focus of only PFA. None of these investors are focusing on biodiversity, waste management, food production and security, income inequality and financial inclusion, infrastructure or shareholder rights.

AP2, at 11 of the 20 themes, and AP3, AP4, and NBIM at nine stand out. PFA is only focused on five, Varma only four, and ATP only on three.

There are two major findings from this analysis. The first is that even these seven Scandinavian asset owners are in the early stages of addressing system-level issues in their investment processes. If a similar analysis were done for all 100 investors in the TIIP data base, it would be possible to compare the Scandinavian funds to the global average. The reasonable hypothesis would be that they’re better but that would have to be confirmed.

The second major finding is that with this group of asset owners, the Swedish funds (AP2, AP3, ad AP4) and NBIM are relatively more advanced. Possible reasons for the Swedish funds are Swedish financial regulations and the fact that they are all raising the bar for each other. In terms of NBIM, it has long been a leader in the narrower domain of sustainable investing and its sheer size means it has the resources to also lead the way on system-level issues.

Robert Eccles is a Visiting Professor of Management Practice at the Said Business School, University of Oxford, a former Professor at Harvard Business School and a current member of the Misum board. Follow Robert Eccles on Twitter: @rgeccles



A tree is not a forest – one tree does not flourish without the others.



“I grew up surrounded by forests. Nowadays, I consider my regular walks in the forest as a medicine. Suffering from occasional nature-deficit disorder while enjoying the urban life-style has deepened my relationship with forest and my high appreciation of nature as a whole. At the moment I am day-dreaming about travelling to Japan to study shinrin-yoku, forest bathing.” Photo: Jenni Puroila

Text by Jenni Puroila, PhD student at Misum, SSE.

Losing perspective is easy when we are too heavily invested in a certain way of looking at things. When we focus on a single perspective, we cannot see the forest for the trees.

The complexity and interconnectivity of corporate sustainability challenges require taking a broad perspective in order to tackle them. Listening to different stakeholder voices and moreover acknowledging the differences and conflicts in their points of view is crucial for companies to understand and manage their sustainability impacts. By ignoring these differences, the dominant perspectives can easily take over the discussions, and with a gentle push eventually create an illusion of consensus and harmony.

”The discussion of what matters in the corporate sustainability has drifted away from protecting nature and human rights to protecting the business from financial and reputation risks.”

By developing an ability to listen to different perspectives, we can learn from the forest and the trees – the masters of communication and collaboration. The innate wisdom of nature and its ecosystems have great potential to inspire new ways of thinking.

When I went to primary school my biology teacher taught us many interesting facts about the forests and the trees. The forests are the lungs of the planet, self-sustaining ecosystems that are rich in biodiversity and provide a home for the vast majority of the plants and animals living on land. The ability of trees and humans to interact in complete symbiosis is vital to the life on planet earth. Humans breathe in oxygen and exhale carbon dioxide, while trees breathe in carbon dioxide and exhale oxygen. She also taught us how trees in the forest compete with each other. The knowledge back then was based on the understanding that trees compete with each other for sunlight, water and nutrients meaning that only the strongest ones survive and grow to be big and powerful.

However, recent forest ecology research has revealed that we have had it all wrong; it is not about the battle of the strongest oppressing the weaker ones – it is all about a collaboration, sharing of resources and helping each other out.

The latest research of forests by ecologist Suzanne Simard has shown that instead of competition, trees collaborate. The trees communicate with each other through several ways such as sending electrical impulses which travel through the root system and fungi networks that serve as intermediates. There is a complex and dense underground network system which reaches throughout the whole forest. Every tree is important to the community and those individuals living in an isolation suffer from their lack of connection.

The similar paradigm shift that the scientific study of forests has witnessed is needed in the corporate sustainability thinking; a move from competition of different points of view towards acknowledgement of everything being interconnected. The discussion of what matters in the corporate sustainability has drifted away from protecting nature and human rights to protecting the business from financial and reputation risks. The argumentation for adopting sustainability management tools and reporting practices is often based on serving the business-case, the risk-management and the financial success of the company as a priority. While acknowledging the information needs of the most dominant stakeholder group: investors, who hold an unquestioned and more formally regulated position in this equation, we need to ensure that the other stakeholders are not silenced.

”A way of seeing is a way of not seeing”[1]

When a certain point of view is dominating the discussion, our attention is limited to consider the facts that are relevant to this point of view, forgetting other perspectives. When all the efforts and energy are directed to only one dominant business case’s point, the end result may not be desirable. The tree does not flourish without the forest.

”The measure of a civilization is how it treats its weakest members”[2]. Trees are able to collaborate, take care of the weak ones and communicate. Anyone walking in the forest can sense the centuries-old wisdom and magic surrounding it. Art, science and business innovations have always sought inspiration from nature. Nature can serve as an inspiration for creating solutions to protect the sustainability of the planet itself. When addressing sustainable development, we first need to prioritize the future of the planet and its ecosystems, us humans being a part of it. Only then can we see the interconnectivity in the surrounding world.

Jenni Puroila is a PhD Student at Misum. Her research focuses on the concept of materiality by exploring how it is understood and applied to define what matters the most for corporate sustainability. Follow Jennie Puroila on Twitter: @jennipuroila

Read more about how trees communicate:


  • The Hidden Life of Trees: What They Feel, How They Communicate―Discoveries from a Secret World by Peter Wohlleben (2016) (Review in The Guardian here.)
  • The Songs of Trees: Stories from Nature’s Great Connectors by David George Haskell (2017) (Review in The Atlantic here.)

[1]Poggi, G. (1965) A main theme of contemporary sociological analysis: Its achievements and limitations, British Journal of Sociology, 16, pp. 283 – 94.

[2]Mahatma Gandhi among other great influencers have reiterated this quote

Harmonization of sustainability reporting standards – a solution to which problem?


Text by: Jenni Puroila and Svetlana Gross, PhD students at Misum

Currently there are more almost 400 different sustainability reporting instruments globally[1]. The SDGs (Sustainable Development Goals) include a specific goal (Goal 12.6) to encourage companies to report on sustainability as part of their reporting practices. Governments, NGOs, market regulators, stock exchanges, industry associations and standard setters have developed requirements for reporting. The question is no longer about whether companies should report on sustainability but rather how. Today the discussion is focused on standardization and harmonization of the reporting, but less so about its purpose and long-term effects.

Earlier in November Misum had the pleasure of hosting a public lecture by its board member Prof. Bob Eccles, who is currently Visiting professor of Management practice at Saïd Business School at Oxford University. The lecture’s topic was “Setting standards for non-financial information: what is the solution?”, and Prof. Eccles raised some important and interesting points on the topic. The question he brought into the discussion was “who should take the responsibility of developing the global standard for non-financial reporting”.

This request for a solution is relevant since the proliferation of standards has been criticised to have increased the reporting burden for companies but also creating a certain amount of confusion among reporting entities and among information users. Therefore, the current call for harmonization and alignment seems to be echoing all over. However, the large number of standards reflects the breadth of sustainability-related issues as well as the innovation and experimentation process in this emerging field. The question that is commonly being ignored or taken for granted is to whom the reporting is directed to.

It is an important question to ask, because it determines what purpose this reporting is serving and what kind of decisions it is supposed to influence: operational, strategic or purely financial? The standards for sustainability related information such as SASB and IIRC are developed to provide information for financial decision-making. As are the more traditional financial reporting bodies such as FASB (US) or IASB (the rest of the world). Throughout Prof. Eccles’ lecture the assumption that the investors are the main audience of sustainability reporting was not questioned. What it means in practice is that information about the non-financial aspects of the company’s environmental and social impacts need to be translated, and integrated, into financial terms.

Including financial implications of social and environmental risks as a part of financial reporting provides more accurate financial information and is in fact fulfilling those reporting requirements that are already in place in financial reporting regulations. This is nothing new. But it does not fulfil the purpose of sustainability reporting if we assume that its purpose is to support the transition towards more sustainable economy.

Today, the investors are expected to make the “right” decisions about our common future, but based on which grounds? One of the most recent and acclaimed efforts in integrating environmental, or specifically climate-related, information into the current accounting and investor decision-making is The Task Force on Climate-related Financial Disclosures, TCFD[2]. It has recently published a framework and recommendations for reporting to be used by financial and non-financial organizations representing the largest greenhouse gas emitting industries: energy, transportation, materials and buildings, agriculture, food and forestry. The focus is on financial impact of climate-related risks and opportunities on an organization, rather than the impact of an organization on the environment.

Recommendations include describing “the resilience of the organization’s strategy, taking into consideration different climate-related scenarios, including a 2°C or lower scenario”. If focusing on the organizations’ impact on the environment, an honest analysis from fossil-based extraction and energy companies will be – “there is no scenario consistent with a 2°C warming where our company survives”. The accepted moderate emissions reduction pathway consistent with (a 75% chance of keeping the global warming below) 2°C includes that fossil-fuel emissions should peak by 2020 at the latest and fall to around zero by 2050[3]. Scenarios for lower than 2°C require even faster phasing out of fossil fuels. Will the companies adhere to this analysis when focusing solely on the financial impact on an organization as requested by these recommendations?

There is nothing wrong with the approach of those standards highlighting investors’ point of view as such, but problems arise when this approach becomes the dominating one. Giving the lead responsibility of alignment and harmonization to those organizations that focus on the investors’ perspective means maintaining the status-quo. This kind of reporting does not give enough incentive for companies to transform their practices towards more sustainable economy but rather contributes to their financial stability. Should this kind of reporting even be categorized under the 400 sustainability reporting instruments when in fact its purpose is to provide financial information about non-financial matters without requirements of measuring the impacts outwards to society and environment?

The sustainability challenges are larger and encompass issues that have implications reaching beyond the financial performance. If we want to find a solution for these major sustainability challenges we need a broader and more inclusive perspective that changes the target from sustaining the financial returns to sustaining our planet and humanity.

Text by: Jenni Puroila and Svetlana Gross, PhD students at Misum

Follow Jennie Puroila on Twitter: @jennipuroila

Follow Svetlana Gross on Twitter: @tant_storm

[1] UNEP, GRI, KPMG & the Centre for Corporate Governance in Africa (2016) Carrots and Sticks Global trends in sustainability reporting regulation and policy. Available at:

[2], June 2017

[3] Rockström, J., Gaffney, O., Rogelj, J. et. al. 2017. A roadmap for rapid decarbonization. Science, Volume 355 Issue 6331


Crowdfunding for Sustainability: A new vehicle for green growth?


Text by Kristian Roed Nielsen, PhD and Misum Postdoc researcher

The emergence of reward-based crowdfunding as novel source of funding for entrepreneurs (also labelled innovation finance) has been hailed as a democratizing revolution within innovation finance (Lawton and Marom 2012; Mollick and Robb 2016). The potential to engage consumers directly for capital is proposed to be changing “how, why, and which ideas are brought into existence” (Gerber and Hui 2013:1) by, for example, reducing the geographical constraints of traditional funding (Agrawal, Catalini, and Goldfarb 2015) in addition to expanding access to entrepreneurial finance to a greater range of individuals and teams (Lehner and Nicholls 2014; Sorenson et al. 2016). Its potential for enabling sustainable entrepreneurship is therefore also gaining popular and academic traction. But is this hype or does reward-based crowdfunding truly represent a needed innovation funding boon for sustainable entrepreneurs? This is exactly what my dissertation sought to explore by examining under which conditions and to what extent reward-based crowdfunding could financially benefit entrepreneurs with social and/or environmentally-oriented products. And can it? Well it depends.

The dissertation finds that while consumers represent a significant and growing source of innovation finance this does not necessarily translate into more sustainable finance[1]. Instead, funding success for sustainable entrepreneurs depends on the purpose of their endeavor (i.e. social or environmental); the amount of financing sought; entrepreneurs’ geographic location, social capital, network and prior experience; and – in no small part – the product [offered].  The fact that innovation finance can now be driven by consumers rather than professional investors does not in itself change consumer demands; demands which more often than not fail to correlate well with sustainable behavior. Instead reward-based crowdfunding appears for certain types of campaigns as an enabler of sustainable product innovation, while in other circumstances it enables egocentrically-oriented campaigns.

The factors that influence funding success for sustainable entrepreneurs are five-fold. Firstly, while consumers are on aggregate more likely to support socially-oriented ventures – as compared egocentrically-oriented campaigns – environmentally-oriented campaigns often perform worse than their egocentric counter-parts. Secondly, entrepreneurs should consider how much funding they are seeking as in reward-based setting as entrepreneurs who seek more than 8,000 US$ (€7,400) will on average find it increasingly more difficult to garner funding. Thirdly, location still matters even with crowdfunding context and entrepreneurs located in an urban setting with a high median income and social capital will find it significantly easier to garner funding. Fourthly, an entrepreneur’s personal network in addition to past experience with crowdfunding strongly influences the likelihood of funding success. Prior success with crowdfunding resulting 173% increase in expected funding, while failure results in a 17,7 % decrease. Finally, the products on offer themselves strongly influence individual pledging behavior both in terms of sustainable and unsustainable pledging, but also in terms of whether social or environmental orientation garners support. Hence when we look at a more detailed picture of the products themselves individuals seem motivated by different things when pledging. Specifically there is some indication that for fashion items, electronics and other “wearables” consumers pledge for egocentric reasons (i.e. style, make and color), while for other more out-of-sight items social (i.e. fair wages) and environmental (i.e. recycled materials) values win the day.

Hence while reward-based crowdfunding is not a silver bullet often espoused by its proponents for tackling the funding concerns of sustainable entrepreneurs “the crowd” does hold a significant potential that thus far remains largely untapped. It is this untapped potential that hope to unravel with my work at Misum.

If you want to read the none-condensed version of my dissertation you can find it here.

Text by Kristian Roed Nielsen, PhD and Misum Postdoc researcher

Follow Kristian on Twitter: @RoedNielsen

[1] Sustainable finance referring to capital that is invested in entrepreneurs or ventures who pursues a good, service, or process system that offers an improved or the same economic performance with lesser externalities in the form of social and environmental hazards (Bos-Brouwers 2010; Halme and Laurila 2009).

Agrawal, Ajay, Christian Catalini, and Avi Goldfarb. 2015. “Crowdfunding: Geography, Social Networks, and the Timing of Investment Decisions.” Journal of Economics & Management Strategy 24(2):253–74. Retrieved (

Bos-Brouwers, Hilke Elke Jacke. 2010. “Corporate Sustainability and Innovation in SMEs: Evidence of Themes and Activities in Practice.” Business Strategy and the Environment 19(7):417–35. Retrieved (
Gerber, Elizabeth M. and Julie Hui. 2013. “Crowdfunding : Motivations and Deterrents for Participation.” ACM Transactions on Computer-Human Interaction 20(6):34–32.
Halme, Minna and Juha Laurila. 2009. “Philanthropy, Integration or Innovation? Exploring the Financial and Societal Outcomes of Different Types  of Corporate Responsibility.” Journal of Business Ethics 84(3):325–39. Retrieved (
Lawton, Kevin and Dan Marom. 2012. The Crowdfunding Revolution: How to Raise Venture Capital Using Social Media. New York: McGraw Hill Professional.
Lehner, Othmar M. and Alex Nicholls. 2014. “Social Finance and Crowdfunding for Social Enterprises: A Public-Private Case Study Providing Legitimacy and Leverage.” Venture Capital 16(3):271–86. Retrieved (10.1080/13691066.2014.925305).
Mollick, Ethan and Alicia Robb. 2016. “Democratizing Innovation and Capital Access: The Role of Crowdfunding.” California management review 58(2):72–87.
Sorenson, Olav, Valentina Assenova, Guan-Cheng Li, Jason Boada, and Lee Fleming. 2016. “Expand Innovation Finance via Crowdfunding.” Science 354(6319):1526 LP-1528. Retrieved (

The Kapuszinski Lecture on Development 2017 – Stockholm School of Economics (SSE) – November 15, 2017


By Jan Eliasson, Former Deputy Secretary General United Nations

I am truly honoured to deliver the 2017 Kapuscinski Lecture. It is a signature yearly event, which brings the EU member states and citizens together around the common challenge of development in the 21st century.

My approach today to the subject of global development is very much influenced by my work at the UN over the past three decades. This work spans over peace and security, conflict resolution, humanitarian action as well as human rights and institution building.

In my analysis of our development challenges, I am also strongly influenced by the work on and adoption of the Sustainable Development Goals (SDGs) and the 2030 Agenda in September 2015 at the UN.

Other elements of significance for my understanding of development are the negotiations and agreement on Climate Change and the emergence of the concept of Sustaining Peace.

Let me from the outset propose that the overall vision and goal should be the universal acceptance of the need for both sustainable development, sustainable peace and sustainable human rights.

My main message today is that economic and social development must be seen, and carried out, in the broader perspective of peace and security, human rights and strong and effective institutions.

In the final document of the UN General Assembly Summit in September 2005, which Sweden had the honor to chair; this relationship is summarized in the following over-arching formula:

There is no peace without development, there is no development without peace and there is neither peace nor development without respect of human rights.

Another crucial conclusion is that development requires mobilization, not only across the areas peace and human rights, but also across a broad range of actors: governments, international organizations, and also parliaments, the private sector, civil society, and the academic and scientific community.

To this list must in today’s world be added the role of media, not least social media – and, ultimately, the role of all of us. Nobody can do everything, but everybody can do something.

No one escapes responsibility for improving human conditions in a world where international cooperation and solidarity now are challenged, even threatened, in the political life of our nations. This threat is evident in the debate in key areas like trade, migration and climate.

This observation of mine is also related to the fact that international and national agendas are growingly interrelated. The dividing line is no longer evident between what we do at home and what is being done in the world.

My conviction is that a good international agreement or formula is, in fact, in the national interest of individual countries. The Paris climate agreement of 2015 can well illustrate this thesis. The future of our nations cannot be separated from the future of the Planet.

In reverse, what we do to build good societies at home – with peaceful conditions, fair distribution of resources and wealth, inclusive and non-corrupt institutions and respect for human rights – is a contribution to a better life to our citizens, but also to international peace and security.

Far too often, I have seen that the absence of these positive factors leads to tensions, to civil strife and even to international interventions, in weak and fragile states.

With this in mind, we should appreciate what the Nordic countries have achieved in terms of well-functioning societies and institutions. This has contributed to a greater degree of trust here than in most other countries.  Admittedly and sadly, we live in a world with much of unfulfilled expectations and a disturbingly high ”trust deficit”.

To me, the new SDGs and the 2030 Agenda represent a remarkably lucid and comprehensive road map for a better life for the peoples of the world and for a livable planet.

It is an ambitious agenda. The UN Member States aimed high, fully aware that setting these daring goals meant leaving the lowest common denominator negotiations behind.

During the talks, I was as Deputy Secretary-General making the point that this agenda could not turn into realities with measures and steps taken only by governments and international organizations. For success, the SDG Agenda required utilizing the huge potential of the business community, civil society and the world of science and technology.

This ”horizontal” mobilization is now one of our greatest tasks. If we succeed in bringing all these actors on board the journey to a life in dignity for all, we will make a giant step forward to a more rational, more effective method of solving problems of human development. The ”silo approach” must be left behind!

This also requires us to combine local, national and regional efforts with international cooperation. Such crosscutting cooperation builds on the premise that we discard the zero-sum game thinking – one part wins and the other one loses. In today’s world we must aim for win-win formulas, based on sound give-and-take and on the realization that the word ”together” is our most important word. If we do not adopt the win-win method, we will be left with highly damaging and dangerous lose-lose propositions. America First – or for that sake Sweden First – simply does not work. It could lead to America – or Sweden – Alone.

Let me now highlight the most prominent of the features of the 2030 agenda.

The basic common feature is, of course, sustainability. None of our pursuits can have lasting effects if we do not base them on sustainability. We may have a Plan B in other areas of politics and life, but when it comes to the existential issue of climate change and environmental degradation, we have no Planet B.

Accepting this, lead us to adopt long-term thinking – away from quarterly results and mandate periods. Another consequence is the urgent need to accept and share responsibility for future generations. This fundamental realization must penetrate all sectors of society, and all of us as human beings.

A second key feature of the SDGs is universality. In contrast to the Millennium Development Goals (MDGs), the SDGs are to be universally implemented – by the countries of the North as well as of the South. This is meant to send a strong message of inter-dependence – we are all in the same boat. Development is an obligation for all, rich as well as poor. By this, Agenda 2030 represents a conceptual break-through. Development is a global responsibility.

A third feature of the SDGs is their mutually re-inforcing character. The 17 goals are closely related. If we, for instance, improve the global water and sanitation situation, we will see progress in child mortality, maternal health and education. The same goes for each and every one of the goals. This means that we must promote a crosscutting, horizontal approach to meeting challenges and solving development problems.

A fourth feature is the relationship of the new goals to the fundamental formula of peace, development and human rights. Goal 16 underlines the importance of peaceful societies, access to justice and strong institutions.

This is another conceptual achievement of Agenda 2030 – the realization, as stated, that efforts for peace and security, development and human rights cannot be divorced or seen in isolation. Rather, they can achieve lasting results only if they are carried out in parallel.

For experts and practitioners in the security, development and human rights communities this is a golden opportunity to mobilize common efforts and reach joint results. Some steps forward have already been taken. In April 2016, the UN Security Council and General Assembly adopted identical resolutions on Sustaining Peace.

This concept is based on seeing peace building as a common responsibility of different sectors across national and international fields. It also underlines the importance of prevention as well as post-conflict peace building as an extended arm of prevention.

Lastly, let me highlight the importance of institutions for development. I have to admit that this issue was one of the most difficult to negotiate. Some countries felt that it was related primarily to domestic affairs and responsibilities.

However, it is hard to dispute that poor governance, corruption and lack of trust in institutions are seriously detrimental to development. Strong, honest and well-functioning institutions are not only beneficial for our citizens. They are also a positive factor in terms of support, cooperation and investments from the outside world.

Today, it is crucial that more of trust be built in leaders, institutions and democratic processes. Not least in view of the communication revolution and the emergence of powerful social media, there is an urgent need to counter extremist forces, which politically exploit the lack of trust. These movements must be taken seriously.

Let me conclude by high-lighting one area, which affects development, security as well as human rights , and which, I suggest, is of historic significance: the issue of refugees and migration.

In the SDGs, migration is listed under goal 11. But it goes beyond this particular goal. Migration and refugee movements have broad and deep economic, social, cultural and political implications. The narrative on migrants and refugees is controversial and often contradictory. Some see perils and problems – others see possibilities and potentials.

The economic consequences of 244 million migrants and 65 million refugees are significant. They contribute to growth in all countries where they live. Studies by IMF and the OECD verify this. They also make possible demographic growth, which is crucial not least for Europe’s and North America’s future. Further, their remittances to families in their home countries are three times higher in value than the total Official Development Assistance (ODA) in the world.

These facts and figures ought to be introduced and stressed in the sometimes toxic debate on refugees and migrants, and this apart from the fundamental question we should all face: are we in the future to build our societies on diversity or exclusion.

This, of course, presents a tremendous challenge to our nations and our peoples. Are we to develop and live up to integration policies, which include, and seriously deal with, education, housing and employment for all?

This is not an easy task for any society, whether it is on the national or local level. But I claim that the long-term gains and benefits of effective integration are much larger than the short term obstacles.

Migration and how we deal with refugees will be a decisive factor for the  journey ahead of us. We will in this century see millions of people leaving not only conflicts but also extreme poverty and climate change disruptions.

Facing this historic challenge requires action plans spanning over development, security and human rights which must be embraced by both national and international actors. Solving the problems inside nations will in this world be as important as international agreements and strategies.

In this pursuit, on both levels, the 2030 Agenda is a formidable instrument as well as an indispensable road-map for the future.

I hope that each and everyone of you in your present and future endeavors will make use of this new instrument in the toolbox of progress for humanity. By doing so, we can contribute to a life in dignity for all on this vulnerable planet Earth. We must do all we can to reduce the gap between the world as it is and the world as it should be.

By Jan Eliasson, Former Deputy Secretary General United Nations

Board Oversight of Corporate Sustainability – From Awareness to Engagement


By Andreas Rasche

Corporate sustainability and responsibility have come a long way. One aspect that has been sidelined quite a bit is how corporate sustainability is linked to the work of Boards of Directors. My plea here is a simple one: We need to anchor corporate sustainability at the Board level, and we need to do it in a way that Boards move from an awareness that sustainability related work exist (which is usually given) to a deeper engagement with sustainability-related questions.

Through my work and research I often talk to corporate leaders about sustainability. Often, I ask them: “Does your Board discuss sustainability-related matters?” Few leaders reply with a straight “no”; they emphasize that their Board is aware of sustainability issues.  However, equally few leaders claim that their Board really shows high levels of engagement vis-à-vis corporate sustainability. Most emphasize that the Board approves/discusses the annual sustainability report, and also that the Head of Sustainability gives an annual update to the Board. Yet, approving a report once a year and getting an annual update on relevant activities is different from engagement. Awareness is not the same as engagement, and confusing the two can give Directors the misleading impression that their Board really addresses corporate sustainability.

Boards that are just aware of the company’s sustainability-related work miss an important point: decades of research have shown that sustainability is about identifying risks and opportunities for the company. Hence, we cannot (and should not) disconnect relevant discussions from the “regular work” of any Board.  By “regular work” I mean the classic role of the Board, which is to approve and monitor corporate strategy against risks and opportunities. Nearly every aspect of corporate strategy has a sustainability angle to it. The challenge is to identify this angle and to make the most out of it.

How, then, can we ensure that Boards really engage in sustainability-related discussions? Research in this area is still rather scarce, and it would be misleading to claim that we have a lot of insights into this topic. I want to suggest three broad areas that seem important when thinking about how to move Boards from awareness to engagement.

  1. Structure: One important area is to think about how to structure Board oversight of corporate sustainability. There are different options but not one best way. Some Boards may find it useful when the entire Board discusses sustainability-related issues. This keeps relevant content high on the agenda and also makes sure that there is broad involvement in the debate. Other Boards may find it more useful to create a separate committee for sustainability-related discussions or they may enrich the work of an existing committee. This option may be risky in the sense that it unnecessarily isolates relevant debates. On the other hand, a committee can signal importance and ensures that the topic is regularly addressed. Both options do not exist in isolation; they can, of course, be combined.
  1. Culture: Each Board has a culture, and even without generalizing too much it is fair to say that most Directors still understand their main job as controlling and monitoring what is happening in and around the company. I share the view expressed by David Grayson and Andrew Kakabadse that in the longer run the structure that a Board adopts may be less important. What matters most is the mindset that a Board develops vis-à-vis corporate sustainability. Does the Board see sustainability just as an add-on, or does it see relevant issues as an integral discussion of risk mitigation and opportunity maximization? Does the Board identify its own role primarily as being about monitoring, or does it also understand itself as a mentor willing to guide sustainability-related discussions? And in what ways does the Board signal to the organization that sustainability is central to any strategic decision? The self-understanding of the Board matters, and this self-understanding cannot be changed overnight. It develops over time, like any culture does. A Board’s culture is influenced by a number of aspects; such as who participates (often people with explicit sustainability knowledge are lacking) and also by whether the Board is open to learn about the relevance of sustainability.
  1. Strategy: While Boards can have a great structure to address sustainability and also the right mindset that underpins such a structure, true engagement around corporate sustainability may mostly be visible in the pattern of actions that a Board adopts. Henry Mintzberg once called such a pattern “a strategy”. Whether or not corporate sustainability is part of a Board’s DNA becomes visible in actions such as the hiring of C-level executives and the compensation packages offered to these executives. A Board that neglects sustainability-related criteria when deciding on compensation packages disregards an important opportunity to fully engage in the discussion and to adjust its own strategy. While in the past many argued that the lack of robust indicators makes it impossible to tie compensation towards sustainability goals, this argumentation does not hold anymore in times where we have long lists of indicators, measures, and materiality maps.

I am not claiming that this is a conclusive list, but it is certainly a platform to start thinking about how to better engage Boards in discussions around corporate sustainability. First initiatives are emerging around this topic. The UN Global Compact launched a Board Programme a while back, and Stockholm School of Economics is discussing the creation of a similar engagement program for Swedish companies. After all, being aware may just not be enough…

Andreas Rasche (@RascheAndreas) is Professor of Business in Society at Copenhagen Business School and Visiting Professor at Stockholm School of Economics. More information at:

Low-carbon management in the shipping industry and the absence of economic


Incentive Structures: A Case of Market and Non-Market Failures?

Text by Serafim Agrogiannis, PhD Candidate in Business Administration at Misum

Navigating the aspects that distil the situation to its very essence requires openness. Not a polarized stance in the debate about uncritically urging firms to raise their environmental performance standards. Such an approach is underpinned by the aim to disprove criticism of the industry lagging behind in sustainability efforts where such a verdict is invalid and to raise awareness and possibly improve amongst other the utilization of low-carbon management where disapproval is due.

Climate change is more topical than ever. Unnerving times about its impact have pervaded considerations of the shipping industry’s role towards GHG emissions reductions. The latest study of the International Maritime Organization (IMO) depicts a current increase of 70% and projects escalation up to 250% by 2050 compared to the baseline year of 1990. This reveals an estimated increase of 200-300% in shipping activity (IMO, 2014) and according to the European Parliament’s report it will comprise of almost 17% of global carbon emissions if left unregulated (ENVI, 2015).

Such evidence serves as an eye-opener. It has vindicated a multitude of tenets held dear by proponents arguing against the shipping sector’s exemption from the Paris Agreement on climate change in 2015. The IMO’s reaction has been to persuasively establish the case that forthcoming carbon data collection requirements would supplement existing initiatives and formulate a coherent response for alleviating the industry’s impact on climate change. Parallel to this, is the new EU regulation (2015/717) on monitoring, reporting and verification (MRV) of carbon emissions for all ships reaching European ports effective from the 1st of January 2018 onwards. Both initiatives reflect a willingness to deal with information asymmetries through increasing transparency and data reliability.

But how do these attempts relate to the market overall? The majority of the shipping sector functions under a risk-based approach adopting only the necessary measures compliant with legislation and operational on-journey ramifications for achieving fuel efficiencies (Poulsen et al., 2016; van Leuween and van Koppen, 2016). In this case, stringent environmental, safety and health standards for reasons of customer/shipper vetting procedures (e.g. oil industry) and for certain management guidelines such as the International Safety Management (ISM) code prevail. Even in the container segment, which is alleged to be more advanced concerning environmental considerations, large shippers only partially deal with carbon management. Instead, reputational and cost reduction concerns prevail. Such a cost-cutting strife and commoditization eradicates any potential of incentive-shifting solutions. This largely invalidates proponents’ stance (e.g. Vandenbergh, 2013; King et al., 2012) for market based measures (MBM’s) and the internalization of environmental externalities. Add to this the weaknesses in data accountability, ambition as well as improvement levels (Scott, 2017) and the landscape becomes clear.

Apart from this indisputable market rigidity, the industry context itself is challenging. First, shipping is extremely capital intensive, freight with cyclicality related to the world economy as well as the time lag in order to couple supply and demand of ships. As such, sustainability-related postulations remain far from a straightforward matter where elaborations encompass dynamic and uncertain juxtapositions against cost-effectiveness and corresponding time horizons in order to evaluate potential trade-offs through certain technology investment choices and related bunker prices. Second, regulation within the industry constitutes the main driver towards environmental upgrades. The existing Energy Efficiency Design Index (EEDI) as well as the Ship Energy Efficiency Management Plan (SEEMP) illuminate a reality where attempts are made to further reduce GHG emissions. Given that the majority of shipping market segments point towards intense competition, these compliance strategies are viewed as means of retaining current position within the industry. With respect to differentiation, market segmentation practices within the different segments (e.g. cargo, dry, bulk) pose varying contract award criteria where cost, quality, flexibility and reliability have stronger effects on shipping firms’ environmental performance compared to product differentiation advantage through the ships themselves “offering the services” in question. Third, and given the outsourcing of the ship management function, many shipping firms focus on the applicability of best practices toward carbon reduction through task specialization and knowledge diversity allowing for the creation of unique bundles of resources and capabilities.

As a remedy, the discussion should embrace a wider perspective. Adopting a supply chain context (e.g. LSP’s) or its procurement function, could unveil potential of improvement. Issues proving material in the near future would also include shipbreaking procedures and the extent that strict working and environmental conditions, exceeding the baseline set by the United Nations’ Hong Kong Convention, are met. Given that recycling of steel is treated through a global commodity lens, the price paid for dismantling a ship is crucial: the lower the shipyards’ standards, the greater the profit potential of the shipping firm due to reduced commission prices paid. Recently, the EU published a list of approved shipyards that abide by certain standards and as an extension shipping firms could potentially agree on an industry-wide level to accept recycling practices conducted in certified shipyards. Revitalizing supporting infrastructure and making respective facilities more competitive and sustainability lenient through ports’ energy and environmental upgrade as well as their seamless integration with maritime operations and hinterland connections could provide added value and promote specialized shipping service clusters.

A steady hand could be offered by the financial sector as well. The newly announced initiative from ABN AMRO, ING and NIBC banks about the Responsible Ship Recycling Standard (RSRS) is telling. The introduction of alternative financing options in the wake of the global financial downturn almost a decade ago and due to stricter liquidity regulations for the banking system (e.g. Basel III) seems promising towards forging new partnerships empowering responsible and patient capital on the investors’ side and augmented oversight of key sustainability results.

Beyond doubt, sustainable shipping presupposes an engaged scholarship approach. Not sticking our heads in the sand. Empirical matters should be combined with multi-functional conclusions in terms of anticipating and influencing the type of knowledge needed for enlightening academic and practitioner spheres. In addition to normative research this calls for issue-oriented inquiry answering the wide diversification of practices involved within the policy-practice field, financial systems and supply chain management.

This is what we do at Misum. All the academic staff and colleagues have deep knowledge and tackle leading issues within our certain disciplines in a collaborative manner. The overarching aim is to invite attention from all across the policy, intellectual and practical spectrum in order to effectively tackle the challenges on the pressing and changing world of not only sustainable shipping but the role of business and society and their reinforcing interplay. We seek to further strengthen the ongoing dialogue about the most central concern nowadays: how to possibly make amendments in current business practices accompanied by appropriate policy-imbued interventions towards the benefit of the common good.

Written by Serafim Agrogiannis, PhD Candidate in Business Administration at Misum

The Challenge of Mobilizing Finance for Renewable Energy


Text by Max Jerneck, PhD and researcher at Misum

Alternatives to fossil fuels are slowly gaining ground –  much too slowly for the world to have any reasonable chance of avoiding catastrophic climate change and ocean acidification. To speed up the process, there would have to be a sea change in investment patterns. Mature low carbon technologies such as solar and wind are attracting increasing amounts of investment but there is a limit to how much they can expand without coming up against the constraints of intermittency, i.e. the fact that they only generate electricity when weather conditions permit. Breaking into the mainstream would require overhauled electricity grids and technological breakthroughs in energy storage technology. To achieve a real transition from fossil fuels to renewable energy, continuous investments in innovation is needed. Mobilizing finance for this task is a real challenge.

Technological innovation is normally not a very good investment. Potential gains are inherently uncertain, and often do not accrue to innovators but to followers who refine the technology. In the case of low carbon technology, competition from incumbent industries makes the prospects dimmer still. For investors to bet on low carbon technology, they would have to be either wildly over-optimistic, or simply unconcerned with financial returns. These types of investors are always needed to bring technologies to deployment, according to economist and venture capitalist William Janeway. Governments are needed to finance the initial unprofitable phase of development, which often lasts decades, and speculators are needed to bring it to market. Only in a bubble does money pour freely and widely enough for technology to be rolled out, tested and tried in the field. Before the 2008 crisis, a combination of these two motivations drove a minor boom clean technology investment. Governments in Spain, Germany, Italy, and other countries paid generous subsidies for renewable energy, enticing irrationally exuberant investors to pour money into the sector. After the financial crisis and Europe’s turn to austerity, subsidies dried up and investors realized that they had lost half of their money.

Venture capital worked well in an unoccupied technological field such as computers (which also had heavy state-backing from the military) but energy is an occupied ”legacy sector”, where market power has merged with regulatory power, fortifying it against disruption. Creative destruction in such a sector is not be easy, particularly since fossil fuels also experience rapid technological advances, as in shale extraction, fracking, etc. The MIT technology review recently published an article called Why bad things happen to Clean Energy Startups, that chronicled the downfall of Aquion energy, an energy storage startup which apparently had done everything right, yet still went bankrupt. The venture capital model for financing clean technology is,”broken,”  another recent MIT report states. The clean energy transition cannot be financed by the private sector alone; it needs to be supported by governments.

One place where the government has invested quite heavily in renewable energy technology lately is China, where state-owned banks and local governments have generously supported the development and expansion of solar and wind energy. In fact, it is possible that government financial support has been too generous. Critics argue that ”soft budget constraints” provided by government weakens incentives for innovation, and keeps uncompetitive ”zombie” firms alive, leading to serious problems of overcapacity. For years, there has been rumours of an impending solar shakeout in China, but it has yet failed to come. Given resistance from local governments supporting their home firms, I am not sure that it will. Overcapacity can be resolved in two ways, by reducing supply or increasing demand. The Chinese may do so through a combination of measures, either by allowing or engineering a consolidation among renewable energy firms into a few national champions; by increasing domestic demand through installations; by shutting down renewable energy’s main competitor coal; or by increasing demand through foreign installations along the One Belt, One Road route. All of these policies are pursued with varying levels of success. It remains to be seen which combination of options prevail; I may return to them in a future post or article.

I am personally not sure that excess capacity in China’s renewable energy sector should be viewed as a problem. It has been the main cause of the steep decline in solar costs over the past decade, and is compelling chinese officials to increase domestic demand. It has allowed a constituency to take form around the technology which will be hard to unseat. Excess capacity represents facts on the ground which makes the advance of renewable energy harder to reverse. Starting with the 12-five year plan in 2011, solar energy has become one of China’s important strategic industries, which will presumably form a foundation for dominance in electric vehicles and energy storage as well. Since the Chinese state does not seem to apply any financial constraints, the only limiting factor is the technological prowess of Chinese firms, which seems to be growing year by year.

The most advanced emerging technological segments, however, are still dominated by western firms and laboratories. The question is how to bring these through the first difficult phase of development, an important task to advance energy storage and promote exploration to avoid lock-in to the dominant designs currently favored by China. The West is much richer than China and should have no problem mobilizing finance for this task. What is lacking is a sense of urgency and a strategic view of the economy. Five year plans are no longer in fashion, even in France.

Mariana Mazzucato has argued that development banks could fulfill this role. In Europe, that would be the  European Investment Bank or the European Investment Fund. Risky investments in innovation do not sit well with the bank’s mission of providing returns to its shareholders, however. To provide the financially unconcerned actors that are needed, investments might have to be backstopped by central banks. Much like quantitative easing has instilled investor confidence in sovereign bonds, promises to buy equities in innovative startups could do the same for venture capital investments in renewable energy. Central banks have bought various financial assets from old-economy firms since the crisis. A post on FT ALphaville earlier this year by Alexander Barkawi titled why monetary policy should go green pointed out the carbon economy bias of these programs. They are in violation of the Paris Agreement, which states that all financial flows be made consistent with low carbon growth. Venture capitalists do not invest in emerging low carbon technologies because they do not see a viable exit option. Having such an option provided by central banks could alleviate those concerns. Western nations do not have the institutional, political or ideological capacity to finance new industries at any level near that of China, but  the commanding heights of the financial system are still under government control, and could in theory be coupled with venture capital to drive the transition. Given the reluctance of western political leaders to address even immediate afflictions such as mass unemployment, and even willingness to exacerbate them, it is almost impossible to imagine them proposing sensible, let alone bold or visionary, policies to address the much more intangible and slow moving threat of climate change. But these are the sort of ideas that should be lying around in the next crisis.

Written by Max Jerneck, PhD and researcher at Misum

Sustainable investment: time to define what it means


Text by Joakim Sandberg, Wallenberg Academy Fellow and Associate Professor at University of Gothenburg, also Associate Researcher at Misum

The financial industry has shown a growing interest in issues concerning sustainability, both social and environmental topics, over the last 20 years or so. According to some calculations (although they are probably exaggerated), Swedish investments with a sustainability profile amount to roughly 7-10 trillion SEK today. That would be about double the size of the Swedish real economy. A total of 38 fund companies, with a collective 670 fund options, participate in an industry initiative called “the Sustainability Profile” ( This explosion of supply is of course promising for the end consumers, since it becomes easier to find savings options that integrate sustainability concerns. However, voices are being heard that not all funds have equally high ambitions in their so-called green options and that the quality in this regard is varied.

A central problem for consumers is to navigate sensibly through this jungle of products. As noted in a recent report by Konsumentverket (Rapport 2017:5 Om konsumenters möjlighet att välja hållbara investeringar), there are many challenges for most consumers, such as getting to grips with a large quantity of complex information and struggling to understand the concrete sustainability results. One of the central solutions proposed by the report is external and credible eco-labelling of investment options. Such eco-labelling has worked well in other fields, such as groceries and energy. Eco-labelling of investment products could help consumers greatly through identifying the most ambitious funds, assessing the concrete sustainability results of their efforts, and also communicating this in a simple and easy-to-understand manner on the market. This is likely to raise the quality standards in the industry.

Earlier this month, the Swedish Forum for Sustainable Investment (Swesif) hosted an event to introduce and discuss some of the eco-labelling schemes that now are being developed (more info on the event here). Presentations were given by Morningstar, ISS-Ethix/Climetrics, Ecolabelling Sweden (Svanen) and the Responsible Investors Alliance Sweden. These are not the only eco-labelling initiatives currently going on, but they may be a representative share. What became clear during the event is that the initiatives actually point in somewhat different directions: they rest on partly differing ideas of what sustainability consists in (E, S or G); how companies should work with this; what measures (qualitative or quantitative) are suitable; what baselines are adequate for the measures; and so on. What was perhaps most striking were the seemingly different visions of the ideal of sustainable investment: whereas some value precaution, integrity and attention to detail; others rather value effectiveness and “impact”.

The conclusion from all of this seems to be that we need to define more clearly what is meant by sustainable investment. This is, at bottom, a philosophical issue that I have spent many years of my research career on. I have identified two main philosophical understandings of, or perspectives on, sustainable investment: According to the “moral purity perspective”, on the one hand, sustainable investment is fundamentally about choosing the right companies to invest in since the ethics of the investment depends on the ethics of the underlying company (in a backward-looking manner). So, for example, it is better to invest in wind power than in coal since the former simply is a more sustainable industry. According to the “moral effectiveness perspective”, on the other hand, sustainable investment is about influencing the underlying companies to make a difference for society (in a forward-looking manner). That is, the most sustainable investment is not necessarily that which is most “pure” but rather that which is effective in making the world a better place. (For an overview of this research, see this article.)

The challenge that I see ahead of us is to use this kind of research to construct a more robust and research-driven eco-label for investment products. There are many ways in which this can be done. In a report for the Swedish Society for Nature Conservation (Naturskyddsföreningen), I have summarized international research on the effectiveness of the investment strategies used by so-called sustainable funds (find the report here). In brief, the results indicate that a positive investment strategy, especially one that targets small or new firms in great need of capital, is more likely to be effective than a negative investment strategy, i.e. the simple avoidance of large companies in unsustainable industries. There may also be opportunities for funds to influence the underlying companies through owner dialogues, but much more research is needed here. The report gives us a rough roadmap for what investment strategies that should be promoted by a progressive eco-label in the field, i.e. one that follows the moral effectiveness perspective. I will now be working with some of the organizations noted in this text to hopefully make the proposed eco-labels both more progressive and more easy-to-understand for end consumers. Our overarching hope is of course that this research makes a difference for the quality of sustainable investment opportunities in Sweden.

This is what we do at Misum; research that aims to be of both high academic quality and, at the same time, high usability for sustainable market actors.

Text by Joakim Sandberg, Wallenberg Academy Fellow and Associate Professor at University of Gothenburg, also Associate Researcher at Misum