The prevailing approach to sustainable investing is not working - what is the real solution?
We need to redesign our approach to sustainable investing.
The current mainstream practice of sustainable investing, which diverts capital away from brown firms and towards green firms, is counterproductive as it can further reinforce the status quo of brown firms without significantly advancing the transformation of green firms. Instead of divesting, investors should support brown companies' initiatives to become greener.
Shifting the direction of sustainable investing may not be easy, but it is necessary as humanity faces an existential threat with the progression of climate change.
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Sustainable investing in theory and practice: The ultimate solution
The Author
Professor Vesa Puttonen
Vesa Puttonen is Professor of Finance at Aalto University School of Business. His research has been published in Management Science, Financial Analysts Journal, Financial Management, European Financial Management, Journal of Banking and Finance, and Journal of Asset Management among others. He has worked as Senior Vice President at the Helsinki Stock Exchange and as Managing Director at Conventum Asset Management (Helsinki). Professor Puttonen has taught MBA Programs in Helsinki, Hong Kong, Singapore, Poland, China, Iran, Taiwan, South Korea and Spain. Full profile