how much they say they embed ESG factors into their decisionmaking , asset managers are not paid to invest in something beyond its marginal ( private ) benefit or paid to take costs into account that are not captured by the ( mis ) functioning price mechanism .
The price mechanism can be likened to Darwin ’ s theory of natural selection . It functions in a similar manner by favouring what is most efficient and effective in the current market . There is no long-term planning embedded in natural selection and ( partly ) because of that , it is unsurprising that most organisms that have ever existed are now extinct – they over-optimise for current conditions and then fail when conditions change .
Could this change ?
Most externalities only exist over short-term horizons . The longer the individual ’ s time horizon , the more likely they will place a similar value on public goods as a society , and the more likely they will consider the negative societal implications of their own behaviour .
Do you , by your own behaviour , consider the impact you will have on future generations , or do you instead focus on your own immediate interest ? Unfortunately , most of us will probably admit to the latter .
Organisations like PPS , which operate on the ethos of mutuality , exist to serve both their present and future members . By implication , these organisations have a much longer time horizon than a typical private company ( and many individuals ) and need not respond predominately to the shorter-term price mechanism . Such organisations should be better at building robustness and dealing with both positive and negative externalities and increasingly will be at the forefront of driving a more sustainable agenda .
The state ’ s failure in its essential support to society is highly problematic in building a just and equitable society . However , organisations like PPS can play an essential and enabling role . We are engaging with other companies from around the world where mutuality forms the core of their existence , to learn how they support the communities they operate in .
As we navigate the complex terrain of investment decisionmaking , it becomes evident that including social considerations is a topic of considerable debate . By embracing a purpose-driven approach , corporations can actively contribute to addressing pressing social issues . Together with other like-minded companies across the globe , we are committed to learning from each other ’ s experiences and supporting the communities we serve .
Click here to learn more about PPS Investments .
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