Insights

Nick Robins and Cary Krosinsky’s first book from 2008 was a specific attempt at helping transform the field then known as Socially Responsible Investing (a term you almost never hear anymore) from a largely negative body of investment practice into the implementation of more effective, impactful, positive investment strategies. In fact, we argued strongly for Sustainable Investing to become the key phrase to describe the field, terminology which has largely stuck, so we were certainly successful in that regard.

Contributions came from many leading figures, including Nick himself, who helped lead the content we selected. Our main writing focused on chapters clarifying why Sustainable Investing and longer term considerations were now the best way forward, looking back at earlier practices in the process. 

Speaking of earlier practices, a foreword was provided by Steve Lydenberg, the L of KLD, an original ESG data provider, and someone whose vision has long been an inspiration.

Julie Fox Gorte, then with Pax World (subsequently acquired by Impax in the UK), one of the three original socially responsible fund managers in the US along with Calvert (eventually became part of Morgan Stanley) and still independent Domini, wrote eloquently on how no company was perfect, therefore how owning and engaging with such companies had become a key strategy for investors. 

In fact, shareholder engagement was the most robust strategy deployed by investors among the Seven Tribes over the course of the first two generations of sustainable finance, arguably peaking during COVID, but struggling for effectiveness during the more recent Anti-ESG approach of “Red” US states backed by the work of the Heritage Foundation.

Shareholder engagement remains important, especially for fostering investor/corporate dialogues, developing ideas of strategies corporates should deploy if they are not already, and acting as a key check and balance ensuring that owned companies continue to focus on not only making money, but taking other ESG issues seriously for the sake of all categories of stakeholder which investors bring into such considerations.

My own chapter looked comprehensively at the then 850 public facing sustainable investing portfolios, to see how they performed financially, something we continue to look at to this day.  To help analyze whether positive approaches were indeed better financially, we divided these public facing funds into three categories:  negative screening, positive strategies and style drift (as fund managers didn’t always do what they say, something receiving much more focus these days in the form of potential greenwashing, very much harder to get away with now as a result of EU/UK regulations and situations where greenwashing was identified and fined by the SEC and the German government. 

Other industry experts shared their views on many aspects cutting across corporate and investor strategy, different sectors, asset classes and countries, and for the most part, were prescient in their visions for where things would head. 

For the most part these suggestions have held up very nicely, if agreed.

Chapter 1: The Emergence of Sustainable Investing

Nick Robins here traced sustainable investing’s evolution from early roots to a capital market force by 2008, arguing it represented a fundamental shift beyond traditional SRI by recognizing environmental and social factors as material to long-term performance. The chapter examined three core sustainability principles—ecology, equity, and futurity—showing how markets failed to internalize environmental costs, particularly climate change. Five forces drove growth: rising social expectations, regulatory developments, value creation opportunities, mainstream investor engagement, and supply chain pressures. Robins distinguished sustainable investing from ethical investing by emphasizing external economic realities rather than internal values, noting sustainable investors had successfully anticipated trends like climate change before conventional markets. Key challenges included overcoming short-termism (UK stock holding periods fell from 9 years in 1986 to 11 months in 2006) and ensuring the practice transformed mainstream investment rather than remaining a niche.

That goal remains something to achieve, and his chapter and this book helped encourage and further transform efforts in the field towards more positive solution seeking strategies.

Chapter 2: Sustainable Equity Investing: The Market-Beating Strategy

Here I presented specific empirical evidence challenging the assumption that sustainable investing underperformed financially. Analyzing fund returns from 2002-2007, we were able to demonstrate that positively focused sustainable investing funds consistently outperformed both mainstream indices and traditional ethical/SRI funds. The research identified distinct SRI styles, showing that sustainable approaches—characterized by best-in-class selection, engagement, and long-term holding—achieved superior returns.

Another key finding was the strong positive correlation between low portfolio turnover and better performance. Comparing sustainable investors like Jack Robinson of Winslow Green Growth Fund to Warren Buffett showed competitive or superior results.

Nick and I later concluded the book with thoughts on how these results demonstrated the viability of positive sustainable investing.  Something that has only been reinforced since then over time.  The book then went on to focus on other perspectives from many leading thought leaders at the time.

Chapter 3: Investors: A Force for Sustainability

Julie Gorte here further explored the evolution from traditional SRI toward comprehensive sustainable investing strategies. Using Pax World Funds as a case study, subsequently acquired by UK based Impax where she continued her career, she described the shift from values-based screening to integrating ESG factors as material financial considerations. The chapter argued investors could drive sustainability through three mechanisms: capital allocation, active ownership (shareholder engagement and proxy voting), and policy advocacy. Gorte emphasized that fiduciary duty properly understood required ESG consideration as these factors posed material risks and opportunities.

Chapter 4: Sustainability Analysis

The late, great Valery Lucas-Leclin as well as Sarj Nahal, at that time with Paris based Société Générale, examined how sell-side analysts incorporated ESG factors into financial research. They described three approaches: reactive (responding to ESG controversies), integrated (systematically incorporating ESG into valuation), and thematic (identifying sustainability opportunities). Quantitative evidence from 2004-2006 showed strong ESG performance correlated with lower beta, with best-rated stocks having approximately 8.5% below average beta.

The authors introduced frameworks for quantifying sustainability’s impact through stakeholder pressure analysis and beta risk adjustment. They argued traditional analysis was inadequate for capturing value drivers in a carbon-constrained world and noted the challenge of broker short-termism conflicting with long-term ESG analysis.

Chapter 5: Observations from the Carbon Emission Markets: Implications for Carbon Finance

Abyd Karmali from BofA Merrill Lynch analyzed carbon markets’ rapid development through 2008. He traced evolution from the Kyoto Protocol’s Clean Development Mechanism through the EU Emissions Trading Scheme, explaining how carbon pricing created risks for high-emission sectors and opportunities for low-carbon technologies. Karmali categorized carbon investments across the risk-return spectrum, from stable CER purchases to higher-risk project development and cleantech venture capital. Carbon markets had grown from virtually zero in 2003 to over $60 billion in annual transactions by 2007. The chapter discussed the three-stage technology development cycle and how different investor types participated based on risk-return profiles. Karmali concluded carbon markets were becoming critical drivers of capital allocation toward low-carbon solutions, though policy uncertainty and volatility remained significant challenges. 

We have subsequently tracked the ongoing ups and downs of this space in subsequent book chapters, as well as an excellent Transitions for Sustainability piece last year, framing the remaining challenges in this space.

Chapter 6: Carbon Exposure

Matthias Kopp and Björn ToreUrdal from WWF Germany and SAM presented a case study analyzing RWE’s carbon exposure, demonstrating how to quantify carbon pricing’s financial impact on company valuations. Using RWE’s emissions profile, they modeled how different carbon price scenarios ($30, $60, $90 per ton CO2) would affect equity value, revealing that carbon costs could reduce RWE’s value by billions of euros. The chapter introduced the “expiring lifetime curve” showing emissions changes as old plants retired. The authors argued traditional equity analysis systematically undervalued carbon risk by failing to incorporate future carbon liabilities into valuations. They presented a framework for carbon risk assessment applicable across sectors, emphasizing the importance of understanding emissions trajectories and strategic positioning for a carbon-constrained future.

This chapter also made something of a case for Germany focusing on importing natural gas from Russia, highlighting the ongoing struggles Germany has faced.  Their ongoing Energiewende has made good progress now but struggled with the ongoing phase out of nuclear (in contrast to right next door France, who continues to generate most of its electricity that way) and partly as a result, have failed to transition adequately away from coal, and now has a fragile coalition government.   Also, this chapter failed to foresee the subsequent events that led to the Ukraine invasion, highlighting the importance of geopolitics from a low carbon transition perspective.

Chapter 7: Clean Energy Opportunities

Emma Hunt and Rachel Whittaker, both then with Mercer, surveyed clean energy investment opportunities across wind, solar, biomass, and geothermal technologies. They analyzed how policy mechanisms (feed-in tariffs, renewable portfolio standards, carbon pricing) created favorable conditions while declining technology costs improved competitiveness. The authors distinguished investment entry points: public equities in established firms, private equity/venture capital in early-stage companies, and project finance for installations. Clean energy had transitioned from niche theme to mainstream sector with rapid growth in indices and specialist funds. Risk factors included technology uncertainty, policy/regulatory changes, commodity price volatility, and competition from conventional energy. The chapter concluded clean energy represented one of the century’s most significant investment opportunities, driven by the imperative to decarbonize global energy systems.

Future book chapters continued to highlight these trends, see the case study on wind farms and tax equity for a specific example of how renewable energy can be financed.

Chapter 8: Water

Katherine Miles Hill and Sean Gilbert from the Global Reporting Initiative explored water as an emerging investment theme. They examined drivers of water scarcity (population growth, urbanization, climate change, pollution) and identified four investment areas: water utilities and infrastructure, water treatment and technology, water-efficient products, and water rights/resources. The chapter discussed development of water indices (like the S&P Global Water Index launched in 2005) and water-focused funds. The authors analyzed how water risks affected sectors differently, across beverages, agriculture, utilities, mining, and manufacturing. They highlighted the role of water disclosure initiatives in helping investors assess companies’ water management. The chapter concluded water scarcity would become increasingly critical in investment analysis, comparable to carbon/climate in importance for long-term value creation. 

As of this writing, water shortages may not have manifested as quickly as many expected, but major cities around the world are beginning to make radical plans given expectations of running out of this necessity, so we can expect ongoing disruption and strategic planning that will need to constantly adjust accordingly.

Chapter 9: Fixed Income and Microfinance

Ivo Knoepfel and Gordon Hagart at the time with onValues examined sustainable investing beyond equities in fixed income and microfinance. They documented SRI fixed income growth in Europe, though it lagged SRI equities. The authors analyzed how ESG factors applied to bond analysis, presenting evidence of correlations between ESG performance and credit ratings/spreads. For sovereign bonds, environmental and social factors (governance quality, corruption, social stability) affected default risk and creditworthiness. The second part explored microfinance as a distinctive social investment seeking both financial and social returns. They traced microfinance’s evolution from donor-funded programs to an emerging asset class attracting mainstream investors. The authors analyzed microfinance investment structures and risk-return characteristics, demonstrating that properly structured microfinance could deliver competitive returns while achieving poverty alleviation goals.

Sean Kidney and his Climate Bonds Initiative have largely taken up the mantle of tracking what is now a multi-trillions dollar undertaking.  Debt, now the world’s largest asset class, can guide the global economy more effectively as it increasingly prioritizes and incentives better green social, and sustainable outcomes.

Chapter 10: Sustainable and Responsible Property Investing

Gary Pivo and Paul McNamara examined sustainable property investing, outlining ten dimensions of responsible property investing (RPI): energy efficiency, environmental management, health and productivity, community impact, brownfield remediation, affordable housing, smart growth, transit-oriented development, green building certification, and stakeholder engagement. They presented evidence that sustainable properties delivered financial benefits through reduced operating costs (particularly energy and water), higher occupancy rates, rental premiums, and improved asset values, with energy efficiency investments often generating 20-30% returns. The chapter discussed rapid growth of green building certifications (LEED, BREEAM) and their impact on valuation. The authors examined barriers including split incentives between owners and tenants, upfront cost concerns, and lack of standardized metrics. They concluded sustainable property investing was transitioning from niche to mainstream practice.

Arguably, real estate was one of the first sectors to take up the mantle of sustainability, but standards often failed to focus on achieving and measuring actual carbon reduction progress.  This is work being taken up now by the CRREM Foundation, backed by Norges Bank and others, and where we act as an advisor.  Specific investment pathways are evolving as we speak, and worth watching out for as they become formalized.

Chapter 11: Private Equity: Unlocking the Sustainability Potential

Rita Kumar from Actis, now with TPG, explored how private equity could advance sustainability while delivering competitive returns. She argued that PE’s characteristics—long horizons, active ownership, operational involvement, and aligned interests—made it well-suited for sustainable investing. Kumar presented four case studies: Actis (emerging markets PE with sustainability integration), IFC (development finance combining profit and development), Hudson Clean Energy Partners (cleantech-focused PE), and HgCapital (mainstream PE implementing ESG practices). The analysis showed PE firms could create value through sustainability by improving environmental performance, strengthening governance, developing human capital, and positioning companies for emerging opportunities. Challenges included short-term pressure for returns, measurement difficulties, and limited ESG data in emerging markets.

Our work on the Future of Private Equity is one effort to continue to encourage progress in this increasingly important asset class. 

Chapter 12: Social Businesses

Rod Schwartz, then with Catalyst Fund Management, examined social business investment in the UK, defining social businesses as enterprises prioritizing social/environmental mission alongside financial sustainability. He traced evolution from small initiatives to significant enterprises, citing successes including Organix (sold for over $60 million in 2008), Abel & Cole, Innocent Drinks, and Justgiving.com. The chapter analyzed diverse capital structures from conventional equity to “ethical shares” (Café Direct, Traidcraft, Good Energy) to blended return structures. Barriers included small market size ($11+ billion in SRI versus trillions in broader markets), lack of infrastructure, and conservatism among ethical investors. Promising innovations included the proposed Social Investment Bank and Social Stock Exchange.

This chapter was early to the discussions which later unfolded in many ways, cutting across social business and perhaps most importantly impact investing, so in many ways this chapter can be seen as a key forerunner.

Chapter 13: China (Ray Cheung)

Ray Cheung, then with the World Resources Institute, analyzed China’s environmental challenges and emerging sustainable investment opportunities. He documented China’s severe situation by 2008: 700 million lacking safe drinking water, 16 of the world’s 20 most polluted cities in China, and environmental degradation costing an estimated 10% of GDP annually. China responded through major policies including the 11th Five-Year Plan (targeting 20% energy intensity reduction), the Renewable Energy Law (aiming for 16% renewable energy by 2020), and strengthened environmental regulation. Cleantech investment exploded, with Deutsche Bank forecasting massive environmental investments.

Cheung examined opportunities across wind, solar, and biomass technologies, citing successful IPOs and in a later talk to my first ever class at Columbia University, he made clear how challenging it was to identify specific companies to invest in. Other challenges included policy implementation gaps, local government resistance, intellectual property concerns, and corporate governance issues.

Of course, China has gone on to be critically important in driving low carbon transitions, and our seventh book went into much more detail on why cooperation with China to solve sustainability challenges together was and remains an important paradigm to strive for on a global basis.

Chapter 14: India (Dan Siddy)

Dan Siddy examined India’s emergence as a sustainable investment destination, documenting rapid economic growth (8-9% GDP annually) alongside severe sustainability challenges including water stress (affecting half the population), air pollution, deforestation, and climate vulnerability. He analyzed drivers of sustainable investment: growing international interest, domestic regulatory developments (including voluntary ESG disclosure guidelines), and corporate sustainability initiatives. Indian companies attracted attention for both positive practices and negative ESG screening due to labor, environmental, and governance concerns. He discussed development of sustainability indices including the S&P ESG India Index launched in 2008, which screened for environmental management, labor practices, community relations, and governance. Key sectors included renewable energy (ambitious solar and wind targets), energy efficiency, water infrastructure, and sustainable agriculture. Challenges included limited ESG disclosure, varying governance standards, and competition with China for capital.

This chapter was early days on India and sustainability, which increasingly comes in to focus within subsequent articles and chapters we have featured, including in this book.

Chapter 15: Civil Society and Capital Markets (Steve Waygood)

Steve Waygood from Aviva Investors, who only recently left that firm after many years of success, explored in this chapter civil society organizations’ growing influence on capital markets and corporate behavior. He traced NGO capital market campaigns from early shareholder resolutions (including the landmark 1997 Shell AGM resolution on human rights in Nigeria) to sophisticated multi-stakeholder initiatives by 2008. Waygood analyzed mechanisms including shareholder activism, corporate engagement, public campaigns, disclosure standards development, and coalition-building with institutional investors. Successful campaigns targeted timber sourcing by retailers (Home Depot, Lowe’s, Staples), pharmaceutical pricing, and climate disclosure through the Carbon Disclosure Project. The chapter discussed the Collevecchio Declaration outlining expectations for financial institutions’ responsibilities. Waygood examined tensions between NGOs and investors over engagement versus divestment strategies. He concluded that civil society had become an essential partner in advancing sustainable investing, providing research, advocacy, and accountability mechanisms.

We further outlined Aviva’s work in our second book, Evolutions in Sustainable Investing, and there is little question that Waygood did foresee the influence of NGOs, which has indeed only grown over time.

Chapter 16: Fiduciary Duty (Stephen Viederman)

The late, great Steve Viederman analyzed how fiduciary duty applied to sustainable investing, challenging conventional interpretations that assumed ESG considerations were incompatible with fiduciary responsibilities. He traced fiduciary duty’s evolution from trust law through the 1974 Employee Retirement Income Security Act (ERISA) and subsequent interpretations. Viederman argued proper understanding of fiduciary duty not only permitted but often required ESG consideration, as these factors affected long-term value and risk. He distinguished between duty of loyalty (acting in beneficiaries’ interests) and duty of care (exercising prudence). The chapter examined how these duties applied to screening, ESG integration, shareholder engagement, and proxy voting. Viederman discussed the “prudent man rule” and its evolution to encompass modern portfolio theory and risk management incorporating sustainability factors. He addressed common myths about fiduciary barriers and provided practical guidance for trustees and managers, concluding sustainable investing was entirely consistent with fiduciary duty.

Steve went on to help lead our next book and was often a thought leader we looked up to, so it was great to capture his thinking here for posterity.

Chapter 17: The Global Agenda (Tessa Tennant)

Tessa Tennant, a longstanding sustainable investing pioneer, presented her vision for the future global agenda. She argued for transforming the financial system to systematically price environmental and social externalities, internalize long-term risks, and direct capital toward sustainable solutions at necessary scale. Tennant discussed international initiatives and standard-setting bodies, particularly highlighting the UN Principles for Responsible Investment (which had attracted over $14 trillion in commitments by 2008) as a framework for institutionalizing sustainable investment globally. The chapter examined necessary policy reforms including mandatory ESG disclosure, fiduciary duty clarification, carbon pricing mechanisms, and financial market reforms to discourage short-termism.

She emphasized continued innovation in sustainable investment products, analytics, and performance measurement, and the importance of expanding beyond developed markets to emerging economies where sustainability challenges and capital needs were most acute. Tennant concluded with both hope and urgency, arguing sustainable investment needed to accelerate dramatically to avert catastrophic environmental and social outcomes.

Tessa and Steve left us too soon, but their concluding pieces stand as prime examples of their life’s work.  If we listen to them now, we can clearly see how taking up their suggested ideas would be a really good idea.

1. “From Fragmentation to Integration: Reimagining Education Systems in West Africa” (December 2025)   This most recent piece by Delali Cynthia Sossou, one of many excellent Harvard Extension School students we now are fortunate to teach, argues that West Africa’s education crisis—marked by severe learning poverty, teacher shortages, gender gaps, and inadequate infrastructure—requires a coordinated regional approach rather than fragmented national efforts. She proposes leveraging existing institutions like ECOWAS and UEMOA to implement comprehensive reforms including teacher professionalization programs, conditional cash transfers for vulnerable students (especially girls), climate-resilient school infrastructure, and digital learning hubs. The transformation would be financed through an innovative Regional SDG Education Bond repaid by a harmonized 1% education solidarity tax across member states, drawing on successful models like the EU’s SURE program and Benin’s pioneering SDG bond. Despite barriers including political fragmentation, fiscal volatility, and cultural resistance, Sossou contends that the region’s young demographic, growing sustainable finance interest, and digital transformation present a unique opportunity to convert West Africa’s population surge into a demographic dividend through systemic educational investment.

2. “Redesigning Conservation Finance in Micronesia” (May 2025) Mahina Cole’ (another NYU student from 2025) here proposes creating a community-led accelerator fund within the Micronesian Conservation Trust to address the region’s economic dependency while advancing conservation goals. The piece describes Micronesia’s challenges including heavy reliance on U.S. aid through COFA agreements, limited private sector development, and missed opportunities in the tuna industry where foreign fleets capture 90% of value despite fishing in Micronesian waters. Cole advocates for a hybrid fund providing grants, loans, mentorship, and technical support to local entrepreneurs, drawing inspiration from India’s Aavishkaar Group model. The proposal emphasizes grassroots innovation and local ownership as keys to sustainable development, moving beyond dependency-based aid toward empowering communities to lead their own economic transformation while protecting marine ecosystems.

3. “An Investigation: Solving Deforestation Due to Soybean Farming in Brazil” (February 2025) Ashley McKinnon (from our 2024 Brown class) investigates how Brazil’s soybean industry, valued at $53.2 billion with 240,000 farms, drives deforestation in the Amazon and Cerrado despite slowing rates. The paper focuses on Cargill, one of Brazil’s largest exporters with $160 billion in revenue, and their 2030 zero-deforestation commitment. McKinnon analyzes external pressures including Chinese import patterns, EU regulations requiring deforestation-free supply chains, and the Russia-Ukraine War’s impact on fertilizer costs. The author proposes three solutions for Cargill and other producers: expanding into existing cattle pastureland rather than clearing forests, implementing regenerative agricultural practices like the ancient Milpa system, and transitioning to insect farming as a more sustainable protein source. The paper argues these approaches could maintain productivity while dramatically reducing environmental impact.

4. “Addressing NIMBYism in Offshore Wind Development” (December 2024) Noah Hallward-Rough (another 2024 Brown student) tackles the “Not In My Back Yard” (NIMBY) opposition that hampers offshore wind development, particularly from wealthy coastal communities. The piece highlights offshore wind’s advantages including 18% higher energy output than onshore turbines, 24-hour generation capability, and minimal land use, producing enough power per turbine to supply 3,000 homes annually. Hallward-Rough proposes multi-pronged solutions including establishing Green Shipping Corridors with preferential treatment for eco-friendly vessels, creating Sustainable Shipping Incubators to support maritime technology startups, and launching interactive public engagement campaigns to build grassroots support. Drawing on the successful Block Island wind farm case study where energy prices dropped 44% and fishing actually improved around turbine structures, the author demonstrates that properly implemented offshore wind projects can deliver environmental and economic benefits while addressing community concerns through strategic incentives and transparent engagement.

5. “Ongoing Challenges and the Future of Voluntary Carbon Markets” (September 2024) Ethan Rosenstein from our 2024 NYU class provides arguably a seminal piece on the state of carbon markets.  He traces the voluntary carbon market from its origins in the 1990s through the Chicago Carbon Exchange’s rise and fall to today’s challenged marketplace. The paper then explains how the market valued at $2 billion in 2022 is expected to grow to $250 billion by 2050 yet faces significant credibility issues with prices dropping over 70% for some credits. Major concerns include greenwashing, double-counting, and controversy over REDD+ projects where 90% were found ineffective at reducing deforestation. Rosenstein examines existing frameworks like the CFTC’s proposed guidance and private registries like Verra, arguing they haven’t adequately addressed market integrity. The paper emphasizes that despite these challenges, voluntary carbon markets remain critical for bridging the $2 trillion investment gap in climate infrastructure, with 70% needing to come from private sources, making market reform essential for achieving Paris Agreement goals.

6. “Towards Carbon-Free Seas: Innovative Strategies for Scaling Eco-Friendly Ship Engines” (August 2024) Avin Im, a rising High School senior from our most recent Brown summer class, examines the maritime industry’s 1.06 gigaton annual CO2 emissions (3% of global total) and proposes scaling South Korean conglomerate Hanwha’s eco-friendly ship technologies as a solution. The piece details Hanwha’s development of the world’s first carbon-free gas carrier utilizing hydrogen fuel cells, energy storage systems, and ammonia crackers, alongside smart ship technologies that can reduce emissions by 45%. Im focuses on South Korea as a strategic testing ground given its position as the 21st highest per capita CO2 emitter and its heavy dependence on maritime shipping for 99.7% of trade. The author proposes three scaling strategies: establishing Green Shipping Corridors with preferential treatment for clean vessels, creating Sustainable Shipping Incubators to support maritime technology startups, and launching interactive public engagement campaigns. The paper acknowledges challenges including technological complexity, high financial investment requirements, and regulatory uncertainties while emphasizing the transformative potential of these innovations for global maritime decarbonization.

7. “Financing India’s Energy Transition” (August 2024) Ahana Kaura from NYU examines how India, the world’s third-largest emitter and third-largest economy, plans to meet its ambitious climate goals of 500 GW renewable capacity by 2030 and net-zero by 2070, requiring $160 billion annually. The paper details India’s advantages including an 85% reduction in solar costs between 2010-2020, strong government support through initiatives like the Production Linked Incentive scheme ($3.2 billion for solar manufacturing), and favorable conditions attracting sovereign wealth funds from ADIA, GIC, and CPP Investments. Kaura provides insights from industry stakeholders including ESG investors and commercial bankers and synthesizes perspectives from the Mercom India Renewables Summit covering advances in solar panel manufacturing, hybrid energy solutions, and green hydrogen production. The analysis identifies key risks including rising capital expenditures, regulatory uncertainties, and currency volatility, while highlighting innovative financing mechanisms like InvITs, green bonds, and Virtual Power Purchase Agreements as pathways to achieving India’s transition goals.

8. “Fighting Climate Change: A Case for Scope 4 Emissions” (January 2024) Amir Reda from our Harvard Extension School classes responds to arguments that regulation shouldn’t be the primary tool for addressing climate change, countering with evidence that regulation and breakthrough technology work symbiotically. Drawing on Michael Porter’s hypothesis that “properly constructed regulatory standards encourage companies to re-engineer their technology,” Reda traces how EPA vehicle emissions standards led to electric vehicle sales tripling and the Climate Action Plan drove over $4 billion in clean energy investment. The paper proposes extending climate disclosure regulations (California’s S.B. 253/261 and the SEC’s proposed rule) to include Scope 4 emissions—the amount of emissions avoided by a company’s products or activities—beginning in 2030. While Scopes 1, 2, and 3 measure direct and indirect emissions generated, Scope 4 would incentivize corporations to develop breakthrough technologies like carbon capture and storage by rewarding measurable emissions reductions. Reda addresses implementation challenges including measurement methodology and potential greenwashing risks, calling for the Partnership for Carbon Accounting Financials to create standardized reporting frameworks. The paper positions Scope 4 as the nexus between regulation and innovation that could drive the next wave of climate technology investment.

9. “Carbon Capture and Storage: How to Ensure its Role in the Energy Transition?” by Luis de la Torre (January 2024, but from Fall 2023 class) Luis de la Torre also from Harvard comprehensively examines Carbon Capture, Storage and Use (CCSU) as a geoengineering solution for climate change, noting that while 50 projects are operational globally, costs remain high at over $80/ton CO2 captured. The paper traces four major value chains including geological storage, enhanced oil recovery, feedstock production for chemistry through green hydrogen, and direct air capture. Despite technology readiness levels between 7-9 indicating commercial viability, major barriers include project cycles averaging 7 years and the challenge of scaling green hydrogen production to below $1.50/kg (currently around $2.90/kg compared to oil products at $0.017/MJ). The author identifies critical externalities including hydrogen leakage having 10 times the global warming potential of CO2, affecting troposphere chemistry and increasing methane lifetime. De la Torre proposes seven policy recommendations including increased R&D funding, international coordination for economies of scale, careful management of ultrapure water resources, and development of industrial hubs. The analysis concludes that CCSU could capture 4.6 GtCO2 annually after 2050, but requires 20 years of development to become commercially viable and assumes green electricity costs dropping below $20/MWh.

10. “What to do with wind turbine blades?” by Ben Jackson (December 2023) Ben Jackson from Brown thinks creatively about the entire life cycle of new technologies, addressing the emerging waste crisis from wind turbine blades, which have 20-year lifespans and are made from non-recyclable fiberglass and carbon fiber composites up to 354 feet long. While 96% of turbines by weight can be recycled, blades currently end up in landfills, with 400,000 tonnes expected to be decommissioned annually between 2029-2033, rising to 800,000 tonnes by 2050. Jackson proposes two primary repurposing solutions: affordable housing where blades serve as waterproof roofing for tiny homes addressing homelessness (with economic benefits of $42,500 saved per housed person annually in California), and parking garage sun shades to combat urban heat island effects by leveraging the blades’ white surfaces with high albedo. The paper examines emerging recycling technologies from Carbon Rivers (processing 50,000 metric tons annually) and Veolia (shredding blades for cement production, reducing CO2 emissions by 27%), but notes these can’t handle current volumes. Jackson highlights industry challenges including the Global Fiberglass Solutions lawsuit where GE paid $17 million to recycle 5,000 blades that were instead stockpiled, demonstrating recycling’s financial unviability. The analysis concludes that repurposing creates more environmental benefit than recycling by extending blade lifespan while generating social value, though recycling mature technologies should handle what can’t be repurposed.

11. “Financing the Transition: Green Bond Challenges and Opportunities” by Ludovica Indovino (May 2023) Ludovica Indovino from NYU analyses the green bond market, which reached $294 billion in sales in the first half of 2021 across 49 countries and 29 currencies. The paper traces green bonds from their 2007 debut with the European Investment Bank through their current role requiring an estimated $9.4 trillion to achieve net-zero emissions by 2050. Major challenges identified include lack of unanimous standards (with voluntary adherence to Green Bond Principles and Climate Bond Standards), greenwashing risks (with 71% of climate-ESG funds not aligned with Paris Agreement standards), and the controversial inclusion of nuclear and gas in EU Taxonomy. Indovino proposes solutions including tax incentives (tax credit bonds, direct subsidy bonds, tax-exempt bonds), boosting demand through mandates for pensions and sovereign wealth funds, and improving risk-return through guarantees and first-loss provisions. The paper highlights the “greenium” phenomenon where externally audited green bonds trade at premium spreads, and emphasizes that China’s alignment with global standards could drive the market to $90-100 billion in 2023. The analysis concludes that systematic regulation with rigorous standards is essential to combat greenwashing and unlock green bonds’ potential as the fixed-income market’s scale exceeds equity markets for mobilizing ESG capital.

12. “Supercharging Circular Mobility in China” by Fiona Chau (January 2023) Fiona Chau from NYU analyzes China’s transportation transformation as the world’s largest carbon emitter (27% of global total) with transport emissions rising from 80 to 850 MMT CO2 between 1980-2016. The paper examines three major initiatives: electric vehicles (China leads with 50% of 2018 global EV sales, targeting 80 million EVs by 2030 with generous subsidies and 12,000 charging stations), public transport expansion (1.4 trillion passenger-kilometers annually on the world’s largest railway system with 35,000 km of high-speed rail and 16,000 electrified buses in Shenzhen alone), and on-demand mobility (Didi with 900,000 EVs representing over half of global ride-hailing trips). Chau proposes a circular mobility framework featuring multimodal integration (inspired by Alipay Ant Forest’s 500 million users planting 100 million trees through gamified green incentives), zero emissions through freight optimization (potentially reducing vehicle emissions by 70%), and circular design enabling vehicle remanufacturing and EV battery second-life applications. Drawing on Ellen Macarthur Foundation projections, the paper estimates circular mobility could generate RMB 33.5 trillion in benefits by 2040 (87% in user cost savings, 13% in reduced negative externalities) while supporting China’s expected 400% mobility demand increase between 2015-2030 driven by urbanization and rising middle class.

13. “Investing in Flint’s Future: Environmental Justice and Health” by Melodie Wang (January 2023) Melodie Wang from NYU examines the Flint, Michigan water crisis (2014-2020) as a case study in environmental injustice, where cost-cutting measures pumped corrosive Flint River water through old pipes, contaminating drinking water with lead for over 100,000 residents. The paper contrasts two narratives: the “technical” view blaming faulty water treatment versus the “historical” view tracing crisis roots to 50 years of disinvestment, including 1950s white flight, 1980s-90s General Motors withdrawal, chronic underinvestment, and redlining dating to the 1930s. Wang details severe health impacts including zero-safe lead exposure levels causing reproductive problems in adults and developmental/learning challenges in children, alongside mental health consequences of chronic stress, reduced self-efficacy, and generational trauma in a majority-Black community where one in four African Americans live in high-poverty neighborhoods. The author proposes multi-sectoral solutions: Biden’s $2 trillion American Jobs Plan addressing lead pipes (though facing implementation barriers), venture capital support for local businesses like The Local Grocer addressing food deserts through firms like Conscious Venture Lab, impact investing via organizations like Common Future focusing on self-determination and BIPOC voices, environmental impact bonds (citing Washington D.C.’s $25 million EIB with Quantified Ventures), and BlackRock-style shareholder activism leveraging $8 trillion AUM for triple-bottom-line outcomes. The analysis emphasizes that clean water alone doesn’t rebuild trust or address irreversible damage, calling for environmental justice centered in every decision with community voices amplified and self-determination prioritized.

14. “Guilty Pleasure: Vanishing West African Rainforests and Chocolate” by Harry Wu (January 2023) Harry Wu from NYU examines the cocoa crisis where Ghana and Côte d’Ivoire provide 70% of world supply for 1.4 million farmers, yet between 2000-2014 global cocoa production increased 32% while land-use footprint grew 37%, with Ghana seeing 60% increase in primary forest loss (2017-2018), the world’s highest rate. The paper exposes a broken value chain where farmers earn only 3% of chocolate sale profits while “middlemen” (local traders, cooperatives, distributors) control most non-production value, creating exploitation cycles forcing farmers into illegal logging in protected areas. Wu traces how bulk Forastero variety (85% of production) requires direct sunlight and spacing unlike traditional shade-growing, degrading soil and requiring more pesticides, lowering yields and farmer income. The analysis criticizes ineffective corporate commitments from companies like Cargill, Mars, and Nestle who pledged ending deforestation in 2017 yet continue sourcing “dirty beans,” with only 5% sustainability-marketed chocolate penetration and 40% of Côte d’Ivoire cocoa falling outside commitments. Wu proposes transformative solutions: vertical integration through direct manufacturing investments in West Africa to eliminate exploitative “middlemen” layers, agroforestry partnerships with local cooperatives implementing shade-growing and multi-cropping to increase yields and diversify income, expansion into organic chocolate (currently 0.6% of production despite 2.38% market growth), and labor training programs to mitigate risks from political friction and industry disruption affecting unskilled workers.

15. “Brainstorming an Emissions Reduction Incentive Program” by Derek Wacks (December 2022) Derek Wacks from Brown proposes a novel capital gains tax reduction program to incentivize corporate emissions reductions, noting that while 71% of Millennials prioritize climate action, only 57% of Boomers (who are 9 times wealthier) share this concern, creating a generational incentive misalignment. The proposal offers long-term capital gains tax reductions proportional to company emissions reductions, with maximum 3% reduction for zero-emissions companies, calculated against industry-specific carbon budgets derived from IPCC’s 420 gigaton remaining budget. Using United Airlines as example (5% aviation sector share of 21Gt budget, market cap-weighted to 0.995Gt allocation, yielding 35.5 million metric tons annual budget through 2050), Wacks demonstrates how third-party audited companies qualifying for the program would see shareholders’ capital gains taxes drop from 15% to 12-15% based on emissions performance. The analysis estimates realistic implementation (50% of capital gains from stocks, 20% company enrollment, 75% average emissions reduction) would cost federal government $2.2B annually ($22B over ten years, 5.64% of Inflation Reduction Act’s $390B climate package), offsetting 44 million metric tons CO2e annually—more than United Airlines’ entire 34M metric ton footprint. Wacks addresses concerns including potential conflicts with board fiduciary duties, penalization of inherently low-emitting companies unable to demonstrate further reductions, and federal funding loss, arguing government-sanctioned shareholder activism leveraging Americans’ 58% stock ownership democratizes climate action while achieving emissions reductions without politically difficult carbon taxes that face oil and gas lobbying resistance.

16. “On the Relevance of Supply Chains” by Ethan Tan (December 2022) Ethan Tan from NYU argues that supply chain transparency is essential for corporate accountability, noting that while consumers instinctively wouldn’t accept candy from strangers, they unknowingly consume products with opaque supply chains. The paper examines two major issues: environmental degradation (Amazon deforestation climbing 22% with 5,100 square miles destroyed for beef/palm oil, turning regions from carbon sinks to net emitters with Brazilian Amazon releasing 3.6 billion more tons CO2 than absorbed over 20 years) and social injustice (wealth concentration where top 1% rose from 30% to 39% of wealth 1989-2016 while bottom 90% fell from 33% to 23%). Tan details corporate scandals including Apple’s Foxconn child labor (knowingly used 2013-2016), Nestle/Mars/Hershey unable to trace over half their cocoa sources despite 20-year pledges to eliminate child labor, and JBS’s links to illegal Amazon deforestation through indirect suppliers. The analysis critiques Friedman’s shareholder primacy doctrine enabling exploitation while proposing solutions requiring upstream developing nations to implement joint policies attaching monetary values to environmental/human capital, creating competitive advantages for transparent businesses. Tan emphasizes the “85-15 rule” where 85% of carbon emissions stem from fossil fuel use versus production, arguing Scope 3 reporting is essential despite SEC debate, as supply chains reveal hidden challenges from carbon to modern slavery in fast fashion and seafood industries where public and NGO messaging fails to resonate effectively.

17. “Investing in Smart Cities: Scaling Financial Innovation in Latin America” by Gabriela Gutierrez Cadavid (December 2022) Gabriela Gutierrez Cadavid from NYU analyzes smart city financing for Latin America where governments spend $2.5 trillion annually on infrastructure yet developing countries need additional $1.3 trillion that government budgets alone cannot meet, with 90% of urban expansion occurring in developing nations. The paper examines Latin America’s unique challenges: urban populations tripling from 109 to 517 million (1960-2018), under-45% household access to basic services, 70% favela families lacking adequate water, and historical economic crises (Argentina’s 2001 $93 billion default, Ecuador’s 2000 dollarization) creating credit mistrust preventing traditional bond financing. Gutierrez Cadavid proposes innovative mechanisms including vendor financing (Cisco’s $1 billion CIFAP program offering “as-a-service” models), revolving innovation funds (Global Environment Facility), Public-Private Partnerships (GE’s $30 million San Diego LED upgrade saving $2.5 million annually), Land-Value Capture/Tax-Increment Financing monetizing future investment value, mini-bonds (Denver’s $12 million cultural facilities bonds selling out in one hour), and performance-based contracting de-risking investments. The analysis showcases successful implementations: São Paulo achieving 100% urban water access and 99.8% 4G coverage through telecom partnerships, Medellín’s integrated BRT/cable car/metro system with bike-sharing via EnCicla, and Santiago’s emergency coordination reducing wait times 30% since 2014. The paper emphasizes IDB’s Emerging and Sustainable Cities initiative working with 77 cities, arguing Latin America needs dedicated Smart Cities PMOs with authority to coordinate departments and navigate financial/political obstacles for economically, environmentally, and socially sustainable urban development beyond capital cities to medium and small municipalities.

(And yes, we did just invade Venezuela and capture Nicholas Maduro as I write this.)

18. “Applications of the Global Carbon Reward to Natural Capital” by Mia Mascone (December 2022) Mia Mascone, all-time great lacrosse player at Brown, analyzes Dr. Delton Chen’s Global Carbon Reward (GCR) framework featured in Kim Stanley Robinson’s “Ministry For The Future” as a solution to the $3.5-4.5 trillion USD annual investment gap needed to meet UN Sustainable Development Goals (requiring 3-6x current funding). The paper critiques current Voluntary Carbon Markets (VCM) which have contributed to no measurable greenhouse gas reduction since the 1997 Kyoto Protocol due to non-transparency, corruption, poor pricing, mispricing in emerging markets enabling greenwashing, and false reporting. Mascone details how GCR would function as an international carbon currency (XCC) managed by a Carbon Exchange Authority coordinating with central banks, valuing one unit per ton CO2 mitigated for 100 years, with performance-based grants that are flexible and scalable. Unlike subsidies (funded through fiscal spending) or offsets (signaling ownership), GCR provides upfront capital for long-term infrastructure projects, creates standardized transparency, and organically channels mitigation costs into foreign exchange markets spreading burden across nations. The analysis proposes extending GCR principles to water (addressing 1.7 trillion gallons wasted annually while 1 in 10 lack access, requiring innovation/conservation funding and the protection of biodiversity (needing $150-440 billion annually versus current $52 billion, protecting $44 trillion economic value through ecosystem preservation metrics considering use and non-use values).

Mascone argues that fragmented market approaches have proven too small or ineffective, requiring an international governing body with monetary power to correct global economic system flaws perpetuating environmental challenges and bridge the gap between recognized necessity and actual action.

In addition, we had a submission from Ana Paul Reismann and our new case study on renewable energy project finance, which follow below, further extending our system of solutions up to the present time.

Our second book was specifically inspired by a lunch on Brick Lane between Nick Robins and Rory Sullivan, the idea being to move from what’s happening and necessary as described in our first book, encouraging more positive strategies, towards what specifically are those strategies as they were evolving at the time.  Sullivan’s chapter on his work at Insight Investment Management remains one of the better case studies of ESG Integration we’ve seen in the literature.

Leading thinkers such as Paul Hawken and Dan Esty provided specific contributions and insights, much of this thinking remains salient, and it is interesting to see how these fund managers have evolved, thrived or not and why. 

As with any new discipline, whether automobiles, railroads or computers, and now AI, there will be many attempts to create the next big thing, and most such attempts will fail, with a few emerging in the end as leaders. 

We believe we are still in the somewhat early days of seeing true leaders on a global scale emerge, where sustainability is deeply embedded, especially by the larger institutions.

Part I: The Sustainability Imperative

Chapter 1: The Sustainability Imperative David Lubin and Dan Esty here established sustainability as a critical “business megatrend” akin to the quality and IT revolutions of previous decades. The authors argued that companies must move beyond tactical environmental compliance to strategic execution. They outlined a framework for value creation where market leaders evolve through stages: reducing costs/risks, redesigning processes, driving revenue growth, and finally differentiating their brand and business model

Part II: Global Sustainable Funds (Case Studies)

Chapter 2: Jupiter Ecology Mark Trevitt detailed the history and investment process of the Jupiter Ecology Fund, one of the earliest environmental funds, actually supported originally by the same Tessa Tennant. The chapter outlines the fund’s investment criteria, which parses out companies with negative environmental impacts while seeking those with positive solutions. It covers the fund’s governance, its focus on long-term assessment, and its engagement strategy, illustrating how a dedicated environmental fund can construct a portfolio that balances strict ecological criteria with financial performance. This fund was actually the first I personally ever came across back around 2000, intrigued by the idea of a portfolio investing in climate solutions as a positive activity, which went on to perform well, hence this chapter’s placement at the start. Jupiter Ecology continues as a viable fund to this day, and has had very few people managing the fund, with somewhat consistent holdings as well.

Chapter 3: A Predictor of Performance Paul Hawken, a renowned environmentalist and author, argued that sustainability is now a leading indicator of management quality and future financial performance. He discussed the concept of Natural Capitalism (also the subject of one of his very popular books) and how resource efficiency can drive profitability. The chapter suggested that companies proactively addressing environmental constraints are likely to be the “companies of the future,” offering a superior risk-adjusted return profile compared to those ignoring these material realities.

Chapter 4: Highwater Global Alexis van Gelder, Dean Martucci, and Erika Kimball presented the strategy of Highwater Global, where Hawken acted as an advisor, focusing on global sustainability themes. The chapter contrasted their approach with traditional negative screening, advocating instead for a positive selection process that identifies investment opportunities in sectors solving global challenges. It details how they map global trends—such as water scarcity and clean energy—to specific investment vehicles. 

Unfortunately, this fund struggled during the financial crisis and did not thrive subsequently, with Hawken having departed long before, but these two chapters did a nice job capturing the thinking of the well regarded Hawken, whose previous seminal 2004 article on socially responsible investing helped clarify the need for sustainable portfolios to not look just like regular mutual funds from a holdings perspective to be truly effective.

Chapter 5: Further Context Here we established ESGFQ, where F represents the business case, and Q the quality of management, distinct and separate from G, the more technical measures of corporate governance.  A better frame than just ESG, ESGFQ presents as a 2×5 of risks and opportunities for companies and investors to manage for alike.

The book then went on to analyze current fund managers and their practices at the time.

Chapter 6: Sustainable Asset Management (SAM) Tom Murtha and Ashley Hamilton explored the origins and methodology of Sustainable Asset Management (SAM), the firm then behind the Dow Jones Sustainability Indexes. They detailed SAM’s Corporate Sustainability Assessment, a methodology used to quantify intangible sustainability factors.

Chapter 7: Domini and BP Colm Fay discussed Domini Social Investments, a pioneer in socially responsible investing (SRI). The chapter used the complex case of BP (British Petroleum) to illustrate Domini’s Key Performance Indicator (KPI) alignment model. It examined the tension between a company’s stated commitment to sustainability and its actual business model and safety record, highlighting the challenges investors face when evaluating large corporations with mixed environmental records.

This chapter was placed intentionally right after the SAM chapter, as SAM had BP as a main holding before the Gulf of Mexico crisis, while Domini managed to avoid owning that company, which sank 50% on the news of that major oil spill.

Domini continues as an independent fund manager but has not been more innovative in recent years, while SAM’s work is now part of Robeco, often voted as a leading sustainable investor and based in the Netherlands, where we served on their sustainable investing panel in recent times as they refined their strategies.

Chapter 8: The Story of Calvert Sam Brownell and Sara Herald chronicled the history of Calvert Investments, a major player in the US SRI market. They detailed Calvert’s specific methodologies, including Signature (legacy classic SRI, screening out the worst companies from an ESG perspective, Solution (water and clean energy strategies), and their proprietary SAGE (Sustainability Assessment, Governance, and Engagement) platform, focused primarily on engagement. The chapter emphasized Calvert’s dual focus on rigorous financial analysis and aggressive shareholder advocacy to attempt to drive corporate change.

Once the largest socially responsible investor in the US, and one of the very first, the company was ultimately acquired and is now part of Morgan Stanley, mostly just leveraging the brand in recent years.

Chapter 9: Winslow Amrita Kumar profiled the Winslow Green Growth Fund’s philosophy, predicated on the belief that environmentally effective companies are more efficient and profitable. The chapter outlines their Green Screen and Green Tilt processes, showing how they identified companies providing solutions to environmental problems.

Winslow also struggled during the financial crisis, and their newer Large Cap strategy was acquired by Brown Advisory, where the same people, Karina Funk and David Powell helped grow that business to manage tens of billions of dollars using a positive sustainability focus, joining the ranks of globally leading fund managers in the process.

Chapter 10: Portfolio 21 Ashley Hamilton outlined the strategy of Portfolio 21, a fund grounded in the scientific principles of The Natural Step.  The chapter outlined the fund’s theory of change, positing that ecological limits will inevitably reshape the economy. The firm searched for forward-looking companies adapting to biophysical constraints, using this lens to attempt to manage for risk and identify resilience in a resource-constrained world.  Portfolio 21 was ultimately acquired by Trillium.

Chapter 11: Northwest and Ethical Investments Dana Krechowicz discussed the evolution of the Canadian firm NEI Investments. The chapter highlighted their transition from using simple screens to a more sophisticated corporate engagement program, attempting to use engagement as a primary tool for risk management and value creation. 

The company continues to work in this capacity to this day.

Chapter 12: Looking for a Green Century Fernando Viana’s elegant chapter contrasted passive indexed management with active portfolio management through the lens of Green Century Funds. The chapter discussed the Green Century Equity Fund, which tracks a sustainability index, versus active strategies. It also highlighted the role of shareholder advocacy, specifically filing resolutions on issues like carbon footprints and safer packaging (e.g., BPA), demonstrating how small funds can try to leverage their assets for significant impact.

Another fund that continues to work in this regard today.

Chapter 13: Pictet Water Jenna Manheimer and Nancy Degnan (who originally started me teaching at Columbia University back in 2009) presented the investment case for the water sector, focusing on the Pictet Water Fund, then the largest sustainability fund in Europe.

 The chapter argued that water scarcity is a defining global challenge that creates specific investment opportunities in water infrastructure, treatment, and distribution. It details the metrics and methodology Pictet uses to identify companies best positioned to capitalize on the “blue gold” rush.

This fund also continues on this work to this day, arguably well positioned to capitalize on this ever growing area of concern.

Chapter 14: Inflection Point Capital Management This chapter focused on Strategically Aware Investing, a proprietary approach developed by Inflection Point Capital Management (founded by Matthew Kiernan, also the founder of Innovest which was acquired during the Global Financial Crisis by MSCI). Inflection Point believed that traditional financial analysis misses critical risks and opportunities related to sustainability. The summary outlines how the firm integrates “strategic awareness,” a mix of innovation, adaptability, and sustainability capabilities, into a quantitative financial model to generate alpha (excess returns).

Though this fund no longer exists, much as is true of Hawken’s methodology, we are glad to have captured these useful examples for both posterity and future consideration.

Chapter 15: Environmental Metrics James Salo from Trucost, where I also worked at the time, discussed the critical role of data in measuring environmental performance. The chapter delved into the complexities of carbon foot-printing and supply chain analysis.

Part III: Analysis and Metrics

Chapter 16: Crawford Chemicals This chapter explores the practical dilemmas a company faces regarding carbon permits, the European Union Emissions Trading Scheme (EU ETS) and the internal cost of carbon.

Chapter 17: Using Statistical Tools This chapter focuses on the quantitative methods that can be used to analyze the risk and return of sustainable portfolios.

Chapter 18: Barriers to Sustainable Investing This chapter identified the structural and psychological barriers preventing the widespread adoption of sustainable investing, discussing misconceptions about lower returns, short-termism in financial markets, and the lack of standardized data. This chapter by Steve Viederman stands as a companion, follow up piece to his chapter in our first book calling for systemic changes in fiduciary definitions and incentive structures.

Chapter 19: The Silent “S” in ESG This chapter, by Steve’s son Dan Viederman, a leader on labor considerations, addressed the social component of ESG, often overshadowed by Environmental and Governance consideration.  The chapter argued for better metrics to help quantify social capital and licenses to operate, asserting that the “Silent S” is a sleeping giant of financial risk.

Chapter 20: Sustainable Investing: A Ten-Year Perspective Nancy Degnan provided a retrospective and prospective view of the field. She discussed the shift from niche green investing to a broader understanding of climate change mitigation and adaptation.

The next few chapters aimed to describe firms and financial institutions fully embedding sustainability considerations in all of their work, something that at the time was very hard to find, though many more have followed suit.

Chapter 21: Bloomberg Curtis Ravenel detailed Bloomberg’s entry into the ESG data market, describing how the financial data giant began integrating ESG metrics onto its ubiquitous terminals, thereby legitimizing sustainability data for mainstream traders and analysts. It discussed the challenges of data transparency and standardization, and Bloomberg’s role in increasing the visibility of non-financial performance indicators. 

Bloomberg went on to be a major funder and supporter of SASB.

Chapter 22: Aviva This chapter outlined the sustainable investment strategy of Aviva Investors, a large global insurer and asset manager, detailing their mainstreaming approach, especially their focus on stewardship and voting, arguing that large institutional investors have a duty to correct market failures through active ownership.

Chapter 23: Generation Investment Management This chapter profiled the investment philosophy of Generation Investment Management, co-founded by Al Gore and David Blood, and explained their concept of “Sustainable Capitalism,” which combined consideration of long-term sustainability trends with fundamental financial analysis.

Of course, the previous chapter on Generation highlights their work today.  Seek out the HBS case study on Generation for a look at their specific investment methodology for choosing stocks, which is still valid today.

Chapter 24: Insight Investment Rory Sullivan reflected on the lessons learned from Insight Investment’s work in integrating sustainability.

Along with the HBS Case on Generation, this chapter is one of the best in the literature, demonstrating what a thoughtful, specific ESG integration methodology can look like. 

Part IV: Regional Perspectives and Asset Classes

Chapter 25: Shaping Chinese Energy Efficiency Norms This chapter examined the regulatory and market landscape in China, focused on energy efficiency. It detailed the Chinese government’s aggressive policy targets for reducing energy intensity and how these policies translate into industrial opportunities. This was the first of two chapters on Asia in our books from Jason Mitchell, still a thought leader with the Man Group based in London.

Chapter 26: Ethical Asia Simon Powell, then with CLSA, explored the state of sustainability in Asia at the time. The chapter discussed the unique cultural and regulatory context of Asian markets, noting that while reporting was then on the rise, it often lagged Western standards. He further focused on issues such as labor standards in supply chains and environmental pollution, and we have Simon’s forward looking perspectives in this book to understand his forward looking expectations today.

Chapter 27: Mitigating ESG Risk in Asian Portfolios Lucy Carmody and Laura Dodge addressed the specific challenges of sustainable investing in Asian markets. The chapter outlined strategies for ESG integration in what was a data-poor environment, such as relying on alternative information sources and direct company engagement, something Mark Mobius highlighted for us as well in subsequent interviews and classes.

Chapter 28: Sustainable Investing and Canada This chapter provided a regional focus on Canada, often perceived to be a resource-heavy economy.  We have found Canada to often be, at the same time, a thought leader on sustainability, see Geoff Moore’s thinking in this book as one of many useful examples.

Chapter 29: High-Risk Areas, Resources, and Sustainability N.A.J. Taylor explored the ethical and financial complexities of investing in “high-risk areas,” such as conflict zones or companies perceived to have with weak governance, with a specific focus on Australia.

Chapter 30: Sustainable Investing in Africa’s Frontier Markets This chapter highlights investment opportunities and sustainability challenges in Africa.

Chapter 31: Evolution of ESG in India This chapter examined the burgeoning ESG landscape in India, highlighting tensions between rapid economic growth and environmental degradation, outlining how investors were beginning to price in risks related to water, energy, and social inequality in the Indian market.

Chapter 32: Indexes Graham Sinclair provided a number of chapters including this comprehensive overview of sustainability indexes (e.g., DJSI, FTSE4Good).

Chapter 33: How Asset Owners Can Achieve a Sustainable Investing Framework This chapter offered a guide for asset owners (pension funds, endowments, foundations) on implementing a sustainable investment strategy. More on how this as evolved into Climate Action Plans elsewhere in this book of course.

Chapter 34: On Performance This chapter tackled the central question of the book: Does sustainable investing outperform? It reviewed the academic literature and performance data of various ESG focused funds and related metastudies.  As we continue to research and point out, once “negative” screens were parsed out, “positive” strategies that focused on innovation and efficiency tended to match or outperform traditional benchmarks, debunking the myth that sustainability requires financial sacrifice.

Chapter 35: Private Equity This chapter explores the role of Private Equity (PE) in sustainable investing. Unlike public markets, PE owners have direct control over management, allowing for deep operational changes.

Chapter 36: Blue Wolf: Implications for Private Equity Authored by Adam Blumenthal and Michael Musuraca, this chapter provided a case study of Blue Wolf Capital Partners, a private equity firm that specializes in complex situations often involving labor unions and government entities. The authors illustrated how private equity can go beyond environmental metrics to include deep social engagement. They detailed their strategy of working with organized labor to solve operational problems in distressed companies, arguing that constructive engagement with employees and unions is a source of alpha rather than just a cost. The last of the 15 case studies in the book, this was certainly one of the more interesting.

Chapter 37: New Business Models, Measurement, and Methodologies Howard Brown explored the necessity of shifting away from traditional 20th-century business models that prioritized “resources and products” toward new models focused on “wealth creation” in a broader sense. The chapter argued that as resource constraints tighten, the definition of economic value must evolve to account for efficiency and natural capital. Brown discussed the disconnect between current financial accounting (which often ignores externalities) and the physical reality of resource depletion. He outlined a vision for new methodologies that allow investors to measure and reward companies that are truly “wealth creating” by decoupling growth from environmental degradation.

Chapter 38: Terminology and Intention Lloyd Kurtz, a prominent figure in the field, in fact formerly the first ever ESG researcher at then KLD, addressed the persistent confusion surrounding the language of the industry. He analyzed the “alphabet soup” of terms—SRI, ESG, Responsible Investing, Sustainable Investing—and argued that the lack of standardized terminology hindered the industry’s growth and credibility. Beyond just definitions, Kurtz emphasized the importance of intention. He posited that for sustainable investing to be effective, it is not enough to simply tick boxes or run screens; investors must have a clear, intentional strategy to drive change or align with specific values. The chapter served as a critical reflection on the maturity of the field and the need for clarity to win over mainstream skeptics.

We couldn’t agree more with Lloyd on the concept of intentionality and how this still needs to be maximized more generally for sustainable investment to become truly effective.  Now imagine this cutting across those who are primarily focused on climate and impact, ensuring there are enough good jobs in the process.

Our third book was an attempt to synthesize our thinking at the time, as my own work was starting to become more independent, and was also a response to the rise of Kindle and other online book readers, then presumed to be the future of reading but instead became just one more format for absorbing content.

The book’s core argument was an extension of our previous writings holding that environmental, social, and governance considerations were already financially material because they shape long-term economic performance, risk, and capital allocation outcomes. We traced how sustainable investing emerged from early ethical screening into a more sophisticated set of tools—ESG integration, engagement, thematic investing, and impact strategies—designed to improve decision-making and align capital markets with long-term value creation. We challenged the notion of a false trade-off between sustainability and returns, highlighted the growing evidence base linking sustainability performance to risk mitigation and competitive advantage, and emphasized the need for better data, clearer objectives, and disciplined implementation.

Ultimately, we argued, much as Steve Viederman’s chapter described in our first book, that sustainable investing is a practical response to structural market failures, short-termism, and unpriced externalities, and that investors who ignore sustainability do so at increasing financial and fiduciary risk.

The book’s highlight was the new ownership section, tapping into my second career, and documenting how capital markets had already become highly concentrated in the hands of institutional investors, in fact well before the early 2010s.

We noted that institutional investors owned a clear majority of listed equities in developed markets, on the order of 60–70 percent in the United States for example, with pension funds, insurers, sovereign wealth funds, and large fund managers dominating ownership.

The largest 100 asset owners collectively controlled roughly one-third of global investable capital, giving a relatively small group of institutions effective exposure to the entire economy. The chapter also pointed to the rapid growth of index strategies, which by that period already accounted for roughly a third of equity assets in major markets (now even higher), limiting investors’ ability to exit systemic risks through portfolio reallocation alone.

Combined with long-dated liabilities stretching decades into the future, these statistical realities underpinned our conclusion: that large asset owners cannot diversify away from economy-wide sustainability failures and therefore have a rational financial incentive—and fiduciary justification—to fully embed sustainability considerations into their overall strategy.

Fast forward to 2016, and quite a few things were unfolding.  I was invited to give a keynote in New York to a large gathering of investment institution CEOs by the Principles for Responsible Investment (PRI), and there was large agreement that morning that they could implement sustainability strategies at their firms.  Prior to this, few investment institutions headquartered in New York focused on sustainability, it was hard to find anyone employed on the subject at these firms, but that all began to change.

We were also privileged to begin teaching at Yale in 2014, and were introduced by a student there, Gabe Rissman to a now mutual friend and colleague, Sophie Purdom, both undergraduate students at the time.  The power of students to rise up and make things happen can be exemplified by Gabe, Sophie and many others we’ve come to know through our teaching.

Gabe was part of Dwight Hall, the community focused entity at Yale, and we had the opportunity to teach a class to the Dwight Hall students in the Fall of 2016 which remains a highlight of my teaching, even if it was a bit traumatic to have the class start before the presidential election that year, and end just after.

Sophie and I combined forces to teach an amazing class earlier that year at Brown, which informed and inspired my teaching for many years to come, and we also collaborated on this next book, which captured the work we had done as the lead consultant for the PRI’s Climate Change Asset Owner working group in 2015 leading up the Paris Agreement, and allowed us to suggest what further progress across the field was happening and what more was necessary, especially encouraging the rise of the dual paradigm of sustainability and financial outcomes.

Part I: How

Chapter 1: The 7 Tribes of Sustainable Investing Here we introduced a foundational taxonomy to clear up confusion in the field regarding terminology, in effect picking up from Lloyd Kurtz’s last chapter in our previous full book.

We categorized investors into seven distinct “tribes” based on their motivation and methodology:

-Values First (ethical/religious screening),

-Value First (financial outperformance as a priority),

-Impact Investing (seeking intentional positive outcomes, usually social and through private investment),

-Thematic (investing in trends such as water or clean energy, the most important way to scale renewable energy, see the Case Study on Shepherds Flat),

-Engagement/Advocacy (shareholder activism),

-Integration (embedding ESG into standard financial analysis) and, perhaps my personal favorite of all,

-Minimum Standards (as per the chapter in this book).

This seven tribe perspective argues to this day that sustainable investing (or call it ESG investing if you must) is not a monolith but a spectrum of distinct strategies that differ greatly from one another and that these must be analyzed separately to understand potential effectiveness and scalability.

Chapter 2: From Far-fetched Theory to Best Practice Sophie Purdom here detailed the student-led movement at Brown University that created a sustainable investment fund with the help of our 2016 class. The chapter serves as a case study in institutional change, chronicling the tension between student activists demanding fossil fuel divestment and a university administration focused on endowment returns. It describes the eventual creation of the Brown University Sustainable Investment Fund (BUSIF), illustrating how persistent stakeholder pressure can force even conservative institutions to innovate.

Chapter 3: Impact Investing Thomas Walker, Stéfanie Kibsey, and Stephanie Lee provided an overview of impact investing, which was first emerging at the time.

Chapter 4: How Paris Became the Capital of Climate Finance Nick Robins returned here to analyze the historic success of the 2015 COP21 Paris climate talks. He argued that Paris succeeded where Copenhagen failed because it mobilized the financial sector alongside diplomats and called for more cities as ecosystems of sustainable finance, work which continues as part of the NGFS (the Network for Greening the Financial System), including attempts to build collaboration across central banks.

Chapter 5: The Value of Everything Here we shared our first attempt to estimate the total value of global tradeable assets (approximately $450 trillion at the time), updated now in this book.

Part II: Systems & Systemic Solutions

Chapter 6: Thinking in Systems Drawing on the work of Donella Meadows, we argued that investors must adopt and better understand systems and how they operate. A bit of a microcosm of Meadows classic posthumous book Thinking in Systems, one struggles to think of a more important book everyone, especially financial professionals, should ensure that they have read.

Chapter 7: On Reducing Emissions & Developing a Climate Change Strategy This chapter provided our practical framework for asset owners to manage climate risk developed for that PRI working group. Moving beyond simple carbon footprinting, this work served as something of a “how-to” guide for pension funds to align their portfolios with a climate affected future, work which has evolved into the Climate Action Plans featured in this book.

Chapter 8: Why Divestment is the Outcome of a Thoughtful Investment Process Here we attempted to reframe the controversial divestment debate. Instead of viewing divestment as a purely moral or political act (which financial professionals often reject), we argued for logical financial outcome based on rigorous risk analysis. If investors truly account for the risk of stranded assets and establish minimum standards, which we have focused on since our recommendation to NYS Common, they will naturally reduce exposure to fossil fuel, considered better than divestment by Bevis Longstreth, also a member of that same Decarbonization Advisory Panel for the State of New York.

Chapter 9: The Data Challenges Which Remain Dan Esty and Todd Cort explored the “wild west” of ESG data. They criticized the lack of standardization, noting that different rating agencies often give the same company wildly different scores, a finding which only became more frequent in subsequent years.

Chapter 10: Scaling the Sustainable Trillion This chapter contrasted “Top Down” strategies (large asset allocation shifts) with “Bottom Up” stock picking, featuring three specific practitioner case studies on Terra Alpha, BlueSky and Mirova.

Part III: The Next Frontier

Chapter 11: The Main Segments of Global Commerce This chapter reviewed existing sustainability opportunities by sector and asset class:

–11a Renewables: Winston and Jules Kortenhorst analyzed the transition from fossil fuels to solar/wind, focusing on the falling cost curves that make renewables the cheapest form of new energy.

-11b Driverless Cars: Mimi Reichenbach explored the investment implications of autonomous mobility, predicting a shift from “car ownership” to “transportation as a service.”

-11c Industrial Ecology: Lillian Childress examined circular economy principles in manufacturing.

-11d Real Estate: Christopher Wright of Norges Bank discussed green buildings, arguing that energy efficiency had become a critical driver of property valuation.

-11e Infrastructure: Helene Winch highlighted the massive funding gap for low-carbon infrastructure.

-11f Fixed Income: Ali Edelstein explored the booming Green Bond market.

-11g Climate Smart Landscapes: Gabriel Thoumi et al. discussed investing in land use, forestry, and agriculture to sequester carbon.

Chapter 12: Regional Differences As we did in the Evolutions book, the next few sections examined how sustainable investing was manifesting differently across the globe:

–12a China: Gabriel Thoumi and John Waugh discussed China’s “Green Finance” revolution, driven by state mandates to curb pollution, which was only going to rapidly accelerate to this day, creating a competitive advantage for the country.

–12b India: Emily Rutland analyzed India’s dual challenge of expanding energy access while leapfrogging to renewables.

–12c State-Owned Enterprises (SOEs): Morgan Smiley explored the unique leverage of SOEs in driving sustainability in emerging markets, something which is indeed accelerating in China

–12d Japan: Jason Mitchell here discussed the “Abenomics” corporate governance reforms (the Stewardship Code) which forced insular Japanese companies to open for ESG scrutiny, and which arguably led to better financial performance.

Chapter 13: Fiduciary Duty Rory Sullivan, Will Martindale, and Elodie Feller summarized the findings of their Fiduciary Duty in the 21st Century report for PRI. They definitively debunked the myth that fiduciary duty prevents ESG integration. Instead, they argued the opposite: failing to consider long-term ESG risks is a breach of fiduciary duty, as it exposes beneficiaries to foreseeable harm.

Chapter 14: The Risk Management Opportunity As discussed in the earlier Risk chapter, this was our first attempt at unifying categories of scientific and financial risk.

Chapter 15: Shareholder Engagement & Active Ownership This chapter provided examples of how investors can use shareholder resolutions and proxy voting to force companies to change behavior.

– 15a (ExxonMobil Case): A case study by the Yale Dwight Hall SRI Fund on filing a resolution demanding Exxon disclose its climate risks, illustrating how even small shareholders can leverage the proxy process to challenge giants.

Part IV: Emerging New Paradigms

Chapter 16: Emerging New Paradigms & Value Drivers Here we revisited the importance of ensuring value creation was measured by investors and data providers.

– 16a Value Drivers: David Lubin reintroduces our Value Driver Model, which connects sustainability strategies directly to financial metrics: revenue growth (from green products), cost reduction (from efficiency), and risk mitigation.

Chapter 17: New Business Models: Conscious Capitalism Jeff Cherry explored Conscious Capitalism and the “stakeholder model.” He argued that companies with a “higher purpose” beyond profit tend to attract better talent, have more loyal customers, and ultimately deliver superior long-term returns. Suggested a frame of ESC rather than ESG, Cherry sees the E representing employees and how they are treated, S has suppliers and how they are treated and C for customers, the treatment of which will determine how sticky the revenue of a business can be or become. He also detailed his work of the Conscious Venture Lab in accelerating startups that embed these principles, work of his which continues across the United States, and especially in Baltimore.

Chapter 18: Sharia & Shared Ownership Mujtaba Wani explored the deep alignment between Islamic Finance (Sharia) and sustainable investing. His spirited class presentation in 2014 in then new Evans Hall at Yale remains in mind as a great and important moment.  Mujtaba helps clarify that fixed income was taboo long before Islam, as the thinking was if you believed in a project, you wouldn’t just lend money, you would also want to share in the ownership.  The chapter argues that Islamic finance represents a massive, largely untapped pool of capital that is naturally predisposed to ESG principles.

Chapter 19: Gender Diversity Ella Warshauer presented data showing that companies with diverse boards and leadership teams statistically outperform their peers. The chapter argued that gender diversity is not just a social justice issue but a proxy for cognitive diversity and good governance. 

Chapter 20: The Future of Innovation Will Martindale, Sagarika Chatterjee and I looked ahead to the role of the Principles for Responsible Investment (PRI) and industry-led change, arguing that the next phase of sustainable investing will be defined by innovation in financial products (like green securitization) and the complete normalization of ESG into the DNA of the financial system.

Conclusion: Climate & Impact Sophie and I concluded by reiterating that we are in a race against time, and that while the “Theory” (Part I) and “Systems” (Part II) are largely understood, the “Revolution” depends on the rapid scaling of the “Next Frontier” (Part III) solutions. We ended with a call for a “Value-First” approach, where sustainability is pursued not as a charity, but as the only logical path to preserving economic value in a resource-constrained world.

I think we had it right, especially on the rise of the sustainability/financial dual paradigm of our times being the only practical way forward.

A system of solutions seems to be required, cutting across corporate, investment, policy and innovation (let alone people wanting these transitions to take place).

Corporate strategy alone is insufficient.  Investment can encourage what is necessary but needs to be paired with changes in corporate behavior (hence the earlier rise of shareholder engagement). Innovation alone is important, but corporations must invest in innovation and its deployment (hello Xerox).  Policy can be helpful, but if people don’t vote for politicians supporting policy, then it gets overturned.  All five of these pillars, corporate, investment, innovation, policy and people must work together, in tandem, to reach the Ideal State.

Hence our fourth book, Sustainable Innovation and Impact, focused on what a system of solutions might look like across these five pillars.  In our classes we frequently ask students to solve an unsolved ESG problem, and many of these excellent essays were successful attempts at doing just that.

In fact, we have more than enough for another book of papers on this subject, but rather than publish a second volume, we started a Substack entitled Transitions for Sustainability, where we continue to publish the best papers that would best fit into a potential, necessary system of solutions.

Among the chapters included:

Arthur Matuszewski explored the concept and definition of innovation in the context of sustainability as innovation can mean many things, from new technologies to new processes and strategies.

Corporate chapters included from:

Alex Kappes, a Maryland student of mine in 2017 (another excellent class, this time for MBA students) examined how companies searched for sustainability through human capital management strategies.

Nora Moraga-Lewy, another excellent Yale student, analyzed the potential for multi-stakeholder engagement through a case study of Argentina’s sugarcane industry.

Pek Shibao, another original 2014 Yale student of ours investigated palm oil-related deforestation in Indonesia and its environmental impacts, diving into the insufficiency of standards and the need for community involvement.  An excellent and important chapter.

Susan Wang also a leader in her time as an undergrad at Yale, discussed sustainability frameworks in pharmaceuticals, specifically green chemistry and sustainable engineering approaches to demonstrate how one sector can be transformed successfully.

Investment chapters included:

Laila Gamaleldin, then a rising High School senior at Brown, during some of the excellent summer classes we had the opportunity to teach, examined the divestment debate and its role in sustainable investment strategies.  This chapter is one we often teach from.

Melanie Condon, also from that excellent Maryland class, explored modern shareholder activism and its evolution in promoting corporate sustainability, envisioning a new role at corporations, cutting across the C-suite and investor relations.

Ella Warshauer returned to examine financing mechanisms for sustainable infrastructure.

Jeff Schwartz, also from that Maryland class, examined the state of global carbon markets.

Matt Dittrich, another Yale student, this time from our MBA classes there, examined sustainable practices in private equity and venture capital investing, an area that was only going to take off from there.

Alizeh Maqbool again from Yale explored Systems Finance and Islamic finance systems and their alignment with sustainable investment principles.   Systems Finance was an area we had been exploring along with Paul Lussier and Marian Chertow at Yale in 2016. The idea being industrial ecology efficiencies, such as Marian long championed at Yale’s Center for Industrial Ecology, could be better executed if designed in from the start, turning waste into reusable resources, for example.  Typically, such projects occur in piecemeal, over time, increasing the potential for cost overruns, and how could this be avoided through better design.

Zach Knight and Chad Reed of Blue Forest, a Rockefeller Foundation winning organization, presented a case study on forest resilience bonds as an innovative investment approach for forest health.

Eric Esposito, another star Yale student, now with TPG Climate, discussed free market solutions for facilitating the energy transition.

Regional solutions then followed including:

Steven Castano from our Yale Energy Studies program where we’ve helped teach seminars since 2015, analyzed New England’s winter energy challenges and potential solutions including some interesting twists on natural gas.

Andreia Marin Martins, Courtnay Guimaraes, and Mauricio Neves dos Santos examined innovation and impact from a Brazilian perspective.

Jason Mazzella explored landfill taxes as a waste management strategy.

Reilly Witheford, again from that special 2016 Yale class, analyzed Germany’s approach to addressing complex waste challenges.

Marvin Krosinsky, my now 91 year old father and a noted architect, discussed infrastructure development and the future of New York City.   We expanded on these plans in the InvestNYC and the SDGs report we produced for NYU in 2021, and we still are looking for allies to help bring a true vision of resilience to cities like New York and Boston through better design and coordinated efforts such as those first envisioned here.

Masengo Kapanga, one more student from that Maryland class, examined impact investing opportunities and challenges in Africa.

Innovation was rapidly emerging at this time and is only further accelerating across many fields, including transportation, energy, agriculture and so much more.

Here we featured a few of many examples:

Sarah Brandt from our Yale Energy Studies program discussed the potential for smart microgrids.

Pascale Bronder from Yale looked at the potential use case for blockchain and how it could transform the energy sector.

Tiffany Chen, another rising High School senior we taught at Brown, gave an early look at artificial intelligence and sustainability challenges and opportunities, something which of course has only grown in relevance.

Cayley Gaffen from the special Yale Dwight Hall class looked at high speed rail in the US and its potential, and Gabe Rissman as mentioned from that same class, looked at the potential for community solar.   Gabe also took a semester off at Yale to study fusion at Princeton, and his final essay inspired our 2020 Yale class How Can I Have the Most Impact.

Kristina Krasteva from Concordia in Montreal, where we taught an excellent one-off MBA class in the summer of 2016, looked at renewable energy technologies as they were emerging at the time, and Reilly Witheford returned to discuss the future of EVs and how they can be scaled.

Christopher Codina-Lucia and Richard Frazao from that same Concordia class looked at the potential for Aquaponics in Canada’s North, an excellent impact investing case.  Northern Quebec suffers from a lack of fresh, affordable food, given the long distances produce needs to be trucked in.  Their vision called for investing in growing food locally, producing local benefits of good jobs, affordable produce that isn’t spoiled given how long it takes to transport, better local nutrition as a result, a lower carbon footprint by avoiding trucking, and good investment returns.  A prime example of impact investing.

Pascale Bronder returned to explore Pavegen and their invention of using pavement to create energy from the friction generated by people walking, one of many innovative ideas being fostered to this day, the main challenge of course being cost.

And if all else fails, we always have Geoengineering, opportunities and risks that relate fully explored by Yale Energy Studies student Peter Mahony, and intentionally the end of this book.

John Kerry passionately called for better US-China relations during his visit to our 2019 Yale Energy Studies class.  He felt strongly that the previous administration had broken the relationship he personally fostered between the world’s two largest economies that led to the Paris Agreement and called for better relations to scale renewable energy across the developing world.  Earlier that year, we hosted our first event in China, the Future of Sustainable Finance in China, as the first product of our then new Sustainable Finance Institute, which also helped produce this book, our seventh. 

The book came out during COVID and the week of Black Lives Matter in the US, limiting the ability of the gain resonance, but the essential call we made for better relations for scaling sustainable solutions globally remains an essential thing to achieve.

Perhaps ironically, the second Trump administration has improved relations with China from where they had been under Biden.  It is unfortunate that Kerry, who had a cabinet role as Global Climate Envoy, was clearly unable to push for better relations for this purpose during his likely final stint in the White House, but his call for more cooperation and collaboration remains an essential goal.

China’s Dr. Ma Jun, an essential figure in China’s rise as a leader in Green Bonds among other areas of his focus, gave us an excellent introduction, explaining how he was able to help catalyze action, through five steps, including the importance of top down approaches, something China is well positioned to leverage as opposed to democratic countries where climate change action depends on election cycles.  It is an important question worth thinking through as to how best climate solutions can be fostered given political systems and variations in opinions and the potential for personal financial outcomes versus what might be best for a society.

The book went into detail on the state of play in China, intended for a Western audience who typically has limited capacity to understand China today.

Chapter 1: The Cooperation Imperative My opening chapter, subsequently published in the Stanford Social Innovation Review, called for better US-West cooperation for solving sustainability challenges together.  In general, we argued for countries to play to each of their strengths,

China having walked solar through a “financial valley of death,” has the unique capability of driving affordable transitions globally, so their own success at transitioning is to be encouraged as they can then export transition capacities that other countries can best afford.  This is taking place now with the rise of BYD as the world’s leading auto manufacturer, and the continued development of new train systems across Africa, for example.

We then had 12 Brown students of ours help with many subsequent perspective lending chapters, including:

Chapter 2: Environmental, Social and Governance Challenges in China Today Devyn Collado-Nicol, who I mentored at Brown for the purpose of his creating the excellent annual FSIcon conference students host there, detailed the domestic drivers of China’s ongoing green transition, among its overall ESG state of play at the time. Collado-Nicol catalogs the “three wars” on pollution (air, water, and soil), explaining how severe environmental degradation, such as the “Airpocalypse” of 2013 and widespread soil contamination, became a threat to political legitimacy. The summary highlights the shift from “GDP at all costs” to the new mandate of “Ecological Civilization.”

Chapter 3: China and Innovation Huang (Johnny) Zhong, our friend and colleague based in Miami and Shanghai and my co-founder at the Sustainable Finance Institute, arguably should have been listed as co-editor of this book.  Here he partners with Brown student Lucia Winton to explore the history of China as an innovation nation, challenging the narrative of China as a “copycat” nation, tracing China’s history of invention (paper, gunpowder) to its modern dominance. They analyze how China leaped over the credit card era directly to mobile fintech (Alipay/WeChat) and how state subsidies allowed it to capture the global solar and battery markets. The chapter argues that China’s ability to “scale” innovation is its primary competitive advantage.

Chapter 4: Implications of the Technology Race Jackson Barkstrom here examines the “Tech Cold War.” He analyzes the strategic importance of 5G, Artificial Intelligence, and semiconductors. The chapter argues that US efforts to contain China (e.g., Huawei bans) are inadvertently accelerating China’s drive for technological autarky (self-sufficiency), leading to a “splinternet” where two distinct global technology ecosystems emerge, complicating global sustainability standards.

Chapter 5: Understanding Chinese History Here Miranda McDermott and Huang Zhong helped explore the historical context necessary to understand China’s history which has informed in many ways it’s thinking today, covering the Dynastic cycles and the dominance of Confucianism, which emphasizes hierarchy, harmony, and the collective over the individual.

Chapter 6: A Century of Humiliation Alexander Rafatjoo details the period from the First Opium War (1839) to the establishment of the PRC (1949). The chapter explains how the trauma of being carved up by Western powers and Japan created a deep-seated “victim narrative” in Chinese nationalism. It argues that modern Chinese foreign policy is driven by an intense desire to regain dignity and sovereignty, making them resistant to Western “lecturing,” and helps explain China’s innate desire for control over chaos.

Chapter 7: 1900 to 2001: Chaos, Cultural Revolution and Economic Rise Mae Fullerton describes the turbulent 20th century, from the fall of the Qing Dynasty through the chaotic Mao era (Great Leap Forward, Cultural Revolution). The core of the chapter focuses on Deng Xiaoping’s “Reform and Opening Up” in 1978, explaining how Deng’s pragmatism (“crossing the river by feeling the stones”) allowed for the introduction of market mechanisms that birthed the modern economic miracle.

Chapter 8: China Speed: Modern China’s Work Ethic and Sociology Here Johnny and I explore the modern sociology of the Chinese workforce. We explore “China Speed” (the rapid pace of development) and the grueling “996” work culture, highlighting the demographic tension as well between the older generation (focused on survival and savings) and younger generations (focused on consumption and quality of life), noting how this shift is driving demand for cleaner cities and better governance.

Chapter 9: China as a Leader in Green Finance Ellie Papapanou here details the mechanics of China’s green financial system. Unlike the West’s market-led approach, China’s system is top-down, driven by the People’s Bank of China (PBoC) and other ministries. The chapter analyzes the “Guidelines for Establishing the Green Financial System” (2016) and explains how state mandates created the world’s largest Green Bond market, effectively channeling credit to state-sanctioned environmental projects.

Chapter 10: Modern Chinese Companies Annie Phan profiles the rise of titans of Chinese industry—the “BAT” companies (Baidu, Alibaba, Tencent) and hardware giants like Huawei and BYD. It explains how these private companies are increasingly integrated into national strategic goals (like carbon neutrality), acting as the digital infrastructure for the state’s sustainability monitoring and implementation.

Chapter 11: Dynamics Emerge on ESG and Sustainable Investment in China Justin Kew, one of the few non-students to provide a chapter in this book, explores the unique characteristics of ESG in China. He notes that while “Governance” (G) risks are high, “Environmental” (E) disclosure is improving rapidly due to regulation.

Chapter 12: The US China Green Fund A number of investment case studies followed, something we also featured at our 2019 event’s second day, especially on the private equity side as were emerging that the time.  Annie Phan presents here a fascinating case study on the US-China Green Fund, a private equity vehicle partly championed at the time by Hank Paulson and designed to bridge the gap between US innovation and Chinese markets. Even though it did not succeed, with offices in Beijing and Chicago, and trading in multiple currencies, this fund illustrates a successful potential model of cooperation: taking US technologies (like building energy efficiency software) that might struggle to scale at home and deploy them in China’s massive urbanization market to generate returns and reduce emissions.

Chapter 13: Case Study: ChinaAMC Here we looked at China Asset Management Co. (ChinaAMC), detailing their strategic partnership with a European firm to learn and adopt ESG integration methodologies.

Chapter 14: Case Study: Ehong Capital and Measuring Impact Kara Huang and I examined Ehong Capital, who we had a chance to interact with at a 2019 Ford Foundation event in New York.  The firm, a longstanding domestic Chinese PE firm focuses on “social impact” sectors like healthcare and education. The chapter demonstrates that impact investing is taking root in China, often aligned with the state’s goal of “Common Prosperity” (reducing inequality), showing how Western financial concepts are adapted to “Chinese characteristics.”

Chapter 15: Case Study: East Capital Kara also profiles East Capital who featured at our event as well, a Swedish/HK asset manager specializing in emerging markets. The case study illustrates the potential role of active ownership, detailing how a foreign investor can engage with Chinese State-Owned Enterprises (SOEs) to improve their ESG disclosure and performance, arguing that engagement is more effective than divestment in the Chinese context.

Additional chapters looked at the Belt and Road Initiative, and how China was learning quickly from earlier challenges and mistakes, as well as how China was integrating policy, market and technology offerings, and more detail on China’s work on green bonds (for which we recommend strongly following subsequent Climate Bonds Initiative reports, which go into great detail on specific tranches of such finance, including subregional offerings.

Conclusions

Our conclusions in Modern China presented three distinct yet integrated frameworks that together form our vision for effective China-West cooperation on sustainability.

Conclusion One: Ten Recommendations for Investors

The first conclusion offers ten specific, actionable recommendations for investors seeking to navigate China’s rapidly evolving sustainability landscape. With China emerging as a global leader in green policy and green finance, investment opportunities are proliferating across private equity, venture capital, and fixed income markets, particularly in green bonds (Krosinsky 2020).

However, these opportunities come with unique risks and require sophisticated understanding of China’s political economy, regulatory environment, and business culture.

Conclusion Two: Guanxi as a Framework for International Cooperation

The second conclusion explores Guanxi, China’s traditional concept of relationship-building, as a model for international cooperation on sustainability challenges. We argue that Guanxi should not be understood merely as a Chinese business practice but rather as a potentially universal framework for how nations approach global cooperation.

Guanxi, pronounced ‘gwan-shee,’ refers to ‘China’s innate sociology that builds trusted circles and relationships’ (Krosinsky 2020, p.10). The famous Chinese saying captures its essence: ‘It’s not what you know, it’s who you know.’ However, Guanxi encompasses more than simple networking. Research identifies three dimensions: Ganqing, representing emotional attachment built through shared experiences; Renqing, embodying reciprocal obligations and favor exchange; and Xinren, denoting deep interpersonal trust based on reputation and history (Chen, Chen and Xin 2004).

We then build the case for applying Guanxi principles on a global basis—’building trusted partnerships that can work together on new ideas and solution categories, then sharing in the benefits both financially and socially’ (Krosinsky 2020). Through gaining trust can come the potential for mutual success at a very high level, and this is precisely what is needed at scale to solve societal challenges. The framework emphasizes several key principles for global cooperation.

Conclusion Three: A Framework for Countries—Mature, Evolving, and Challenged

The third conclusion presents a developmental framework for understanding and categorizing countries based on their position in economic development, sustainability transition, and institutional capacity. This framework moves beyond simple developed/developing, emerging or first/third world binary categorizations to recognize a spectrum of specific national circumstances and capabilities (Krosinsky 2020).

Countries are either mature, evolving or challenged, or somewhere along that sliding scale, moving up or down at any particular point in time.

Practical Application

For Western institutional investors, the integrated framework suggests using this country framework to understand where opportunities and challenges exist, applying Guanxi principles to build trusted relationships with partners and firms in evolving countries, and following the ten recommendations for specific investment decisions and risk management. For policymakers, the framework suggests recognizing China’s position as an evolving to mature country with responsibility toward challenged countries, building Guanxi relationships with mature country governments and investors, creating investment opportunities that attract mature country capital while supporting challenged countries.

For challenged country leaders, the framework indicates understanding their position on the development spectrum, and what it will take to move up this sliding scale, perhaps especially to help better create investable projects that can attract capital from both mature country investors and evolving country partners (Krosinsky 2020).

The central message across all three conclusions is clear: cooperation is not optional. Solving climate change requires all three categories of countries working together. Trust-based relationships at scale—between governments, companies, and investors—create the foundation for necessary collaboration. Smart capital deployment, following practical recommendations while understanding the country framework, enables capital to flow effectively while generating returns and advancing sustainability (Krosinsky 2020).

Transformation at the required scale is possible.

China uses half of the world’s coal, which represents roughly 40% of the global carbon footprint. Asia’s carbon emissions will reach 50% of the global total by 2030 (Krosinsky 2020). No climate solution is mathematically possible without China’s active participation. ‘Sitting on the outside and complaining about problems or exacerbating tensions isn’t nearly as effective as building trusted relationships and working together to find mutually beneficial solutions’ (Krosinsky 2020, p.9).

China’s ongoing rapid transformation demonstrates that fundamental change can occur quickly under the right conditions.  We believe forcefully that cooperation with China is not optional but imperative: ‘If we really care about solving the global climate change challenge before us all, the need to cooperate with China is the new imperative of our times. It’s impossible to see a way forward where we successfully solve for climate change, let alone many of the other more pressing societal issues of the day without China’s direct engagement and involvement’ (Krosinsky 2020, p.1).

(Note: the following two parts of Section 7 are further Transitions in Sustainability papers which could have been posted at that Substack, but are shared here as specific case studies detailing how Renewable Energy Project Finance works in practice, and how more creative funding mechanisms will be needed to fund Global South transitions)

Part 1 – Shepherds Flat Wind Farm: Renewable Energy Project Finance and Tax Equity

The Shepherds Flat Wind Farm, located in north-central Oregon, represents one of the most significant renewable energy project finance transactions in United States history. Commissioned in 2012, this 845-megawatt wind facility became the largest wind farm in the world at the time of its completion, demonstrating the sophisticated application of project finance principles and innovative tax equity structures in the renewable energy sector.

Project Overview

Shepherds Flat Wind Farm is situated in Gilliam and Morrow counties in Oregon, approximately 200 miles east of Portland. The project comprises 338 GE 2.5-megawatt wind turbines spread across approximately 30 square miles of land. The facility generates enough electricity to power approximately 235,000 homes annually (Caithness Energy, 2012).

Development of the project was undertaken by Caithness Energy, an independent power producer with extensive experience in renewable energy development. The project benefited significantly from federal incentive programs available during its development period, particularly the Section 1603 Treasury Grant program and accelerated depreciation schedules under the Modified Accelerated Cost Recovery System (MACRS).

Capital Structure and Financing

The total project cost for Shepherds Flat was approximately $2 billion, making it one of the largest single-phase wind energy investments in history (Norton Rose Fulbright, 2012). The capital structure employed a sophisticated multi-tranche financing arrangement that combined traditional debt, tax equity, and sponsor equity.

Debt Financing

The debt portion of the capital structure totaled approximately $1.3 billion and was structured across multiple tranches to optimize risk allocation and pricing. The Federal Financing Bank (FFB) provided $1.04 billion in senior debt, which was guaranteed by the U.S. Department of Energy through its loan guarantee program under Section 1705 of the American Recovery and Reinvestment Act of 2009 (U.S. Department of Energy, 2011). This loan guarantee was instrumental in achieving favorable debt pricing and extending the tenor of the financing.

Additionally, the project secured approximately $260 million in subordinated debt from a consortium of commercial lenders. This subordinated tranche carried higher interest rates than the FFB-backed senior debt, reflecting its junior position in the capital structure and correspondingly higher risk profile (Mintz Levin, 2012).

Tax Equity Structure

The tax equity component of Shepherds Flat’s financing represents a particularly sophisticated application of partnership flip structures, which have become standard in renewable energy project finance. The project utilized a two-investor partnership flip structure involving Google Inc. and Sumitomo Corporation as tax equity investors.

Google committed approximately $100 million to the project, marking one of the company’s earliest significant investments in renewable energy infrastructure (Google, 2011). Sumitomo Corporation contributed additional tax equity investment, bringing the total tax equity commitment to approximately $500 million. These investments were structured to monetize the substantial tax benefits generated by the project, including the Section 1603 Treasury Grant (which substituted for the Investment Tax Credit) and accelerated depreciation deductions under MACRS.

Partnership Flip Mechanics

The partnership flip structure employed at Shepherds Flat follows the classic design utilized in renewable energy tax equity transactions. During the initial phase of the project, tax equity investors received a disproportionately high allocation of tax benefits and cash distributions relative to their capital contributions. This allocation typically ranges from 90-99% of tax benefits during the pre-flip period (Harper, Karcher & Bolinger, 2007).

The structure was designed to achieve target after-tax yields for the tax equity investors, typically in the range of 7-9% annually. Once the tax equity investors achieved their target returns, the partnership “flips,” reallocating tax attributes and cash flows more favorably to the developer sponsor, Caithness Energy. Following the flip, the developer typically receives the majority of cash distributions and residual tax benefits, while tax equity investors retain a minimal continuing interest, often around 5% (Bolinger, 2009).

Section 1603 Treasury Grant

A critical component of the project’s economics was the Section 1603 Treasury Grant in lieu of Investment Tax Credit. This program, established under the American Recovery and Reinvestment Act of 2009, allowed renewable energy projects to receive a cash grant equal to 30% of eligible project costs rather than claiming the Investment Tax Credit over time (U.S. Department of the Treasury, 2012).

For Shepherds Flat, the Section 1603 grant provided approximately $500 million in upfront cash, significantly improving project liquidity and reducing the required tax equity investment. The grant was paid directly to the partnership, and the allocation of this cash between tax equity investors and the developer was a key negotiated element of the partnership agreement.

Sponsor Equity

Caithness Energy provided the residual equity required to complete the capital structure, estimated at approximately $200 million. This sponsor equity occupied the most subordinated position in the capital structure, bearing the highest risk but also maintaining potential for the greatest upside returns following the partnership flip.

Risk Allocation and Mitigation

The Shepherds Flat transaction incorporated multiple layers of risk mitigation, reflecting best practices in renewable energy project finance. The project secured a 20-year power purchase agreement with Southern California Edison, providing revenue certainty and supporting the debt service coverage ratios required by lenders (Southern California Edison, 2011). This off-take agreement was critical to the bankability of the project, particularly for the senior debt tranches.

Construction risk was allocated to GE Energy, which served as the engineering, procurement, and construction contractor and turbine supplier. GE provided warranties and guarantees on turbine performance, significantly reducing technology risk for investors and lenders (Norton Rose Fulbright, 2012).

The DOE loan guarantee effectively transferred credit risk on the senior debt from project lenders to the U.S. government, enabling the attractive pricing on the largest debt tranche. However, this guarantee came with extensive due diligence requirements and ongoing compliance obligations.

Financial Performance and Implications

Shepherds Flat achieved commercial operation in 2012 and has generally performed in line with or above initial expectations. The project has demonstrated the viability of large-scale wind development in the United States and the effectiveness of partnership flip structures in channeling institutional capital into renewable energy infrastructure.

The transaction has been studied extensively as a case example of successful renewable energy project finance, particularly regarding the coordination of federal incentive programs with private capital structures. However, the project has also attracted scrutiny regarding the appropriate role of government loan guarantees in supporting commercially viable renewable energy projects (Geman, 2012).

Conclusion

The Shepherds Flat Wind Farm exemplifies the sophisticated application of project finance principles to large-scale renewable energy development. The transaction’s multi-tranche debt structure, partnership flip tax equity arrangement, and strategic use of federal incentive programs created a viable financing solution for what was, at the time, the world’s largest wind farm. The success of this transaction has influenced subsequent renewable energy financings and demonstrated the capacity of project finance structures to mobilize the substantial capital required for the clean energy transition.

Part 2 – Funding Decarbonization Transitions in the Global South

By Ana Paula Reismann

The political winds have shifted: as the United States steps back from global climate change cooperation, the Global South has become a critical player on the international stage— leading the way towards decarbonization worldwide (Figueres, 2025). The international community has fallen short on the Paris Agreement; ten years later, as COP30 approaches, society at large is showing signs of correcting its course towards a life within planetary limits (Figueres, 2025). The Global South now represents a powerful industrial sunbelt with approximately half of the world’s clean industry projects outside of China, accounting for “70% of the world’s wind and solar potential, and 50% of the minerals necessary for the energy transition” (Figueres, 2025). Renewables are growing at an impressive speed, and the Global South is both a well-positioned, crucial player in society’s decarbonization efforts.

But how can society fund these trillion-dollar initiatives to accelerate this much-needed decarbonization transition to zero greenhouse gas emissions by 2050—enabling society to live within its planetary bounds? Given the political and structural context of many nations in the Global South—marked by weakened institutions—a new sequenced financing structure, tailored to each project’s risk level and maturity, becomes crucial to achieve the need to mobilize at least USD$1.3 trillion per year by 2035 (UNFCCC, 2025). There are four financial instruments that work toward the growing influence of the Global South and the strivings toward a sustainable global future: a) policy credibility initiatives, b) risk-absorption instruments, c) scaling methods, and d) institutional coordination mechanisms. Together, these four financial instruments can bridge the trillion-dollar financing gap needed to finance the transition to decarbonization.

Weak governmental institutions represent a significant barrier to financing the decarbonization transition in the Global South. When there is uncertainty around policies and regulations, investors retreat, leading to higher costs and slower deployment of decarbonization projects (Supriyanto et al., 2022). It is critical that mechanisms be developed to create a credible, transparent, and, to a certain extent, predictable environment that can attract consistent financing at an acceptable risk. The feed-in tariff (FIT), alongside long-term Power Purchase Agreements (PPA) (15-20 years), is but one short-term tool that has been successfully implemented. FITs and PPA’s are most commonly used in renewable energy projects. FITs make renewable energy more accessible to the end consumer: this is because FITs “allow electricity produced by using renewable energy plants to be purchased by the final consumers at a low price by introducing subsidies to compensate for additional costs” (Supriyanto et al., 2022). This mechanism makes the technology financially attractive before it reaches grid parity—giving it time to mature and become competitive and thereby accelerating the energy transition (Supriyanto et al., 2022). That said, this is a temporary subsidy that will necessarily decrease over time as grid parity is met. FITs and PPAs make early-stage projects more attractive to investors—creating predictable long- term cash flow, reducing policy risk, and mitigating, to a certain extent, the vulnerabilities of weak institutions.

In Vietnam, the world’s third-largest solar PV market in 2022, the FIT mechanism has propelled the country’s installed solar PV capacity from 100 MWp in 2018 to 16 GWp in 2020 (Le et al., 2022). The implementation was not without challenges, but it was successful in attracting investment and increasing installed capacity in a short period of time. Taking lessons learned from FITs such as Vietnam’s, Le et al. (2022) suggest that FITs alone are not a stand- alone solution; they need to be coupled with other solutions that help to support it:

“[Governments] should build a solar PV roadmap based on the cost trend of demand, technology type, installed capacity, and/or project location. The roadmap should provide vision, target identification, and identify specific actions, especially regarding the stability of policy frameworks. Policy changes should be made in a deliberate and predictable manner.”

Furthermore, the FIT mechanism should be combined with other complementary policies that support the development of transmission and distribution of the generated renewable energy, including storage (Le et al., 2022).

Increasing generation alone, without the necessary infrastructure in place will have no meaningful impact. Once the policies are in place and the credibility of local institutions increases, it becomes critical to address the high-risk stages of businesses to attract private investors.

Risk absorption mechanisms play a key role in making projects viable by minimizing investor and business risk at a company’s early stage. Among these mechanisms, blended finance has the potential to significantly impact financing for decarbonization in the Global South. Blended finance uses public or philanthropic resources to minimize early-stage risk and increase private investments in later-stage project execution, and in fact 78% of these structures are concessional capital: “below-market terms into a transaction’s capital stack, thereby enhancing its credit profile or adding loss protection to the benefit of more senior investors” (Convergence Report, 2024). These structures can take on other forms—including design-stage grants and public investors offering partial or full guarantees, so as to enhance the credit profile of a transaction (Convergence Report, 2024). Blended finance ultimately enables public or philanthropic investors to go where private investors are unwilling to go due to high risk— thereby improving the project’s bankability and attracting private capital.

A successful example of this risk absorption mechanism can be seen in Kenya, where the advancement of its geothermal energy projects has made the developing nation an industry leader (Olando et al., 2024). These kinds of renewable—and, specifically, geothermal—energy projects face initial barriers: high upfront costs, complex regulations, and the need for diverse financing mechanisms and robust project management practices (Olando et al., 2024). Kenya has been implementing Public-Private Partnership Financing Structures, using a mix of blended finance structures to address early-stage risks; with a 43% variance in project completion, that financing structure has proven effective in driving the completion of geothermal power plants (Olando et al., 2024). Certain factors remain key to the success to the completion of geothermal plants—such as management, policies, and technical barriers—but blended finance has proven to be a powerful driver of positive outcomes of these sustainable development initiatives. Once credibility and early-stage risks are mitigated, scaling becomes a key challenge.

Enabling large-scale capital flow, institutional investors play a critical role in financing the decarbonization transition in the Global South. Scaling capital from institutional investors requires standardized financial instruments—including green bonds, infrastructure investment trusts, and structured credit credits—and these set of practices translate sustainable development initiatives into investable assets for the private sector. Let us touch upon briefly the set of practices these financial instruments enable for sustainability. Green bonds—or rather, bonds whose proceeds are committed to climate-related projects—provide access to capital and attract long-term, large-scale investors aligned with climate priorities (Flammer, 2021). Infrastructure

investment trusts (InvITs)—are regulated financial funds focused on investing in infrastructure projects through special purpose vehicles (SPVs) (Jaishankar et al., 2022). InvITs offer access to lower-cost capital for developers and thus increase the developer’s ability to invest in new infrastructure, because the structure of the trust offers stable and transparent returns to investors (Jaishankar et al., 2022). Carbon credits—when structured within a clear, aligned framework that is backed by strong policies—can address a significant gap in climate financing: that is because carbon credits have the potential to “support broader economic development through associated co-benefits and the potential reinvestment of carbon revenues” (World Bank, 2024).

There are of course practical, and not strictly theoretical, examples of the effectiveness of these financial instruments. In the Global South, India has a proven track record of using infrastructure investment trusts: the Sustainable Energy Infrastructure Trust (SEIT) has eight solar power plants, with a total of 1.54GW of installed capacity (MENA Report, 2024). India is working actively to attract institutional capital and domestic retail savings, so to further scale up India’s sustainable infrastructure industry: in that vein, SEIT is a “capital-raising track record and is a testament to establishing and validating InvITs as a long-term financing channel in India” (MENA Report, 2024). SEIT offers a transparent, reliable financing vehicle for large- scale institutional investors—including the Asian Infrastructure Investment Bank, Ontario Teachers’ Pension Plan, and multinational conglomerates—to channel funds towards the development of renewable energy across India and advance the Net Zero agenda (MENA Report, 2024).

Large institutional investors require not only stable, transparent financial vehicles but also coordination and institutional reforms that enable financial institutions to effectively create and support these vehicles and attract capital. These reforms must be implemented to further align macroeconomic and financial policies to national climate goals—and thereby strengthen domestic capital markets. Once this alignment comes to fruition, it enables green investment banks, for example, to mobilize private investment at scale for sustainable development projects such as water, energy, and waste management (OECD, 2016). Specifically, green investment banks minimize investor risk by co-investing, offering guarantees, credit enhancements, and securitization—measures of which allow projects of development to be bankable and financially attractive to private investors (OECD, 2016). Scaling investments, green banks are able to funnel large swaths of private capital because they reduce financing costs, offer transparency regarding project execution and completion, and strengthen the domestic capital market (OECD, 2016).

In Chile, CORFO—or the Chilean Production Development Corporation—is the national development and innovation agency; in practice, the corporation acts like a domestic green investment bank to a certain extent. CORFO has implemented green investment windows to promote sustainable development projects such as renewable energy—using blended finance and risk mitigation mechanisms so as to improve financing conditions (MENA Report, 2023). Aligned with the National Green Hydrogen Strategy, CORFO has coordinated investments from the World Bank (US$150 million) and other multilateral partners; these investments have been used to fund a green hydrogen pilot that has accelerated the development of commercial-scale initiatives in the sector (MENA Report, 2023). CORFO still expects to raise an additional USD$280 million of private capital and thus pave the way for Chile’s global leadership in green hydrogen production (MENA Report, 2023).

At the same time, no single solution will cover the trillion-dollar financing gap for decarbonization in the Global South. A sequenced financial architecture is necessary to address each pain point in attracting and maintaining long-term investments in sustainable development projects. Large institutional investors, the holders of vast flows of available capital, require stability and credibility to enter certain investments. Addressing credibility issues with mechanisms such as feed-in tariffs combined with PPAs has proven successful in Vietnam— transforming its solar power industry from 100 MWp in 2018 to 16 GWp in 2020. Once credibility is addressed, risk mitigation strategies become key. Concepts such as blended finance mobilize public investments to mitigate early-stage risks and attract private capital to later project stages, particularly concessional capital; in fact, that strategy has transformed Kenya’s geothermal potential into one of global and industry leadership. Once credibility and risk are properly addressed, scalability can become a focus. To attract private capital on a necessary scale, a series of vehicles can be used to channel the large flows required to fund projects—among these, infrastructure investment funds, carbon credits, and green bonds. India’s Sustainable Energy Infrastructure Trust is a proven tool for accessing long-term investments and for propelling the development of the nation’s solar power. Coordination is certainly critical, and green investment banks support the financing of sustainable development projects, in part because these institutions have the potential to align macroeconomic and financial policies with a nation’s climate agenda. Chile’s CORFO has been successful in aligning multilateral institutions (i.e., the World Bank) to develop a green hydrogen industry within the country.

These financial instruments are not groundbreaking but in fact tried-and-true innovations and have been used individually worldwide in the past. But what leads us to believe that meaningful impact will be achieved now compared to a decade ago, when the Paris Agreement was signed? Between political hurdles in climate negotiations, despite the worldwide embrace of sustainable development, the climate situation is dire, and urgency must drive collective and individual action (UNFCCC, 2025). According to the UNFCCC (2025), key drivers will guarantee that this time it will be different: as the 1.5oC threshold approaches, the risk of cascading, catastrophic impacts become an imminent reality—already felt worldwide in the form of increasingly volatile weather events, impacting developing nations unequally (UNFCCC, 2025). That said, now that climate technologies are maturing, becoming scalable, and supported by policy and financing, they have the potential to grow exponentially (UNFCCC, 2025). This is already evident in the fact that renewables are projected to overtake coal as the main source of electricity generation within the next year (UNFCCC, 2025). Furthermore, as states and institutional players become increasingly accountable for their actions, a broader engagement of stakeholders across political, economic, social, and financial systems globally is already a reality that will drive meaningful impact (UNFCCC, 2025). Climate finance is a critical component of this transition—and one that has become a necessity for a livable planet and a just society (UNFCCC, 2025). Climate finance is slowly being put into place and into practice: the natural resources exist, the financial instruments have a proven track record, the technology is maturing, large-scale stakeholder coordination is a reality, and the necessary capital is available. All the pieces are ready to be put into motion and drive a systemic mobilization in climate finance, but without a sequenced financial architecture, efforts will continue to yield subpar results and no meaningful climate action. The window for a livable planet is rapidly closing, and large-scale financing to close the trillion-dollar gap is critical to decarbonize the Global South.

Key Takeaways:

Infrastructure and project finance offer scalable climate impact
Collaboration across investors, developers, policymakers, and communities is essential
Financial innovation enables deployment, but does not guarantee outcomes

Place-based solutions reveal trade-offs invisible in portfolios
Execution, not intent, determines impact

Part 3- How Sustainability and Real Estate Can Truly Come Together: Sustainable Real Estate: Multidisciplinary Approaches to an Evolving System (2019)

This recent book, edited by a few of us, including colleagues at Concordia University in Montreal, brought together diverse perspectives from academia and practice to broaden understanding of one sector, sustainable real estate and how it was and could best unfold going forward.  My own work continues on this as an advisor to the CRREM Foundation, given that real estate standards such as LEED and BREEAM tend not to focus on carbon emissions and emission pathways, and buildings are a large part of the world’s carbon footprint.

Chapter 1: Introduction (Lisa N. Hasan)

Lisa was a student in our 2016 Concordia class, and a visionary architect who led the majority of the effort around this book, along with Amr Addas who should also have been listed as a co-editor.

Here Lisa reviews the evolution of sustainable real estate over three decades, covering innovations in building materials, certification programs, simulation tools, design processes, regulations, and sustainable investment strategies.

Chapter 2: The Relevance of Real Estate in Solving Climate Change (Cary Krosinsky)

Here we sought to establish why addressing building energy efficiency is critical to solving climate change given that buildings produce substantial greenhouse gas emissions.

Chapter 3: Evolutions in Sustainability and Sustainable Real Estate (Sherif Goubran, Tristan Masson, Margarita Caycedo)

Takes a multidisciplinary approach examining the three pillars of sustainability (social, economic, environmental) in relation to real estate. Traces the concept of sustainable development, connects the UN Sustainable Development Goals to real estate, and maps the sustainable real estate system.

PART II: REGULATORY APPROACHES

Chapter 4: Public Regulatory Trends in Sustainable Real Estate (Pernille H. Christensen, Jeremy Gabe)

Examines three main policy instruments: forward planning, development controls, and development incentives. Explores mandatory disclosure and integrated reporting as tools to mainstream sustainability. Includes international examples and recommendations for improving public policy effectiveness, emphasizing collaborative approaches and UN Sustainable Development Goals implementation.

Chapter 5: A Policy Framework for Sustainable Real Estate in the European Union (Diane Strauss)

Provides a comprehensive review of EU regulations and policies promoting sustainable building practices across member states. Examines the diversity of approaches taken by different European countries and identifies three key challenges: financing building renovation, alleviating energy poverty, and transitioning to connected “smart-ready” buildings.

PART III: MARKET-DRIVEN APPROACHES

Chapter 6: Information or Marketing? Lessons from the History of Private-Sector Green Building Labelling (Jeremy Gabe, Pernille H. Christensen)

Analyzes 25 years of voluntary green building certification, classifying labels into “voluntary environmental building codes” (design intentions) and “measured building performance audits” (operational performance). Discusses the disconnect between design intentions and actual performance, calling for integrated certification across all building phases.

Chapter 7: Global Real Estate Sustainability Benchmarking: An Essential Tool for Real Estate Management (Willem G. Keeris, Ruben A. R. Langbroek)

Focuses on the Global Real Estate Sustainable Benchmark (GRESB) as an example of “international standards benchmarking.” Explains how benchmarking contributes to scenario development and productivity improvements in sustainable real estate management, discussing future opportunities and challenges.

Chapter 8: Business Case for Green Buildings for Owner-Operators (Philippe St-Jean)

Outlines the financial justification for sustainable construction in new and existing buildings. Provides analytical methods and financial tools for building owners, developers, and construction professionals to pursue sustainable practices profitably.

Chapter 9: Sustainability as an Organizational Effectiveness Tool (Sara Levana Schoen)

Presents sustainability work as a tool for improving organizational effectiveness. Uses real-world examples from companies across the real estate sector to demonstrate how sustainability initiatives can identify and address organizational weaknesses, arguing for connecting sustainability and organizational effectiveness functions.

PART IV: DELIVERING AFFORDABLE, RELIABLE, SUSTAINABLE ENERGY

Chapter 10: Building Energy Simulation and the Design of Sustainable and Resilient Buildings (Bruno Lee)

Reviews building energy simulation practices for evaluating energy performance and facilitating design decisions. Discusses integrated design approaches combining passive and active measures, addresses performance-related risks and uncertainty, and demonstrates performance-based design for net-zero energy buildings resilient to climate change.

Chapter 11: Driving Investment in High-Performance Commercial Buildings (Molly J. McCabe)

Examines real estate investments, valuation, and financing for high-performance commercial buildings. Links high-performance attributes (energy/water efficiency, technology integration, occupant well-being) to market value and summarizes financial mechanisms facilitating increased investment.

Chapter 12: Financing Rooftop Solar for Single-Family Rental Properties (Russell Heller)

Proposes the Renter’s Power Purchase Agreement (RPPA) as a solution to the split incentive problem preventing solar adoption in single-family rental homes. Explains how the RPPA enables property owners to sell electricity to tenants, discussing conditions where this model is most lucrative.

PART V: SUSTAINABLE CITIES AND COMMUNITIES

Chapter 13: A Case for Sustainable Affordable Housing in the United States (Sarah Gomez)

Critiques sprawled residential development patterns and advocates for sustainable affordable housing. Discusses how sustainability and affordable housing frameworks share compatible goals, surveys existing policies and organizations, and explores future possibilities.

Chapter 14: Passive House Standard: A Strategic Mean for Building Affordable Sustainable Housing in Nova Scotia (Ramzi Kawar)

Documents Housing Nova Scotia’s (HNS) approach to building energy-efficient housing using Passive House standards. Describes three pilot projects with details on materials, systems, energy usage, and cost comparisons, concluding with lessons learned applicable to Nova Scotia.

Chapter 15: Sustainable Investing in Community Sporting Facilities (Gordon Noble)

Examines the overlooked area of community sporting facilities (over 700,000 clubs in Europe alone). Proposes a “Community bonds” model adapted from historical debentures to unlock institutional investment in these facilities, using Australia as a case study.

Chapter 16: Sustainable Real Estate in the Middle East: Challenges and Future Trends (Amir Rahdari, Asma Mehan, Behzad Malekpourasl)

Provides an overview of sustainable real estate in the Middle East, focusing on industry status and regional challenges. Concludes that initiatives have been ad hoc rather than systematic and the industry remains in an early stage of development.

Chapter 17: Sustainable Community Development in Nigeria: The Role of Real Estate Development (Saheed Matemilola, Isa Olalekan Elegbede, Muhammad Umar Bello)

Examines the critical importance of environmental responsibility in Nigerian real estate practice and sustainable community development. Addresses accommodation challenges in growing urban centers and questions whether intervention programs for public housing, health centers, and markets are executed in environmentally sustainable ways.