Financial markets are the primary source of signals used to direct investment and economic activity in a capitalist global economy. These signals are more accurate and robust when they result from decentralized decisions by many small market participants rather than a few dominant players. An important societal role of the financial sector is to provide a low cost method of channeling capital to productive investment opportunities that are beneficial to natural and human ecosystems. If this role remains unfulfilled efficiently, a society cannot fund new capital formation and innovation, virtually ensuring the future elimination of wealth enhancement opportunities. A key obstacle to channeling capital to new and small businesses or specific local projects is the high cost of information gathering, due diligence, selection, and impact assessment.
The panel speakers will explore the value and limitations of using collaborative systems of measurement and automated rules to channel investment capital to large numbers of small companies. We will discuss approaches to opportunity identification and risk management in the context of companies with limited financial history, often operating in innovative and disruptive sectors related to social equity and environmental sustainability. We will address the special challenges of estimating expected return and potential loss in the absence of a long history of stable operating metrics. The panel discussion will outline the importance of keeping the cost of evaluation and monitoring low and using environmental, social and governance metrics, where available, to enhance investment decision-making.
Steve Cohen, Executive Director, Earth Institute
Satyajit Bose, Lecturer and Associate Director of the Research Program on Sustainability Policy & Management