"System-level investors support and enhance the health and resilience of the social, financial, economic, and environmental frameworks upon which they depend for long-term returns while still generating competitive or otherwise acceptable performance."
(Steve Lydenberg, 2023)


Increasingly, private and public sectors are incorporating environmental, social, and governance (ESG) considerations into their investment practices to help finance and promote a more sustainable world. However, key impediments remain in efforts to mitigate climate change, preserve biodiversity, reduce poverty and social inequalities, and address other grand societal challenges. Below we describe some of the critical impediments:

  • In many countries around the world, there is a lack of mandatory disclosure requirements for non-financial data. As a result, companies may not disclose their ESG information, or if they do, they disclose it in a non-standardized way. The lack of available and reliable standardized information complicates the assessment of companies’ ESG performance, the efficient allocation of capital financing projects, and the tracking of progress toward the achievement of the United Nations’ Sustainable Development Goals (SDGs) such as the mitigation of climate change, conservation of biodiversity, as well as the alleviation of social inequality and poverty. 
  • While several efforts toward standardized ESG disclosure are currently being undertaken that have implications for the attainment of the SDGs, most ESG reporting frameworks (e.g., the broadly recognized Sustainability Accounting Standards Board framework, the Global Impact Investment Network’s IRIS+ System, etc.) ask for information confined to the firm or portfolio level. That is, the disclosed data is insufficient to capture the totality of corporations’ and investors’ impact on the broader (environmental, social, and economic) system. For example, companies may outsource or divest entirely their emission-intensive business activities or investments on which they report and merely account for their own direct emissions or those of the firms in their portfolios, failing to capture progress or lack thereof in overall emissions (recent efforts in carbon accounting aim to address the issue of indirect corporate emissions). Accordingly, even if all companies were to disclose their ESG (firm-specific and portfolio-level) performance following a standardized framework, the information provided is unlikely to help track progress toward the overall achievement of the SDGs.
  • In a related challenge, the abundant corporate and portfolio-level data points currently available frequently bear only tangential relationship to the national and economic development data-points that the United Nations has developed as indicators of milestones of progress toward specific SDGs. This mismatch complicates corporations’ and investors’ frequent assertions of “alignment” with the SDGs. 
  • In order to foster the financing of a more sustainable world, new measures need to be identified―and frameworks need to be developed―that appropriately capture companies’ impact on the broader (environmental, social, and economic) system and help track progress toward the achievement of the SDGs. Moreover, some of the SDGs include the measurement of intangible values (e.g., biodiversity, social equity), which are difficult to quantify. In addition, if unaddressed, the long-term impacts of the challenges highlighted by the SDGs are deeply uncertain.
  • Similarly, we need a more general understanding of how the full range of systemic environmental, social, and economic risks (e.g., loss of biodiversity, global loss of access to fresh water, social and economic inequality and attendant political instability, forced migration, etc.) impacts investing and business practices, the likelihood of such risks to persist in coming decades, the degree to which corporations and investors can and should contend with this full range of systemic risks sooner rather than later, and the emerging relationships that will develop between corporations, investors, civil society, and government in contending with such risks.
System-level challenges
  • In addition to improving their own environmental and social business practices (and those of their portfolio companies, respectively), we need a better understanding whether and to what extent investors and corporations act as stewards of systemic change and actively engage with policymakers to mitigate system-level challenges.
System-level challenges

In sum, critical factors are needed to mitigate system-level challenges and ensure the long-term health and resilience of individuals, communities, the natural environment, and economies. They include:

  • Adopting a systems-focused approach that considers how business and investment practices impact the broader environmental, social, and economic systems, and how these systems impact business and investment practices and opportunities.
  • Developing better measures to track progress toward the mitigation of system-level challenges
  • Creating public-private partnerships to fill financing gaps, using development funding to increase private sector investments in addressing these challenges.
Addressing system-level challenges

In response, Columbia University’s School of International and Public Affairs (SIPA) has created the Sustainable Investing Research Initiative (SIRI). Its mission is to foster cross-disciplinary scholarship, education, and dialogue on the interplay and interdependencies between investment and the most complex challenges facing our world.

Drawing on faculty expertise from SIPA and across the University (including the Climate School, Columbia Business School, Columbia Law School, the Faculty of Arts and Sciences, and the Fu Foundation School of Engineering and Applied Sciences), the initiative’s focus is the nexus between corporations, investors, policy, and system-level challenges.

Its research activities will be complemented by new courses and related activities, convenings and policy-oriented publications to educate the next generation of leaders, communicate insights from academic research to the investor community, inform policymakers, and ultimately impact the practice of sustainable investing. In particular, it will focus on the following five pillars:

  1. the development of better measures to track progress toward the mitigation of system-level challenges;
  2. the fostering of academic scholarship;
  3. improving dialogue by convening and hosting leaders from academia, policy, the public and private sector;
  4. the development of new courses and other educational activities to educate the next generation of leaders in policy and business; and
  5. executive education to inform and train investment and management professionals, including leaders from policy, business, and NGOs.
SIRI 5 Pillars

These pillars aim to complement, inform, and mutually reinforce each other in helping to finance a more sustainable world that ensures the long-term health and resilience of individuals, communities, the natural environment, and economies.