Writing in a post on “This Ain’t Your Daddy’s Capitalism, and That Ain’t Such a Bad Thing”, the CFA Institute’s Matt Orsagh highlighted the importance of externalities and referenced TIIP. From the post:
“Today, both companies and investors have a better understanding of the interconnectedness of companies and the societies in which they operated. No company operates in a vacuum. Whether a publicly traded company or an asset management firm, all must provide a valuable product or service to their customers or clients. To paraphrase Fink, if a society sees that a company provides a service that is detrimental to the society’s long-term well-being, that company’s license to operate will be in jeopardy.
“These days, externalities — or side effects of a commercial activity — are also better understood. Externalities encompass such side effects as pollution, greenhouse gas emissions, obesity, and other inefficiencies that have for many years not been factored into financial analysis, but do have an impact on society. This is the idea behind efforts such as those of The Investment Integration Project, which is trying to help investors better understand how their investment decisions impact the larger systems in which we operate.”