Investment Management Post Pandemic, Post Global Warming, Post Resource Depletion

Environmental issues including mitigating climate change, reducing pollution, and halting exhaustion of natural resources are no longer marginal cultural issues but have become parts of serious government plans with substantial funding in both the United States and Europe. Government plans explicitly call for sustainable growth with no (or minimal) use of resources. In this article, the authors argue that sustainable growth requires shifting to qualitative growth. This is more than a change in technology because it implies changes in products and services and therefore a change in demand. It also implies developing an economic theory able to understand and eventually model qualitative growth. Practical and theoretical changes will affect asset management. Investors will have to cope with new types of risk, both exogenous and endogenous, and will need to understand the cultural changes implied by sustainable growth. Although environmental issues, per se, will not affect returns, financial sustainability might imply a reduction of inequalities and therefore affect returns.