sustainability – your responsibility.

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STUDIO!SUS: In the early 1990 you started publishing on sustainability issues. What was your motivation to start working on sustainability?
Richard Sandor: I am a problem-solver. It became very apparent to me, that pro - blems concerning the environment were getting larger and larger. I did not believe that people were approaching those problems the right way. I saw an opportunity in creating incentives to change behavior rather than ordering people to change their behavior. I felt that I could make some small contributions to change the way people thought about environmental responsibility. I found it an exciting opportunity.

STUDIO!SUS: Why should conventional investors adopt the concept of sustainable investments?
I think it will pay off. I think that sustainability is a viable long-term business investment decision. I don’t think a company is viable over the long term, if it only thinks about profitability and doesn’t think about social and environmental issues.

STUDIO!SUS: How should a sustainable company look like?
On the long run a company has to create value and not only financial value but social and environmental value and ultimately investors will be rewarded by those companies. People who work and run those companies will be rewarded. If a com - pany only recognizes where the problem lies, that’s not enough.

STUDIO!SUS: Could you give us an example for a company you would call sustainable?
I would not put one versus the other and I would rather not pick one because there are many. If you look at the indices there many of them; some are better, some are worse. I think the import thing to recognize is that we change the behavior of companies and that investors change their behavior before they buy their stocks. I am not so worried about achieving the perfect; I am more concerned about changing the way people think. The companies, who are members of the Dow Jones Sustainability Index ( and the Chicago Climate Exchange (, are moving into the right direction. Examples are American Electric Powers, Ford or Rolls Royce.

STUDIO!SUS: Is sustainable investment enough to make the economy sustainable or is it just a way for investors to feel good?
The ability of shareholders to change companies behavior is enormous. We saw the negative view-point of socially responsible investment in the case of apartheid in South Africa. Investors made their voices known so much, that I think they were able to change behavior. In addition to these negative filters people can have influence with positive filters. Therefore we have to educate investors to ask their brokers and investment bankers: What are you looking at? Why choose this company in the next five years? Have you looked at its environmental performance, have you looked at its corporate governance, have you looked at how many women are employed on a senior level, have you looked on the diversity concerning the countries of origin, have you looked at employment practices and the way they treat the people? If brokers start asking companies these questions, they can change behavior, because companies care about their share-prices.

STUDIO!SUS: There are some critical voices arguing that sustainable investment will result in stabilizing an unsustainable economy. What would you answer?
I am always driven by the fact that the perfect should not be the enemy of the good. Those critiques hurt the good. It is a dangerous thinking when someone argues to better wait the total collapse instead of moving into a good direction. The perfect system is always the enemy of the good. It is like waiting for one billion people to die from aids before starting to do something.

STUDIO!SUS: You said, incentives are more powerful for changes in people’s behavior than orders. Do you think governmental regulations are dispensable for these changes?
There is a role for both. Certainly there is a role for regulatory activity and in some instances it has worked very well. I supported for example the acid rain program in the US. But I believe that incentives and creating private ownership of the environment is the most effective way to solve the environmental problem, which is critical for me as well as for your generation. When you own something, you behave different. This fits with human nature.

STUDIO!SUS: Do you think that the ratification of the Kyoto Protocol will induce a significant market for trading emission rights? What are the critical issues?
The market will be very big. Enormous amounts of wealth will be created in environmental services: for example the change of a fossil fuel driven car to a renewable, alternative fuel. These markets will create job-opportunities for people who create investments. The dimension of this transformation is comparable with technology in the 90ties or manufacturing following the Second World War.

STUDIO!SUS: Do you think that the market for emission rights is attractive only for industrial companies and countries or could this market be attractive for financial investors as well?
They will attract a lot of financial players. As a matter of fact, right now investment banks like Morgan Stanley and Goldman Sachs are involved; Barkleys and Deutsche Bank are getting into the space.

STUDIO!SUS: Can you give us a recent example that could motivate us students for sustainable development?
Sometime you will have the chance to get financial gains, but you cannot participate on something that positively affects the world. In some instances you can do transformation and positive work, but there is no financial gain. Sustainability provides a unique opportunity to create value for both you and society. There is an economic value that you can create. You have the chance to transform the world. And you have the chance to have financial gains while doing it.

Richard L. Sandor ist CEO der Firma Environmental Financial Products, und PD am Kellogg Graduate School of Management Northwestern University. Er ist second vice Chairman des Chicago Board of Trade und Verwaltungsratsmitglied folgender Institutionen: Central and South West Corp., Center for Sustainable Development in the Americas und SAM (Sustainable Asset Management) in Zürich. 2004 erhielt Richard Sandor den Ehrendoktortitel der ETH Zürich.