Broadly, there are two basic motivations for acting based on sustainability factors: achieving financial goals and achieving sustainability goals as ends in themselves.
Businesses and investors operate out of legal structures. The laws governing those structures fundamentally shape what they can do. When it comes to legal rules, motives are important, so it is crucial to be clear how sustainability factors are motivating business or financial decisions in any given case.
Financial return is generally regarded as a core goal of business and financial activity. Relevant legal rules have therefore tended to be interpreted as requiring financial objectives to be prioritised, and in the case of some kinds of institutional investor financial return is, ultimately, the only goal that they should pursue. So, a key reason for introducing sustainability factors in business or financial activity is where doing so can further the financial goals of the relevant institution. In other words, this is where sustainability considerations are instrumental to financial goals.
However, another reason why a business or finance operator might be motivated to act based on sustainability considerations is because they have a preference to align their activities with a given sustainability standard. The preference could be passive or active:
Legal duties generally allow for sustainability-related activity that is financially instrumental. Business and finance operators established as companies also often have scope to engage in sustainability-related activity as an end in itself. However, the room for some categories of institutional investor to do so is more limited.
