Abstract
With the growing global recognition that environmental and social crises are pushing systems of social and ecological reproduction to their breaking points, governments, philanthropists, and the private sector are proposing a variety of strategies that aim to shift the social and environmental role of finance capital from an extractive process to a reparative one. A frequent refrain is that only finance capital promises the scale of investment necessary to address Earth’s complex social and environmental problems, and that trillions of private investment dollars wait in the wings ready to mobilize for the right kinds of projects. A hallmark of these approaches is their promise of “triple bottom line” outcomes, with social, environmental, and financial benefits—what the industry refers to as “responsible investing.” This symposium interrogates the political dynamics and financial mechanisms underlying ongoing experiments in so-called responsible finance, including various forms of impact investing and financial “solutionism” to social and environmental problems. We develop the term “reparative accumulation” to conceptualize the divergent forms and continuities in how these new financial devices function across sectors, what types of futures the industry is attempting to create, the effects on socionatures, and what resistance might look like both within and outside these systems.
From impact investing1 to environment and social governance (ESG) ratings, outlets like the Financial Times and high-profile business leaders (Business Roundtable, 2019) report that finance is changing and now has both the potential and mandate to harness its influence for good—to solve the social and environmental problems the world is facing while generating profits for investors. As promoted by their fiercest adherents, new financial tools like impact investing claim to connect the New Yorker moving into her first home, the student in Tanzania studying under electric light, the small-business owner in Cambodia expanding her payroll … [and] the commercial banker placing debt in the Acquisition Fund, the high-net worth individuals investing in E+Co, or the German worker whose pension fund invested in microfinance through Blue Orchard. (Freireich and Fulton, 2009: 3)
At stake in this process is a revaluation of the social role of finance. This symposium explores various guises and mutations in what we term “reparative accumulation”: investment strategies by the financial industry and its government partners that offer finance as a benevolent purveyor of solutions to the very social and environmental problems that capitalism has historically created while mobilizing those solutions to generate profits. The contributions in this forum explore how impact investing, ESG ratings, and related products that we group into the category of “reparative accumulation” seek to make the project of socio-ecological repair into a site for the extraction of financial rents. This is not a new phenomenon, but it is one that has largely been explored through separate lenses focused on finance’s manifestations in the use of “nature as an accumulation strategy” (Katz, 1998; Smith, 2007) and the reorientation of systems of care into objects of investment (Cohen and Rosenman, 2020; Langley, 2018; Mitchell, 2017a). Thinking across these social and ecological manifestations allows us to broaden our scale of analysis and examine the particular role of reparative accumulation as an emerging mode of regulation that attempts to stabilize contradictions inherent to capitalism, especially in the face of growing skepticism since the 2008 financial crisis (Jessop and Sum, 2006).
We use the term reparative accumulation in the ironic spirit of Marx’s so-called primitive accumulation, to disrupt the tale of frictionless, do-gooding capital and the transparent representation of its “impacts” peddled by impact investment firms, while also examining the material and ideological processes by which socio-ecological harms are transformed into problems amenable to financial solutions. Our use of repair is thus more expansive than political ecological treatments of substantive forms of socio-ecological repair or reparation (cf. Cadieux et al., 2019) in that it draws attention to the ideological repair that such processes serve in the reproduction of capitalist social relations. In this light, we can identify three reparative functions that, in another ironic inversion, we could term reparative accumulation’s “triple bottom line”: first, such products may serve the reparative function for capital of a “socioecological fix,” an outlet for over-accumulated capital that displaces crisis via the production of socionatures (Ekers and Prudham, 2017). Second, they provide this temporary “fix” via efforts to redress lived socio-ecological harms, extracting value from the project of repair itself. Third, impact investments and related products strive to repair the ideological damage wrought by business-as-usual capitalism, especially in the aftermath of the 2008 financial crisis (Cohen and Rosenman, 2020; Kish and Fairbairn, 2018; see also Somerville, 2018 for a discussion of the colonial roots of some of these projects). Reparative accumulation thus serves not only a socio-ecological purpose but also a crucial ideological one in cementing what Mark Fisher (2009) called “capitalist realism,” an ideological mode that renders alternatives to capitalism unthinkable. While there are tensions within this sector (as explored by Irvine-Broque, DiSilvestro, and Dempsey; Kish; and Mitchell in this symposium), reparative accumulation strategies are justified by proponents through a continual effort to define the terms of what is politically “pragmatic” or “realistic,” despite substantial evidence that such solutions are often demonstrably impractical (Dempsey, 2016).
Our ironic use of the term does not signal that reparative accumulation has no possibility of achieving substantive socio-ecological repair; indeed, in a climate of general austerity, reparative capital is mobilized and courted by a diversity of civil society actors for the purposes of harm reduction and progressive ends (Webber et al., in review). The goal of this forum is rather to expand the critical geographical tools for evaluating the uses and implications of reparative accumulation across its ideological and material functions, with particular attention to the linkages it draws between social and environmental crises. As witnessed in the diverse geographies and processes covered by contributors to this symposium, geographers are already exposing the messy, and often harmful, ways in which reparative accumulation transforms socionatures to suit the needs of capital. Central to such transformations have been attempts to standardize definitions of “impact” across geographies and sectors with the aim of measuring and comparing the social and environmental value of investments from “a company that provides hospital care in sub-Saharan Africa or one that builds solar arrays in India” (Fischer, 2020). Indeed, those promoting reparative accumulation have been generating a rapidly proliferating number of metrics that work across sectors (e.g. IRIS+, the Dow Jones Sustainability Index, FTSE4Good Index, Impact Multiple of Money).
Yet, despite this clear empirical overlap in how reparative accumulation works across social and environmental spheres, critical interventions have tended to be limited by persistent divisions among social and environmental subfields (although see Bigger and Millington, 2020). In this regard, at least, financial actors seem to be beating political ecologists at their own game, explicitly recognizing the inseparability of social and ecological crises by proposing “triple bottom line” solutions that promise environmental and social uplift alongside profits. Our position is that building a conversation across these silos is an essential next step for critical studies of reparative accumulation as an emerging mode of regulation and of the political interventions in the worlds it produces; including, as Irvine-Broque, DiSilvestro and Dempsey explore, unpacking any progressive potential within this project. By working and thinking across projects in “green” and “social” finance, this symposium examines the common processes through which finance attempts to “do good” across myriad geographies and sectors and its ability to (temporarily) stabilize capitalist crisis tendencies.
To this end, this symposium brings together critical perspectives on reparative accumulation from scholars who work across a variety of geographies and sectors. The commentators interrogate the political dynamics (Kish; Mitchell) and financial valuation mechanisms (Asiyanbi; Parfitt and Bryant) that underlie ongoing experiments in this new frontier of capital, including various forms of impact investing and financial “solutionism” to social and environmental problems that range from the moralizing discourses of individual investors (Kish) to worldwide sustainable development goals (Asiyanbi, 2017) and the pricing of global risks from pandemics to climate change (Parfitt and Bryant). Collectively, these commentators examine the ideological and material work accomplished by reparative accumulation as well as its limits (Irvine-Broque, DiSilvestro, and Dempsey), highlighting, in the words of Parfitt and Bryant (below), “the strategically selective representations of the ‘social’ and the ‘environmental’” that emerge from its various forms.
This begins with Mitchell’s unpacking of the political, ideological, and governmental dimensions of reparative accumulation. Asiyanbi then examines how reparative accumulation interacts with state-driven national and international processes to produce its objects of investment, highlighting how both the “social” and “environmental” are “reified, visibilized and dissolved” as finance extends into new asset categories that mobilize a neutral idea of impact. Parfitt and Bryant move from impact investing to ESG ratings, showing how socionatures are selectively translated into “risks” that capital can see, making them “market compatible and profit oriented.” Kish shifts from the systemic level to examine the tensions emerging at the individual level as impact investors negotiate the failure of their projects to produce widespread change through individualized discourses of moral worth—potentially part of a sectoral reckoning with the crises of 2020. Finally, Irvine-Broque, DiSilvestro, and Dempsey build on the tensions identified by other authors to ask how the widening “cracks” in the neoliberal consensus cushioning reparative accumulation might provide opportunities for more substantively-reparative regulatory agendas. Together, these contributions highlight the myriad ways in which reparative accumulation functions across geographic scales and processes, but also commonalities in how its projects seek to perpetuate market rule through the creation of a common view of social and environmental progress that facilitates investment by bypassing or erasing the friction of unruly socionatures.
Social impact investment: Policy, ideology, governmentality
University of California, USA
In the face of obvious market failures in social provisioning, as well as the clear relationship of unfettered capitalist development to environmental catastrophe, how do capitalist markets continue to enjoy generally positive regard? I address this question by looking at the role that social impact investment plays in ameliorating the worst forms of damage caused by free market systems, while simultaneously changing attitudes and inculcating new market-oriented subjects. Drawing on Wendy Larner’s (2000) influential article on neoliberalism, I flesh out a research agenda that assesses impact investment through the lenses of policy, ideology, and governmentality. These three different but related approaches can help us to tease out the complexities of social impact investment as well as demonstrate how it is both a project of capital and a project of governance. Further, investigating impact investment in these three domains increases the opportunity to grapple with the similarities between philanthropic sectors and to think across green and social finance to observe the processes common to both. With the policy interpretation, it is possible to examine how a policy agenda involving politicians, banks, donors, and other actors helps to establish a political program in which social impact investment can function; interpretations focusing on ideological formation enable a glimpse of the persuasive ideas that advance a business logic and consolidate new political positions; and a governmentality lens allows us to see the cultivation of entrepreneurial and prudential subjects and the construction of new forms of philanthropic governance. In the three sections below, I give a brief example to help flesh out each of these approaches. The intent here is to establish the positive potential of all three concepts, whether taken up as an individual academic endeavor or as part of a collaborative research agenda involving multiple scholars and practitioners.
Policy: Foster markets and harness the state
A key conceptualization of social impact investment relates to its importance as part of a broader policy framework shoring up market systems that are deficient or perceived to be failing. What Matt Sparke and I called market foster care in earlier work (Mitchell and Sparke, 2016) and Cohen and Rosenman (2020) termed reparative capitalism are initiatives by key actors and institutions to help the market survive in the face of obvious crisis. This framework is developed further with the concept of “reparative accumulation” discussed in the introduction to this symposium (Cohen, Nelson, and Rosenman, this issue). Instead of direct state support leveled at areas of market failure—such as in the provision of affordable housing or deceleration of climate change—political actors facilitate mediated solutions through new financial devices and social impact investment opportunities. These opportunities are often in the form of hybrid market partnerships that yoke together government actors, NGOs, non-profit and for-profit organizations.
One example of this kind of public–private partnership took place in 2013, when the then Prime Minister Cameron presided over the first G8 Social Impact Investment Forum in London. He invited politicians, philanthropists, businesspeople, and academics to network and catalyze new social impact initiatives at this event (Mitchell, 2017a). As the leader of government in the UK, Cameron explicitly encouraged and aided UK banks to partner with social agencies and government in tackling entrenched social problems. This “encouragement” took the shape of policy through the formation of the UK bank, Big Society Capital, which helped to enact the kinds of impact investments Cameron was envisioning and promoting as a politician. Since that time there have been countless examples of these types of public–private partnerships operating in both social and green sectors worldwide. The important role that heads of state play in galvanizing these philanthropic assemblages and then building policy around them is instructive. Instead of providing for its citizenry, policing market rule or demonstrating sovereign authority over territory or population, the state here manifests power by facilitating partnerships in service to reparative accumulation. In doing so, a policy terrain is opened up that harnesses government to the market while simultaneously extinguishing any lingering Keynesian sentiments vis-à-vis the role of the state as the central provider of social or environmental goods.
Ideology: Measure and assess value
The ideology approach opens up the wider struggle over hegemonic formation, enabling us to ask how and why subjects might consent to new political interventions based on a social impact investment logic. Individual and group understandings about social impact investment are formed through multiple often contradictory threads, but here I point to just two: the constant emphasis on transparency and efficiency in capitalist markets, and the equally inexorable rhetoric of inefficiency and corruption in government. The first is generally promoted through the reputed neutrality of numbers and the importance of expertise, metrics, and accountability in business practices. The second is more insidious, relying on racist assumptions about chronic nepotism in non-western, developing countries, and bureaucratic inertia and ineptitude in western governments. Taken together, these two discourses nudge people toward market-based solutions and partnerships and function to justify and legitimate the introduction of ROI philanthropy in both social and green programs.
Examples of these forms of rhetorical and ideological persuasion can be found across the philanthropy spectrum. In the celebrity philanthropist Bono’s TED talk in 2013, for instance, he spoke about the problems of political bias and crony capitalism in government and the need for facts, transparency, and reason. He said, “And right now, we know that the biggest disease of all is not a disease. It’s corruption. But there’s a vaccine for that too. It’s called transparency, open data sets.” Honing in on cronyism in developing societies he continued, So let me tell you about the U-report, which I’m really excited about. It’s 150,000 millennials all across Uganda, young people armed with 2G phones, an SMS social network exposing government corruption and demanding to know what’s in the budget and how their money is being spent. (Quoted in Mitchell, 2017b)
Governmentality: Cultivate the entrepreneurial self
A third research approach to social impact investment is through a governmentality lens, which involves understanding the programs and technologies through which individuals and populations are recruited into particular forms of subjectivity. In this case, social impact investment follows other liberal philanthropic practices that have emphasized self-interest and the development of human capital. From the beginning of modern, early 20th-century philanthropy, major figures such as Carnegie and Rockefeller encouraged recipients to develop personal autonomy and to improve themselves as workers and citizens. Social impact investment continues this trajectory with an even stronger push toward risk-taking and entrepreneurialism. Both donors and recipients absorb the necessity of using rankings, competition, and benchmarking to set and make funding priorities; they adopt entrepreneurial ways of thinking into their practices and their everyday lives. Governance, in this scenario, is not about persuading individuals about the truth or logic of a way of thinking; it consists of “setting conditions and devising incentives so that prudent, calculating individuals and communities choosing ‘freely’ and pursuing their own interests will contribute to the general interest as well” (Li, 2014: 37).
Creating the conditions in which entrepreneurial subjects can use their own “powers of freedom” (Rose, 1999) to make optimum cost–benefit calculations is the hallmark of venture philanthropy and social impact investment. It is evident in contemporary microfinance programs, education reform grants, global health initiatives, environmental management, and green eco-ventures. Both green and social financial structures are involved in these forms of philanthropic governance. Through their programming and technologies of calculation and accountability, they constitute subjects oriented toward prudential self-improvement as well as market advantage and opportunity. The will to improve—both self and society—is engrained and embodied in trustees of land and ideas about development and environmental expertise and management worldwide; it impacts assumptions about what crops to plant and trees to grow, when to harvest, and how best to do so. A governmentality approach can help to elucidate the environmental side of impact investing in myriad ways, as it involves investigating the transnational practices and programs of international development alongside the formation of entrepreneurial and calculating subjects in both developed and developing societies.
In Larner’s (2000) important essay on neoliberalism, she points to the governmentality interpretation as the most useful way to understand the socio-economic transformations that were occurring in the 1980s and 1990s. Here I underline the usefulness of all three lenses in providing a broad research approach to contemporary social impact investment and reparative accumulation more generally. I believe that investigating this widespread phenomenon from different vantage points, using varied methods and concepts, will help us to better interrogate and critique this faux project of beneficent progress.
Impact investing: (In)visibilizing and producing “impact”
2129 University of Calgary, Canada
Impact investing further renders socionatures legible to finance capital through claims of “impact.” Here, I briefly reflect on three aspects of impact investing that relate to the categories of “social” and “environmental” impacts as self-declared objects of reparative accumulation. First, I show how recent global agendas such as the sustainable development goals (SDGs) and the Paris Agreement appear to have contributed to legitimizing impact investing, reifying its objects of reference. Second, I note some of the political work entailed in visibilizing these objects of reference through a system of valuation that obscures as much as it visibilizes. Finally, I show, through an example of the forest sector how this valuation system allows proponents of impact-claiming interventions on the ground to sidestep contradictions by tentatively dissolving boundaries and categories. The reach of finance capital is being extended as these objects of impact investing are variously reified, visibilized, and dissolved, while the very term “impact” (read positive impact) serves a powerful purpose of invisibilizing adverse effects.
Legitimizing impact investing
Through the expanding landscape of impact investing, finance capital claims to contribute to addressing environment and social problems, while generating returns for investor. One estimate puts the total assets for potential impact investors at $2 trillion in 2019, with funds sources that range from public markets such as development finance institutions to private markets such as private debt funds, private equity, and venture capital funds (International Finance Corporation—IFC, 2020). The rise of this niche domain of finance is partly a reflection of the remarkable constellation of actors, agenda, institutional principles and practices which are fast aligning to constitute impact investing as an important expansionary front for capitalism. Three of the recent global agendas, which have been central to the recent expansion and growing mainstreaming of reparative accumulation, are the Paris Agreement, the Natural Capital agenda, and SDGs.
While the ambition (let alone action) of Parties to the Paris Agreement was grossly inadequate to keep global temperature at or below 2°C, it was nevertheless sufficient to provide significant momentum and a strong moral appeal for impact investing. Indeed, one way in which ambition has been understood in this context is in the mobilization of finance. Thus, the Global Impact Investment Network (GIIN), the world’s largest network of impact investors, justified its dedicated climate investing track by pointing to the need for massive impact investments in the order of “several trillion dollars a year” in order to keep global temperatures below 2°C as agreed in the Paris Accord (GIIN, 2020). Yet, impact investing builds on the natural capital agenda, an idea which gained momentum about a decade ago, advanced by multilateral development organizations including the UN, the development banks, investment banks, conservation organizations, and host of other actors seeking to account for the monetary value of nature (TEEB, 2010).
The remarkable alignment of impact investing with international development reflects most strongly in the SDGs. For instance, the Addis Ababa Action Agenda agreed by the 193 UN members on financing for the SDGs devoted specific action points to promoting impact investing (UN, n.d.). This is part of a wider shift in the development sector toward market finance to supposedly plug shortfalls in official development assistance estimated at $2.5 trillion annually. Increasingly, aspects of international development, which had historically been shielded from the market (e.g. International Development Association), are now decidedly mobilizing impact finance from the market. Development geographers are already analyzing these trends as part of the speedup and intensification of “financialization in the name of ‘development’” (Mawdsley, 2018: 264). What is at stake here is not only the problematic redefinition of development in terms compatible with profit-oriented capitalist growth, but also the legitimization of impact finance and the tentative reification of its objects of reference—“the environmental” and “the social”—as substantive domains of intervention.
If the Paris Agreement and the Natural Capital agenda provide some legitimacy for environmental impact, the SDGs legitimize both the social and the environmental dimensions. With the 17 goals, 169 targets and 247 indicators, the SDGs readily project an array of social and environmental problems for reparative accumulation concerned to demonstrate the “triple bottom line.” So readily transferable are the SDG targets and indicators into impact management systems that some insist that the SDGs become the “universal benchmark for sustainable investing around the world—a sort of Generally-Accepted Accounting Principles (GAAP) for the planet” (Zwick, 2017). Together, these agendas reify “the environmental” and “the social” as substantive objects of intervention for impact finance. They provided some of the basis for discursively linking notions of “the environmental” and “the social” in impact finance to hegemonic, if contested, visions of reality.
(In)visibilizing “impact”
These environmental and social objects of finance are the pillars of the valuation system, composed of diverse tools (such as measures, standards, targets, and principles) and processes through which the moral worth and profit potentials of claims about particular interventions are rendered visible (Cohen and Rosenman, 2020). Besides being partly constitutive of some of the reality it seeks to name, this valuation system also does some other important political work. For instance, the term “impact” itself, taken as only positive in impact investing, represents a subtle evacuation of the term’s dual reference to both the positive and the negative. Depoliticizing “impact” in this way means that the possibility of underlying intervention producing adverse impacts is rendered unthinkable, ab initio. Moreover, studies show that the major standard for carbon offset verification, for instance, “do not account for additional (negative) environmental and social impacts that project activities related to carbon offsets may cause” (Arendt et al., 2021: 189). This means that negative impacts are doubly invisibilized—both in the valuation system and in proponents’ accounts of referent interventions.
Capturing the triple bottom line of social, environmental, and financial impacts entails taking account of the social and the environmental at once, with numerous subcategories and indices, as tools like the IRIS+ reveal. But this dual focus on the social and the environmental should not be confused with a deep reckoning of the material and cultural co-production of nature and society. Rather, the logic of impact legibility reflects a world of finance that seeks to reconstitute (claims of) “the social” and “the environmental” in its own image. It is about formatting claims of impact into an array of simplified, isolated, standardized, and fungible indices that ultimately share a common denominator. While this shares some similarities with processes of commodification and financialization of nature long analyzed by critical scholars (cf. Sullivan, 2013), this valuation system reflects greater degrees of abstraction since it is constructed prior to and independent of impact-claiming projects, and it seeks standardization across very broad categories of “the environmental” and “the social.” Yet, the effects of this valuation system should not be underestimated. One important effect, as I show in the example of the forest sector below, is that the abstraction entailed in these purified metrics of impact attempts to sidestep the distinctions, contradictions, and trade-offs that would usually accompany underlying interventions, furthering the reach of finance capital.
Effects, beyond “impact”
Some of the effects of impact investing and its valuation system are evident in the world of impact-claiming projects. Here, I take an example of impact investing activities in the forest sector, which in the age of climate change, has been touted as an attractive sector that offers opportunities for a wide range of potential impact-claiming interventions seeking to address carbon emission, deforestation, biodiversity loss, rural poverty, and so on. For instance, the global network GIIN recently published a major report to demonstrate “the compelling opportunity that the forestry sector presents to impact investing” (GIIN, 2019). Cases in forestry illustrate how impact investing enhances the drive of finance capital to create value across an ever-wider range of activities and components of the forest landscape.
For example, AlphaSource Climate Funds, a $250 million fund with a portfolio and pipeline of REDD+ projects across Africa, SEA, and Latin America targets landscapes where REDD+ investments can cover a range of projects including “responsible mining, sustainable timber, climate-smart commodities, and other practices” (Zwick, 2017).2 In the Kasigau Corridor REDD+ project which has received investments from €101 million Althelia Climate Fund and the IFC’s $152 million Forest Bond, revenue sources for the project included not only carbon credit sale but production and sale of charcoal, Ecotourism lodge and marketing of locally produced arts and crafts (Kill, 2016: 15). In their own account of biodiversity conservation in Kenya, Dempsey and Bigger (2019: 523) also report “an array of investments in conventional commodities like cattle meant to have conservation benefits.”
Not only does the very search for “impacts” open up a wider array of domains of intervention for project proponents, the valuation system of impact investing—with its standardized and fungible indices—also structures impact-claiming projects in ways that allow trade-offs and counterproductive effects to be side-stepped—at least in the visibilities projected “upward” to investors. Impact gets reframed in the narrowest ways possible. For instance, under a REDD+ project, it becomes possible to unproblematically demonstrate “impact” on the basis of a narrow indicator such as decline in tree cover loss, even if such a decline has been achieved through the exclusion of local communities or through means that exacerbate social problems, as seen in many REDD+ projects (Asiyanbi and Lund, 2020; Milne et al., 2018). In fact, while impact investing may claim to pay attention to the “triple bottom line” at once, the very nature of its valuation system means that the narrowly framed metrics of “the social” and “the environmental” are fungible and proponents can pick and choose. For project proponents on the ground, it means that distinctions across and within “the social” and “the environmental” matter less, and even less the adverse effects of projects.
This tendency to constitute and align a wide array of unlikely activities and asset categories derives partly from the legibility afforded by the valuation logics of impact investing. Of course, the everyday moral and entrepreneurial performances of local proponents at project sites are a significant factor here (Dempsey and Bigger, 2019; Kish and Fairbairn, 2018). Project proponents do construct and share their own stories of impact through brochures and colorful webpages (e.g. Wildlifeworks, n.d.). Indeed such performances are very much co-constitutive of the valuation system of which metrics and standards are only a codified part. However, the point is that the valuation system of impact investing reflects an important discursive moment for deepening and extending the material reach of finance capital into nature and social life in important ways.
Here, briefly, are only few of the logics through which impact investing seeks to deepen and extend the reach of finance in what the introduction to this forum aptly conceptualizes as “reparative accumulation.” What is clear is that understanding and uncovering the wide-ranging effects of these logics demands analyses that collectively take seriously both the discursive and the material circuits of impact finance across scales. Visibilizing and challenging the adverse effects that are variously invisibilized in impact investing also remains an important task, as critical scholars continue to scrutinize the ongoing financialization of social life.
Derivative socionatures: Abstract risk and financial materiality in ESG integration
University of Sydney, Australia
The Financial Times reported in July 2020 that ESG (Environmental Social Governance) funds had outperformed more conventional funds since the outbreak of Covid-19 (Tett, 2020). This has led many advocates to claim that ESG investing can create a more resilient economy. Such claims are becoming increasingly commonplace in the financial sector, and are backed up by some longer term studies of ESG performance, although contested by others (Friede et al., 2015; Kölbel et al., 2020).
This short commentary seeks to move past (justified) critiques of ESG as ‘greenwashing’, and focuses on how, taking up Dan Cohen, Sara Nelson and Emily Rosenman’s provocation in the opening commentary, responsible investing is driving a ‘revaluation of the social role of finance’. We do this by taking seriously the claims of ESG managers and investors that growing imperatives for ‘doing well by doing good’ are transforming finance, whether or not the latter (doing good) is actually realised (Parfitt, 2020). This opens up important questions about what exactly is being transformed, and in particular, what kind of socionatures are being protected or promoted by ESG investing? Pursuing this question through the example of ESG investing offers the possibility of a more systemic critique of responsible investment, compared to those that are based on case studies of particular projects or instruments.
We argue that ESG, as a form of ‘reparative accumulation’, creates derivative socionatures with the aim of securing the resilience of capital itself. ‘Derivative socionatures’ are strategically selective representations of the ‘social’ and the ‘environmental’ as bundles of risks for capital. The derivative socionatures created by ESG integration are concerned only with exposures to risks that have a financially material impact on investment outcomes, resulting in an uneven distribution of risk that is on capital’s terms.
ESG investing, or ESG integration, emerges from the broader trend toward responsible investment but is significantly different from other strategies associated with the term. Responsible investment, notoriously difficult to define (Langley, 2018; Soederberg, 2009), includes positively and negatively screened portfolios, equities investing which seeks a particular and measurable social benefit, and various forms of socially and environmentally defined bonds. By contrast, ESG investing requires integrating financially material environmental, social and governance (ESG) risks into investment decision-making. It is not product-, project-, or issue-based. As a risk assessment and management process, ESG integration can be applied to any investment strategy, portfolio or company. ESG investing is sometimes presented as ‘responsible’ but has no clear ethical or principles base that places absolute constraints on finance. Rather than seeking a normative goal through finance, it is an investment strategy that insures capital against social and environmental risks.
ESG investing operates at a different scale to other responsible investment strategies that are built around particular projects or instruments. Critical geographical research has demystified many such projects and instruments by revealing the materiality of the resources and labour involved in their construction. It has demonstrated how initiatives from social impact bonds to carbon offsetting projects have tended to operate through processes of commodification that abstract from geographical context in order to promote accumulation (Bryant, 2019; Cohen and Rosenman, 2020; Harvie and Ogman, 2019; Rosenman, 2019).
Studying the latest novel financial instruments or projects reveals important insights about the frontiers of responsible investment. Yet, their often ‘small, marginal, and geographically constrained’ status within financial markets do not always match arguments about ‘nature as accumulation strategy’ (Bryant, 2018; Dempsey and Suarez, 2016: 654). Further, illuminating the materiality of responsible finance on the ground offers valuable insights into processes of ‘market making’. But, this can lead to what Bigger and Robertson (2017: 69–70) describe as ‘analytically paralysing’ arguments that different socionatures are fundamentally incomparable, missing the ‘regimes of value’ that nonetheless connect and reshape them.
A focus on ESG investing addresses both issues in a way that reveals the potentially systemic ‘revaluation’ of finance by responsible investment. First, ESG investing is widespread and growing quickly. In 2020, global investment in ESG products grew to USD1.6 trillion, with USD152 billion of new money invested throughout the year (Webb, 2021). Over 2019 and 2020, ESG funds attracted almost twice as much new money as the rest of the equities market combined (Wigglesworth, 2021). Second, the ambition of ESG is not limited to the commensuration of different ways of reducing carbon, or the costs anti-recidivism programs vs. incarceration, but of integrating ESG metrics and standards into capitalist finance in general. Through ESG investing we can gain a more comprehensive understanding of how and why capital sees environmental and social challenges together, and what kind of socionatures it seeks to protect and promote.
With its focus on identifying and managing risk, ESG investing reflects the establishment of risk as a master narrative of the contemporary economy (Johnson, 2013). While risk has always been crucial to capital accumulation (Bernstein, 1998), it occupies a particular place since the transformations of finance and statecraft since the 1970s. The widespread dispersion of financial derivatives has changed the function of risk. Risk is now commodified. As Christophers (2018: 331) argues, risk is finance’s ‘stock in trade’. The commodification of risk opens up opportunities to profit from constructing, and pricing, unequal spreads of risk exposure and absorption (Bryan, 2016). A recent example is the World Bank’s failed pandemic bonds that delivered woefully inadequate payouts for beneficiary nation states but windfall profits for investors (Hodgson, 2020). Commodified risk is centred in accumulation through the logic of the derivative (Martin, 2015). Through the derivative logic, finance makes the future actionable in the present and connects otherwise distant phenomena and actors. Continuing the example, pandemic bonds operate through a derivative logic because they enable investors to be exposed to the risk of a pandemic of a certain level of severity occurring (Erikson and Johnson, 2020), without necessarily being directly exposed to the impacts of the pandemic itself.
The logic of the derivative clarifies critical perspectives on the commodification of risk in ESG and other processes that make socionatures ‘investable’ (Baker et al., 2020). Financial derivatives enable the pricing and trading of risk by unbundling certain attributes of economic life from their particular contexts and rebundling them with comparable phenomena across different contexts (Bryan and Rafferty, 2006). The explosion of financial derivatives as a tool for managing all manner of risks establishes a role for abstract risk as an organising logic in the global economy (LiPuma, 2017). In producing abstract risk, finance is less engaged in a process of detaching from the concrete, as is often maintained, as it is connecting contexts in ways that are derived from partial representation of the concrete based on discrete measures of risk (see also Büscher, 2010).
ESG investing accesses, manages and expands abstract risk (Christophers et al., 2020). ESG investors bring the ‘social’ and ‘environmental’ together in a very particular way: as financially material risks for capital. This is the frame through which capital renders socionatures legible and thus investable. Contradictory ratings by ESG funds show that this is an emerging and contested process. Using a derivative logic, ESG creates opportunities to profit from risk spreads that emerge between socionatures that have been rated in different ways (Gabor, 2021). In the process, socionatures become increasingly shaped by what and whose risks are, and are not, commodified.
Crises bring the relations of abstract risk into sharp relief because they represent acute moments when risk is realised. The Covid-19 pandemic rapidly exposed interconnections between ESG risks and economic impact. It is credited in particular with highlighting the need to incorporate the ‘social’ more strongly alongside environmental and governance risks. Around the world, weak labour rights and workplace health and safety, as well as inadequate access to health care, have fuelled the spread of the virus.
Before the pandemic hit, UK fast fashion company Boohoo was rated highly by influential ESG ratings agency MSCI for labour standards because of its UK-centred supply chain, and a large number of ESG funds were invested in the company (Nilsson and Mooney, 2020). In the opening months of the pandemic, Boohoo’s profits increased on the back of demand for online sales, boosting the performance of ESG funds. The company’s share price then crashed after it was accused by campaigners (Labour Behind the Label, 2020) and media (Wheeler et al., 2020) of sourcing clothes from Leicester factories that used ‘modern slavery’ and were exposing workers to risk of coronavirus infection.
Much has been made about the failures of ESG analysts to identify this problem at Boohoo, and more broadly about the discrepancies between different ESG agencies’ ratings. The episode, however, illustrates how the integration of socionatures into the field of abstract risk is mediated by what is financially material. Derivative socionatures for ESG are bounded by financially material risk. Significant concrete social and environmental risks not deemed to have financial implications are in practice excluded from the purview of ESG integration. The spread between the risk to investors represented by Boohoo’s ESG rating and the risk faced by its workers opened up opportunities for ESG funds to profit. Despite well-documented problems in Leicester garment factories (Hammer et al., 2015), it was only in the conditions of the pandemic that the risks faced by these workers became sufficiently visible to be financially material, closing the profitable risk spread and triggering a revaluation of Boohoo – for a time.
This returns us to the question: what kind of socionature does ESG investing promote and protect, and what kind of economic resilience does it create? ESG does not make any absolute claims about what is socially or environmentally ‘responsible’. It takes a derivative position that is based on what attributes of socionatures represent financially material risks. This remains on capital’s terms because it leaves open the possibility of exposure to the risk where the price is right. For some investors, taking risks on ESG will prove immensely profitable. The centrality of risk and financial materiality to the process of ESG investing necessarily circumscribes the range of ESG issues that can be considered. Despite moves to introduce ‘double materiality’ into ESG that incorporates both financial risk to companies and socio-ecological risk (European Commission, 2021), there will always be an asymmetry between the financial and the non-financial in any private sector mode of regulation. The socionature that is protected is market compatible and profit oriented. ESG investing should outperform if it successfully integrates financially material risks, but only if ESG factors that do not put profits at risk are excluded.
For activists, this means ESG opens up strategic opportunities to politicise risks that have been shifted onto socionatures in order to make them financially material. ‘Risking’ investments in things like coal or prisons is emerging as a viable tactic in campaigns for climate and racial justice. This follows Erikson and Johnson’s (2020: 530) argument about pandemic bonds, which suggests public health advocates ‘engage with and interrogate the language and priorities of finance’, rather than moralising about financial incursions into previously non-financial spheres. These strategies to intervene in and politicise financial markets are welcome proposals but, like initiatives that aim to politicise ESG risk, they must be connected to other sources of power in order to be effective.
In the months after the Boohoo revelations, the brief convergence of risk between the material conditions facing labour and the financial performance of the company dissipated. The same week that an independent report commissioned by Boohoo found the allegations were ‘substantially true’, Boohoo announced a 51% increase in half-yearly profits and its share price bounced back (Boohoo Group, 2020; Levitt, 2020). Efforts to put Boohoo’s ESG rating ‘at risk’ by politicising the risks faced by workers nonetheless forced the company to audit its supply chain and publish a list of 78 approved suppliers, down from over 500 before the controversy (Boohoo Group, 2021). However, this process was instituted and conducted on the company’s own terms, signalling the need for an organised trade union to negotiate and hold the firm accountable on an ongoing basis to achieve meaningful change in the lives of workers. In sum, understanding the derivative socionatures of abstract risk reveals new ways in which capital is accumulating and new possibilities for contesting (reparative) accumulation. This ‘risky’ politics should therefore complement, rather than displace, labour’s traditional strategies.
Performing impact in the Covid-19 crisis
Zenia Kish
University of Tulsa, USA
The combined crises of the Covid-19 global pandemic, resulting economic retraction, and nation-wide anti-racist protests in the US have sparked intense, even self-reflective, conversation among impact investors and their allies in philanthropic and related spheres. In industry publications, events, and webinars, many have raised questions about what, fundamentally, impact investing can offer in this moment. Such musings have led to questions about what the sector has actually achieved since its institutional beginnings a little over a decade ago. After all, the majority of social and environmental issues impact investors pledged to help solve have only deepened over this time. The reparative vision these investors hold for capitalism has been deeply challenged by the inescapable surfacing of the underbelly of endless market expansion, not least the unavoidable socionatural origins of the pandemic and the racialized distribution of its effects. While the contradictions subtending capitalist growth are not new, their visibility in this moment makes it harder for impact investors to minimize them—and their own role in expanding market rule over social and environmental domains—given their avowed commitment to creating triple bottom line value. These concerns have been compounded by the reality that the capital diverted to impact-oriented funds are growing but continue to represent a minor niche in overall investment capital. The legitimacy of the sector, and its project of further financializing social and environmental domains, therefore finds itself vulnerable not only to existing anticapitalist critiques, but to internal disillusionment as well—a moment of crisis, but also potential opportunity for a more radical reappropriation of impact energy and capital.
In this commentary, I briefly examine several elements of this pandemic rhetoric to highlight the cracks emerging in the conventional optimism of impact investor discourse that they can fix social and environmental crises through profit-seeking solutionism, without risk to entrenched market structures. The moral stories being disseminated by impact investors reveal the limits of ethical imaginaries in the sector: what is the meaning and scope of ethics for these actors? What cracks become visible in the internal dialogues between investors, asset managers, philanthropists, and social entrepreneurs as they negotiate the definition and measurement of socio-environmental value in their investment practices, and how do they patch them ideologically? How are the politics of social change rerouted through personalizing discourses of self-actualization? These questions deserve scrutiny precisely because this marks a moment of regrouping for impact investors, and tests the legibility and adaptability of the reparative promises embedded in the triple bottom line, even to those within the sector.
Central to these conversations is the ideological work of reviving and justifying individualistic moralizing discourses. Even as structural critiques of racism and human-induced climate change are increasingly evoked in political and business discourses in the US, albeit in attenuated form, the reparative function of impact investing continues to pivot on the mythology of individual entrepreneurialism as the frictionless, and indeed most ethical, method of solving global grand challenges. In this way, the performance of ethical commitments by impact investors (the ideological repair discussed in this symposium’s introduction) supports and reinforces the extraction of value through the “fixes” of reparative accumulation. Below, two brief examples illustrate how this ideological work is articulated in impact investing culture. I argue that these moments of self-reflection may perform a systemic critique of their own movement, yet ultimately reveal the limits of the reparative financial imaginary by reinscribing it within familiar, depoliticized frames of market-mediated social change.
One significant strand emerging in the impact investing field is the retreat from socio-economic analysis of intersecting crises into a focus on moral self-improvement. Jacqueline Novogratz, the founder of Acumen Fund and a frequently cited “thought leader” in the sector, has built a sub-industry of social entrepreneurial self-development through social media, books, leadership training, and other outlets. In the summer of 2020, the Acumen Academy ran an online course entitled “The Path of Moral Leadership” to promote her recently published book, Manifesto for a moral revolution (Novogratz 2020a). She explained in her opening address that the book was inspired by her desire to see “radical moral rejuvenation” in “our deeply flawed world,” which involves cultivating the 12 qualities of moral leadership, including moral imagination, empathetic listening, practicing courage, avoiding the conformity trap, deploying humility with audacity, and telling stories that matter (Novogratz, 2020b). Updating managerial and motivational rhetoric with a cosmopolitan ethic of empathy and self-care, Novogratz’s revolution centers the cultivation of an ethical entrepreneurial subject whose ability to achieve measurable impact is pegged to their self-improvement. In another recent book, The Purpose of Capital: Elements of Impact, Financial Flows, and Natural Being (2018a), Jed Emerson strikes a similarly personal, at times pseudo-spiritual, tone in arguing that impact investing still provides the best method to reinvent capitalism from within. Credited with coining the term “impact investing” with Antony Bugg-Levine, Emerson has more recently expressed concern that the sector’s moral mission is in danger of becoming diluted by mainstream financial firms and investment banks that subordinate impact to returns, while profiting from the cachet of ethical branding (Emerson, 2018b). The sector has become too focused on pitching solutions to discrete problems, the mechanics of structuring funds, and developing measurement tools, he argues, and has lost sight of the deeper purpose—the “why”—of impact investing. Echoing Novogratz, Emerson advocates investors undertake a project of the self by exploring various thinkers he deems crucial to rethinking the social function of finance, from Spinoza to Karen Armstrong.
Another notable element of recent impact discourse is the circumscribed negotiation of current market conditions, both acknowledging and containing structural contradictions of the expanding financialization of social and environmental life. Impact investor Sir Ronald Cohen, for instance, admits that “COVID has shaken our habits and beliefs, and is opening up all sorts of questioning about capitalism” as widening inequalities “are threatening the very stability of our society” (2020b). Emerson concurs that “we operate within an economic order that is founded upon injustice” and that “you, to my mind, cannot be an impact investor and not have […] a critique of modern financial capitalism” (2018b). Yet, in the same breath, Cohen reinforces the sector’s unquestioned commitment to upholding capitalism because “we don’t really want to give up the huge power of markets, financial markets, entrepreneurship in pulling people out of poverty into prosperity.” The commitment to financialized solutions for socio-environmental crises must be made and remade as impact investors tread a fine line between conceding the harms wrought by endless accumulation and repairing them through market-based solutions. Renewing one’s personal faith in their “moral imagination,” as Novogratz would have it, helps to reinscribe these solutions within the domain of individual action and away from other, more radical, politics of engagement.
Industry discussions like these contain surprisingly candid admission of several contradictions internalized by mainstream impact investing. Its financialization of social and environmental life hinges on a depoliticized compromise between its competing orders of worth, particularly between the moral register of performative compassion and care (e.g. Novogratz and Emerson), and the sector’s ideological embeddedness within the financial markets that sustain many of the inequalities and environmental harm they seek to repair. As Boltanski and Thévenot (2006) suggest, different orders of worth can coexist in dynamic equilibrium, but conflicts between their distinct values and logics can also threaten institutional stability (Patriotta, Gond, and Schultz 2011). Further, even as impact investors deem their expansion of market logics into further reaches of social and environmental life essential, such an expansion presumes the permanence of a stable, liberal democratic and legal order to support the market infrastructures they rely on. In the face of the global rise of the far right, the ineffectiveness of multinational commitments on climate change, and other factors threatening the stability of the order, these actors have so far evaded the political implications of their oft-reiterated assertion that markets must align with governments to solve social and environmental problems (Cohen, 2020a).
Against the backdrop of Covid-exacerbated economic and political unraveling in the United States (where many impact leaders are based), Novogratz, Emerson, and others are not offering new ideas so much as they are signaling a renewed campaign to revive the sector’s moral messaging and assert its relevance. Crisis provides a stage to perform their ethical commitments and justify the urgency of impact investing approaches. At the same time, these attempts at moral retrenchment evidence ambivalence and contention about the sector’s performance over the last decade. As Chong (2018) argues, consultants and other financial actors can face heightened expectations to perform their moral worth amidst failure—indeed, the “conspicuous ethicizing” of such actors can serve to justify and intensify, rather than buffer, the social damages of financialization (175). This studied depoliticization exposes the disconnection between the scale of social change these actors imagine to be within their sphere of agency, and the scope and relevance of their solutions. Even as many in the sector use the crisis as an opportunity to recuperate legitimacy for their work, it remains to be seen how thoroughly these cracks can be sutured, or whether they open up new vulnerabilities in the impact economy.
The road less travelled: Finance for diverse ecological futures
University of British Columbia, Canada
One of the lesser-known stories of the 1992 Earth Summit was that organized business and powerful states derailed efforts by the G77 and the UN Center on Transnational Corporations to regulate multinational capital (see Rowe, 2005). Threatened by efforts to impose regulations on transnational corporations, these companies formed the World Business Council for Sustainable Development to lobby against binding regulation. Working in close alliance with countries like Japan and the US, they thwarted any possibility of international cooperation for environmental regulation, and instead, a series of voluntary mechanisms took center stage, leaving businesses to “self-regulate” their harmful environmental and social impacts.
The road taken in Rio exemplifies what many have labeled as neoliberal environmentalism (e.g. Heynen et al., 2007), a model that attempts to “construct a regulatory regime in which the market is the principle means of governance” (Mann, 2013: 148). Where has this trajectory left biological diversity and nature? Consider, on the one hand, the exponential growth in public and private financial flows fuelling environmentally harmful industries like agribusiness, mining, oil, gas, and forestry, amidst ineffective voluntary efforts to tame negative impacts (e.g. Clapp, 2017; Heim, 2019; Portfolio Earth, 2020); and, on the other, three decades of largely inadequate, at times violent, initiatives trying to entice private capital into “selling nature to save it,” as Kathy McAfee (1999) famously described. The promises of this model have not been kept: biodiversity loss continues at unprecedented rates, and the capital trickling into “saving nature” seems to fund only an endless circle of small bespoke pilot projects. The market-oriented, public–private partnership and voluntary road is not nearly as smooth as promised back in Rio.
As a result, tangible cracks are forming in the neoliberal environmental consensus. Between the mounting evidence of failure to safeguard crucial public goods (Biodiversity Capital Research Collective, 2021) and the shocks of the Covid-19 pandemic, itself linked to rapacious extractivism (Gibb et al., 2020), even financial elites seem to be realizing that private sector investment and voluntary, market-based solutions are unable to stabilize the threats caused by emissions and extractivism. Both the perils and possibilities of these cracks can be found in a biodiversity finance report recently put out by the Paulson Institute—the think tank created by Henry “Hank” Paulson, the former US Treasury Secretary and before that, Goldman Sachs CEO. Their report, “Financing Nature,” states what is an axiom in most political ecological and geographical research: “A critical lesson is that we cannot rely on economic models, market forces, or the private sector alone to solve the problem of unprecedented global biodiversity loss” (Deutz et al., 2020: 9). In bold text, it claims “policy intervention is essential” (9). Governments must govern finance, it turns out. Cue the birds singing, lay out the “we told you so” red carpet, say legions of global justice activists and scholars.
But what kind of governing, and for whom?
It is very possible that these cracks might not trigger a course-correction, and instead be paved over with more light-touch regulation that doesn’t address the underlying drivers of biodiversity loss; this is the well-worn neoliberal path favored for decades by big finance and wealthy states. The possibility of that path appears in the Paulson report, which calls for governments to use public resources, “smart incentives and market structures” to prime the pump for capital to flow into biodiversity conservation (Deutz et al., 2020: 7). Recent initiatives such as the Task Force on Nature-Related Financial Disclosures still maintain—as many voluntary schemes have done before them—that the financial sector will internalize and avoid the risks of nature loss once they are disclosed. And reminiscent of the Rio Summit, the World Business Council for Sustainable Development and allies have launched a Business for Nature group, another laundry list of corporations attaching their names to non-binding commitments for nature. It could seem as though history might be repeating itself.
Yet, as we track the project of reparative accumulation, let us consider these cracks as signs that we are approaching a crossroads. Among those travelling this well-worn path there is growing recognition that finance is “unlikely to transition from its current net-negative impact on nature,” as the Paulson report states carefully, “unless … it is required to do so by applicable laws and regulations” (Deutz et al., 2020: 78). The Nature for Business policy recommendations, too, may be read as more empty words that deflect blame, or as a burgeoning awareness about the urgent need for “regulatory systems that set high standards and create a level playing field” (Deutz et al., 2020: 78); precisely what the G77 and the UN Commission on Transnational Corporations called for back in Rio in 1992.
So how do we switch lanes?
Like many climate and environmental justice advocates tired of decrying the failures of market-based environmental governance, we find ourselves looking to the formidable power of the state to intervene at a scale and pace commensurate with the challenges at hand. And, at the same time, we must confront head-on the long-standing limitations of the state: its embeddedness in colonialism, carcerality, and violence as well as its entanglement with the market and the financial sector. Decades of political ecology research shows that state-driven actions to prevent deforestation and conserve biodiversity frequently result in violence, dispossession, and livelihood destruction that penalize the most vulnerable (e.g. Peluso and Vandergeest, 2001). If we are to call for state-driven, multilateral action to repair finance, then we are tasked with continuing to critically engage with the threats of state action, and consider what kinds of state action ought to be pushed for, and to what ends.
To do this, we invoke the spirit of Gorz’s (1967) “non-reformist reforms” to consider what ideas might be capable of disentangling finance from ecological destruction while forcefully chipping away at the neoliberal consensus. These propositions are not the utopian futures promised by investable natures and financial self-regulation. On the contrary, they are mired in the messy work of pressuring neoliberal states to change tactics even as we know that the underlying, harmful nature of capital and states will not be so simply transformed with a new tax policy or liability regime.
For Gorz (1967), non-reformist reforms must disrupt the status quo in a way that creates new openings for popular power, and must be part of a larger transformative path, but are not themselves the end goal. For us, such reforms necessarily (but insufficiently, of course) involve expanding those cracks in the neoliberal environmental consensus by changing the ground rules for the financial sector. We draw inspiration from Oscar Reyes’ Change Finance, Not the Climate, which outlines a variety of strategies to slow and eventually end damaging financial flows, making responsible and sustainable investing not an act of charity by some individuals, but rather the only allowable investment.
We can start by moving past voluntary measures like the UN Principles of Responsible Investing and toward compulsory liability regimes with teeth that would make financial institutions accountable for the impacts of their lending. These liability regimes would hold not only the “infringing” company liable for biodiversity damage, but would legally extend it to said company’s lending and financing organizations (Portfolio Earth, 2020). Alongside such legal reform, climate and biodiversity advocates have long argued that a necessary fix for harmful financial flows is to rewrite fiduciary law with a mandate to include longer-term public goods, like a safe climate and robust biodiversity, while also aligning with legal agreements like the UN Declaration on the Rights of Indigenous Peoples (Deutz et al., 2020: 20; Reyes, 2020). These technical changes do not overhaul the system, but they are nothing to sneeze at either; if widespread and enforced, they could fundamentally change the viability of extractivism.
The structure of the financial system must also be changed going forward. Overhauls of international and national taxation regimes, regimes long known to shelter corporations and the super-rich and starve public coffers, are needed to support community and ecological health (Kozul-Wright, 2020). This requires multilateral efforts, as Kozul-Wright outlines, including clamping down on tax havens in the North, establishing a global asset registry to enable wealth taxes on the super-rich and moving to a unitary taxation system that recognizes that the profits of international corporations are generated collectively at the group level.
Alongside this could come taxes or levies on damaging activities like international shipping and large-scale agricultural products, or a realization of the polluters pay principle, after all these years.
Once we begin going down this alternate road, we see that it is full of possibilities. While holding our concerns about state violence—especially with regard to biodiversity conservation—close at hand, we note that these non-reformist reforms do not start by criminalizing smallholder farmers through deforestation bans or new protected areas. Rather they look instead to criminalize those who profit from destruction or attempt to hide their wealth. Might the polluters and profiteers finally be the ones who pay?
These actions would disrupt the status quo flows of capital into the future, a “victory of democracy over the dictatorship of profit,” to quote Gorz (1967: 7). But truly reparative finance also requires reckoning with the past: with the compounding social and ecological debts amassing for hundreds of years. This means forcing finance and those who profit from finance to look in the rearview mirror, to address ruination left in the wake of so much capital and imperial accumulation (Stoler, 2013). Here, too, there are non-reformist reforms to advance, including debt restructuring and jubilees, which end yet more rounds of debt-repayment austerity that negatively impact social and ecological well-being (Biodiversity Capital Research Collective, 2021).3
The phrase of the day in global environmental politics is “transformative change,” called for by the Intergovernmental Panel on Biodiversity and Ecosystem Services (2019), language now appearing in the documents of the Convention on Biological Diversity.4 Corporations involved in biodiversity conservation, like insurance giant AXA are now proclaiming that we need a “structural approach,” “to guarantee long-term efforts,” noting clearly the limitations of voluntary and market-based measures when it comes to ecological degradation.5 All of these point to an alternate path in formation.
But despite these emerging cracks, it is unlikely that financial institutions or corporations will ask governments to hinder their profits, raise their taxes, or increase their liability for destruction. Governments, too, are unlikely to lead on matters such as changing fiduciary duty to include safeguarding ecosystems alongside pensioner returns. As Geoff Mann and Joel Wainwright (2018) argue, the state should not be understood as an institution that will “save us” but as an actor that must be coerced—by collective power—into acting otherwise. Thus it falls to social movements of all kinds to mobilize these cracks in the foundation, and to demand that governments regulate finance rather than promising that market-led schemes or voluntary commitments will suffice. Governments have the power to reign in big finance and disrupt extractivism at the scale needed. But only popular power can make this alternative road politically realistic.
Conclusion: Reparative accumulation across the natural/social divide
Queen’s University, Canada
Sara Nelson
University of British Columbia, Canada
Emily Rosenman
Penn State University, USA
The contributions outlined above bring into focus commonalities in how projects of reparative accumulation are working across the social and environmental sectoral divide. As highlighted in the introduction, this flattening of the terrain of socionatures is integral to ideas of “impact” or the rating of environmental social governance (ESG) risks, which seek to provide common, comparable metrics of use for financial investors. Parfitt and Bryant, for example, highlight how risk becomes a fungible asset and master narrative that brings together social and environmental crises in a way legible to capital. Asiyanbi, however, asks us to go further than simply documenting codified metrics to explore how such valuation systems “represent[] an important discursive moment for deepening and extending the material reach of finance capital into nature and social life.” As he argues, the flattening of such terrains is an integral step in extending finance into “activities hitherto considered crude or unproductive for capital.” At the same time he cautions that the “dual focus on the social and the environmental should not be confused with a deep reckoning of the material and cultural co-production of nature and society.” Rather, such a reckoning with the long colonial and carceral history of the co-production of nature and society is what Irvine-Broque, DiSilvestro, and Dempsey argue is needed to truly disrupt the damaging impacts of financial capital on socionatures.
Together, these contributions outline several dimensions of these “impacts” beyond the local scale of intervention. As Mitchell and Kish illustrate, most effective, perhaps, are its ideological and governmental operations, constraining and corralling political imaginaries while introducing new techniques for the government of conduct and the production of entrepreneurial subjects. Paraphrasing Asiyanbi, these broader effects are “doubly invisibilized” by the glossy promotion of localized project outcomes, obscured not only by valuation metrics but by a binary scalar imaginary that moves from local to global by simply aggregating quantifiable local impacts in order to signal the sector’s overall achievement. These more pervasive impacts further indicate the importance of examining the multi-scalar workings of reparative accumulation across social and environmental assets in order to understand how it is reconfiguring the ideological and political terrains of anticapitalist struggle. As illustrated by Parfitt and Bryant, these terrains may enable new tactics (such as “risking” investments) that, however, must be linked with ongoing, old-fashioned large-scale organizing (including unions) if they are to truly center the interests of those most vulnerable to capitalist accumulation. Likewise, Irvine-Broque, DiSilvestro, and Dempsey identify cracks in the operation of reparative accumulation that may provide openings for much-needed regulatory reforms to the financial system, but highlight that these possibilities require a deep reckoning with past harms through wealth redistribution and an end to rising debt.
Many of the effects of the seemingly-novel sector of impact investing are, it would seem, continuations of longstanding capitalist themes—the entrepreneurial subject (Mitchell), the liberal refashioning of the self (Kish), the reworking of ontological dualisms in the creation of new assets (Asiyanbi, 2017), and the commodification of risk (Parfitt and Bryant). These continuities raise the question not of “what’s new” about reparative capital but rather why and how reparative capital seems poised to so effectively perform these essential functions in the present. One answer is in the ongoing, successive economic and legitimacy crises of capital, from 2008 to the coronavirus pandemic, the latter revealing in stark terms the basic exploitative underpinnings of capitalism (as voiced in the popular refrain protesting US government inaction on the pandemic, “they expect us to die for the economy”).
One level deeper is the political history of the present underpinning what Elizabeth Povinelli (2011) calls late liberalism: the countercultural, revolutionary, and anticapitalist movements that have, incrementally and under constant repression, prompted a crisis in both the liberal “governance of difference” and of markets. Reparative capital is an exemplary vehicle of late liberalism, directly linking the governance of difference and markets to respond to the conjoined legitimacy crises in both spheres. Here, finance capital, itself in disrepute, is called upon to repair the damage wrought by failed liberal institutions (rampant inequities, unmitigated climate change, and other “market externalities”), embedding the politics of liberal recognition and multiculturalism within the market itself (while subjecting the former to necessary market discipline). With this long view, we can see a thread connecting project-based impact investing with ESG, in which each functions at different scales to secure capitalist risk: if ESG applies a cold calculus of direct material risk to “traditional” investments, impact investing plays the long game to secure the reproduction of capitalism by redirecting and co-opting critique. Here the university stands out as one of, perhaps, the most potent ideological terrains of reparative capital, where the promise of “doing well by doing good” operates as a powerful attractor for young peoples’ anger, desires, and financial insecurities in an increasingly disastrous job market with increasingly large student debt burdens.
In light of such commonalities across the landscape of reparative capital, the goal of bringing together these commentaries is, in part, to think across the sectoral divide which has characterized critical geographic work on the subject. The gathered works offer many clues in these directions. Mitchell’s description of three ways of thinking about reparative accumulation, or what she has termed market foster care, draws our attention to the policy terrain upon which these financial projects are based—a terrain that limits imaginaries of what kinds of responses to social and environmental crises are possible, given a state that is “harnessed” to financial capital. Kish, however, also draws our attention to the “cracks” emerging in this ideological project, especially in light of the Covid-19 pandemic, suggesting there is another terrain to be uncovered, one that also deserves our scrutiny. Irvine-Broque, DiSilvestro, and Dempsey mine the productive potential of these cracks, asking how they can be made larger (and recognizing the perils of doing so).
What is clear in the common processes and tensions discussed by all contributors is that projects of reparative accumulation are adaptable and highly flexible. This is clear in Irvine-Broque, DiSilvestro, and Dempsey’s piece—they begin by describing how capital has continually bypassed attempts at regulation. It is also reflected in Parfitt and Bryant’s description of how UK fast fashion company Boohoo’s finances quickly recovered after a scandal reduced its ESG ratings. Despite the narratives of standardization in sustainable development goals and other high-profile commitments signed onto by private finance, these metrics rarely stand in the way of profit or tame the exploitative materialities of contemporary finance. This signals an important next direction for this conversation. While processes of standardization are operating across social/environmental divides (and there is still much to discuss in this vein), the question of how reparative capital adjusts to crisis, failure, and resistance across sectors is an important one. Indeed, it may be one that necessitates a conversation between social and environmental geographers studying reparative accumulation, with capital able to quickly move from sector to sector (and project to project) as assessments of risks or impact change. If finance can move quickly from a scandal-ridden clothing manufacturer with high ESG ratings in England to a REDD+ project in Kenya, then the function of social-ecological links to enhance reparative capital’s resilience in the face of cracks in its ideological armor requires that critical scholars trace these movements across sectors, places, and contexts. This is a conversation we hope to continue to build.
Highlights
Impact investing and similar models are increasingly popular financial tools that attempt to do “good” without fundamentally altering capitalist accumulation.
Systems of valuation such as ESG ratings use metrics to compare impacts and risk across investments, geographies, and sectors.
This symposium’s commentaries discuss the processes underpinning what we call “reparative accumulation” as they remake socionatures to fit financial logics.
This includes exploring the ideological work done by reparative accumulation to address contradictions caused by financial speculation.
We must think across “social” and “green” finance to understand how reparative accumulation adapts to its contradictions across different sectors/geographies.
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