The past 25 years have seen a proliferation of investment movements promising to make capitalism sustainable. These include impact investing; socially responsible investing; corporate social responsibility; shared value; conscious capitalism; and environmental, social, and corporate governance. Yet all these movements, however promising, assume there’s no need for a trade-off between returns and social and environmental impact. They are grounded in the idea that investors and corporations can achieve commercial returns while fixing our biggest problems—that we can “do good while doing well.”

In a 2020 Harvard Business Review article, we argued that while there are indeed niche opportunities for this type of “win-win” investing at a firm level, the current regulatory framework won’t support anything close to the level of investment needed to address our social and environmental challenges. For example, without a supportive regulatory framework, business would have to accept losses of about $10 trillion by 2030 to meet the Paris Agreement global warming target of 1.5 degrees Celsius. Whether it is global warming, loss of biodiversity, or poverty and social isolation, win-win investors simply are not willing to accept sub-commercial returns and will not make the required investments.

Instead, we need to pursue traditional win-win investing in tandem with “trade-off” investing that creates impact but delivers below-market returns, and investing in advocacy aimed at changing economic regulations. In this article, we look at the roles and challenges of the latter two approaches, and present a new investment strategy that is both scalable and replicable for a wide variety of investors.

Read the full article about investing in advocacy by Alan Schwartz and Reuben Finighan at Stanford Social Innovation Review.