The Hau of Finance: Impact Investing and the Globalization of Social and Environmental Sustainability

IMPACT HAU explores cultural and ethical dimensions of the rapid growth in ‘sustainable’ and ‘ethical’ finance, including financial products that are both socially and environmentally progressive. The moral and sustainable turn in finance could have enormous implications for society worldwide. It may be only with the help of private finance that governments can hope to implement climate goals and social development objectives, even when the political will is sufficient. Curiously some parts of the finance sector often seems to be pushing more strongly than governments in this direction (and this remains the case despite the recent pushback against ESG) – so we need to know what the motivations are, and if it is financial innovation that is offering solutions for sustainability, what effects might this have on society? IMPACT HAU focuses on various types of bond like green bonds, as well as impact investing vehicles like social impact and development impact bonds, to find out who is behind this trend for moral and sustainable finance. What do they want to achieve? What are the concrete effects – the much vaunted ‘impacts’ – of sustainability-labeled bonds upon local populations, and what do they think about them? For each case study, the project has explored the social and environmental outcomes of investments, using ethnographic fieldwork to examine what lies behind impact metrics.

The IMPACT HAU research team produced detailed critical accounts, based on case studies, of green and social finance, with symmetrical comparison of financial actors and target beneficiaries. We showed that before and during the years of the project (2019-26) there was indeed a cultural shift towards a greater concern for environmental, social and governance (ESG) issues in business, which some, but not all, financial actors embraced. We demonstrated that the moral perspectives of impact investors are often, satisfied with quantitative indicators of the successful outcomes of projects which, upon closer scrutiny, turn out to be reductive and in some cases to obscure indifferent or even harmful outcomes. We also documented ways in which the structuring of green and social financial products is more effective in satisfying the needs of the financial industry than in addressing social and environmental harms. The political pushback against ESG (especially in the USA) which grew contemporaneously with the project, inasmuch as it was felt by those involved to be important, is in a sense an indication of the scale of this shift. Our observations suggest that there will be no net overall improvement in the social and environmental impacts of finance without strong and effective global regulation. Though ESG investing (perhaps with new labels and categories) will continue to develop despite political pushback, the faith in green growth that is embedded within it will put further pressure on resources. Meanwhile, sustainable investing will remain a relatively niche area within finance for the foreseeable future, and mainstream economic activities will continue to drive carbon emissions, environmental destruction, and rising inequality.
IMPACT HAU used a novel form of symmetrical ethnography to allow the comparison of the perspectives of elite actors (finance professionals, impact entrepreneurs etc) and target beneficiaries of impact investing. This allowed us to cut through the illusions of transparency produced by impact metrics. Case studies included capital markets regulators and lobbyists in Europe and Malaysia, green bonds for energy infrastructure in Portugal and Italy, and for transportation infrastructure in Brazil, the International Finance Corporation's forest bond, pandemic recovery bonds in West Africa, the use of blockchain in impact investing, and impact investing for 'climate smart' agriculture in West Africa, sustainable cocoa farming in Peru and employment for forced migrants in Colombia. All of these case studies exposed significant misalignment between the aims and expected outcomes from the perspective of investors and bond issuers on one hand, and the concrete outcomes of the investments in terms of impacts on local communities as revealed by our ethnography. Some (but only a few) issuers expressed enthusiasm for engaging with this problem and seeking to improve mechanisms to allow outcomes to be reflected in the indicators used by them and by investors. Others were content with contributing to the emergence of a market for labeled sustainable financial products. Some key outputs of the project include the following:

EDITED VOLUME: Brightman, M., C. Mizes and S. Voicu (eds) (under contract [2025]). The Hau of Finance: Impact Investing and the Globalization of Social and Environmental Sustainability. Toronto: Toronto University Press.
SPECIAL JOURNAL ISSUE: Brightman, M., G. Dal Maso, and A. Tripathy (eds) (2022) A Moral Turn in Finance? Special section of Focaal, Journal of Global and Historical Anthropology, vol. 93.
JOURNAL ARTICLE: Brightman, M. and A.Z. Jaafar (2022). ‘From Structure to Purpose: Green and Social Narratives, Risk, and the Shifting Morality of Islamic Finance in Kuala Lumpur’. Sustainability 14 (5433). https://doi.org/10.3390/(opens in new window) su14095433
JOURNAL ARTICLE: Eyre, B., Bonilla, O., Brightman, M. and Voicu, S. (2024), ‘Beyond the ‘tyranny of metrics’? Indicator literacy in sustainable finance’. Tijdschrift voor economische en Sociale Geografie, 115: 582-597. https://doi.org/10.1111/tesg.12625(opens in new window)
FINAL CONFERENCE: ‘Impact Hau?: Ethnographic Critiques of Sustainable Finance’. Bertinoro/ University of Bologna (1-4 May 2024).

IMPACT HAU underlines that the moral and sustainable turn in finance, and the focus on social and environmental impact, are subscribed by a limited section of the financial sector. Our research challenges the view held by many social scientists of finance which reduces the motivations of financial actors to a calculative 'morality of the market'. There is in fact considerable variety in the sector, and there is clearly a significant contingent of actors with strongly articulated ambitions to make finance sustainable, with a powerful conviction that financial products have the potential to bring about positive change. Opinions vary about the adequacy of the structural dimensions of financial institutions and products to the task. Even if there is powerful motivation among individual actors, and even perhaps a cultural shift among finance professionals, this is clearly not anywhere near enough to change the course of a financial system closely allied with extractive economies and entrenched practices of unsustainable resource use. The evidence of positive change occurring among local populations and in local ecosystems as a result of financial innovations such as impact bonds or green bonds remains thin.