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September 07, 2012
Opinions Differ on the Future of Sustainable Investing
    by Robert Kropp

Industry veterans weigh in on likely developments over the next twenty years, and their opinions range from optimism to concern.


I noted in the second of two articles covering the upcoming SRI Conference on Sustainable, Responsible, Impact Investing that one important session will feature the top executives of three major sustainable investment firmsóBoston Common Asset Management, Calvert Investments, and Pax World Managementódiscussing the future of sustainable investing.

Assessing the future of sustainable investment appears to be very much on the minds of several veterans of the industry, as the Fall 2012 issue of Green Money Journal demonstrates. In an article entitled Relevance Achieved, Amy Domini of Domini Social Investments commends sustainable investors for their successful campaign to pressure corporations into issuing sustainability reports. What was a rare occurrence 30 years ago is now practiced by more than 80% of companies, she writes.

As a result, regulators are now more willing to mandate that companies report on issues such as greenhouse gas (GHG) emissions, asset managers are increasingly considering environmental, social, and corporate governance (ESG) factors in their investment analysis, and academics are reporting more and more examples of outperformance by leading sustainable firms.

"As society sees the full cost of traditional business behavior," Domini concludes, "SRI (socially responsible investing) will be embraced as the single most important lever towards building a better world than the planet has ever seen."

As things stand in 2012, however, the fact remains that sustainability is failing to keep up with global over-consumption, and the mainstream capital markets continue to prioritize short-term financial results. Contrasting the growth capitalism still dominant today with sustainable capitalism, Joe Keefe of Pax World writes, "The sustainable investment community's role is vital because the fundamental struggle is between a long-term perspective that fully integrates ESG factors into economic and investment decisions and our current paradigm which is increasingly organized around short-term trading gains as the primary driver of capital investment and economic growth regardless of consequences/externalities."

"We need to be more ambitious in our agenda," Keefe continued, arguing that sustainable investors must advocate "against economic and investment approaches that ignore ESG concerns," advance gender equality, and engage with policymakers in critically important initiatives such as public funding of federal elections.

Robert Zevin, the founder of Zevin Asset Management and a pioneer in the field of socially responsible investing, takes a distinctly historical approach, writing, "We cling to the idea that ESG investing is a formula for making money."

"Putting ESG on the same shelf with Growth and Value," he argues, "Seems to have taken it off the shelf that SRI shared with advocacy, demonstrations and political action."

Referring to his firm's early statement of support for the Occupy movement, Zevin observed that many in the sustainable investment industry commended him for his "courage". He writes, "Apparently the idea that our core purpose is to make money rather than change society, has caused our former movement to feel in many instances more aligned with Wall Street than its occupiers."

"My earnest hope is that as social investors we can be at the forefront of an effort to move reasonable human values of equality, sustainability, peace and love, back closer to the middle of our work, our lives and our society," Zevin concludes, "And that we can wholeheartedly declare our independence from the rest of the investment industry, with its sorry record of deception, self-enrichment and ill-served clients."

Zevin will also be speaking at next month's SRI Conference. "On the evening before the conference begins, those who arrive will be invited to a special presentation by Robert Zevin," Steve Schueth, President of First Affirmative Financial Network and producer of the conference, told SocialFunds.com.

Keefe will also be present at the conference, representing Pax World in the aforementioned discussion of the future of sustainable investing.

 

 
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