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GreenMoney Journal - publishing since 1992
Fall 2010 issue
Socially Responsible Investing – Better Companies, Better Communities
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THE FUTURE OF SOCIALLY RESPONSIBLE INVESTING
Joan Bavaria
Two years into the Third Millennium, the investment industry in the United States finds itself with
a "fierce hangover," to quote Barron's Alan Abelson. Mr. Abelson believes that the speculative
excesses of the nineties are "all coming out in the wash," and that we're only in the "rinse
cycle." This laundry metaphor strikes me as an apt one, impossible to ignore as we look forward to
the future of socially responsible investing.
At the heart of the now-historic frenzied
bubble that burst in early 2000 lay a seemingly idiotic single-minded push to drive up "shareholder
value." This idiom became the mantra of Wall Street, corporate boardrooms and accounting firms, and
meant nothing more or less than sacrificing the sustainability of the business for short-term
financial performance. In the process, CEO pay rose to astronomical levels, corporate debt
increased, honesty blurred, and the petroleum-addicted economy of developed countries continued its
inexorable march toward a collision with the planet's carrying capacity. In fact, the entire
investment industry, socially responsible investors included, became enmeshed in tighter and
tighter financial performance measurement schemes, overwhelming business common sense and
foresight. Now, the morning after, corporate managers almost seem frozen as they deal with
over-capacity and intense public scrutiny.
Yet even as the stock market struggles here in
the United States, the Third Millennium begins with the budgets of many transnational corporations
owning unprecedented power and influence around the world, often caught up in the supremacy of
financial performance with no moral imperative. Whether we like it or not, globalization is here,
and with it a forced awareness of the finite nature of our planet. There is a direct and causal
link between a degraded, exhausted natural system and human poverty and misery. Short-term profits
and performance become meaningless when our natural capital is exhausted and deprivation-driven
strife wreaks havoc on our security.
Socially responsible investors have always been
concerned with human and natural capital in addition to economic capital. We have a contribution to
make to the raging debates, and, in the confusion of the morning after, we have an opportunity to
be heard. In the frenzied world of growth for its own sake, the term "sustainable development" has
been co-opted by those who believe that the only way to cure the poverty and deprivation of most of
the world would be through increased commerce, or, in many cases, more exploitation. Our clients
are paying us to demonstrate better paths.
CERES is launching the Sustainable Governance
Project this year -- http://www.ceres.org
The Project will reach out to Wall Street and
corporate boardrooms to ask for plans for truly sustainable business. In describing the need for
such an effort and referencing global warming, Bob Massie, Executive Director of CERES, said on
April 18:
"Our enduring premise, as a coalition of investors and environmentalists, is
that the key to the long-term health and prosperity of any company and of the planet will depend on
the integration of sustainability issues into the core strategy of a company. But now, to much of
the world, Americans look more like children who have stuck their fingers in their ears and started
humming rather than hear about unpleasant truths. Sometimes we Americans look like ostriches who
prefer to stick our heads in a hole, where our vision can be confined to a small, comforting space
that will confirm our prejudices."
Socially responsible investing in the future must
involve more global collaboration, more activism, and, perhaps most importantly, a re-definition of
success. Those who allocate capital need to focus on the long term, a broad definition of assets to
include non-monetary wealth, and the health of our interdependent social and natural systems.
Redefining and broadening the measures of success for our investment portfolios is a tall order
- there is a very entrenched system to change. But twenty years ago, we could never have foretold
the overthrow of the South African apartheid system and the slow but steady movement of that
country toward true freedom for all its citizens. Now, this September, Johannesburg will be the
site of the second World Summit on Sustainable Development. Socially responsible professionals and
their clients now take on challenges before us knowing that together with our various allies we
have accomplished much over the years. "History," says Michael Gorbechev, "is not
pre-ordained."
Article by Joan Bavaria, President, Trillium Asset Management
Corporation.
For more information go to- http://www.trilliuminvest.com
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of The GreenMoney Journal / Cliff Feigenbaum
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