Two new reports highlight the expanding adoption of Environmental, Social, and Governance (ESG) criteria among money managers, as well as the benefits to the bottom line that accrue to ESG-savvy investors.
The biennial Report on US Sustainable, Responsible and Impact Investing Trends from US SIF, the trade organization for the SRI industry, shows a continuation of the rapid adoption of ESG criteria among mainstream money managers that was noted in the previous Trends Report. In the last two years, the value of portfolios that include consideration of ESG factors has mushroomed by 69%, to over 8 trillion dollars, under the management of 777 money managers and institutional investors, and over 1000 community investing financial institutions. While the number of more active money managers who filed shareholder resolutions
Tags: ESG, financial assets, sustainable global economy strategy
I’ve long been a subscriber to The Atlantic, and particularly enjoy James Fallows’ contributions to their website (incredible on both China and small cities as “American Futures” trailblazers). But golly, this month’s big feature on Al Gore’s investment firm is pretty heavy on hyperbole, starting with the title: The Planet-Saving, Capitalism-Subverting, Surprisingly Lucrative Investment Secrets of Al Gore. Granted, this is par for the course in headline-writing—this post pleads guilty as well!—and Fallows’ intent with the article is mostly to get “sustainable capitalism” onto the wider public radar, and we’re all for that. Still, most of what is presented here as groundbreaking is, to our quarter-century-in-SRI eyes, old news. To wit:
What this means in practical terms is that Gore and his Generation colleagues have done the theoretically impossible: Over the past decade, they have made more money, in the Darwinian competition of international finance, by applying an environmentally conscious model of “sustainable” investing than have most fund managers who were guided by a straight-ahead pursuit of profit at any environmental or social price.
Convincing quotes from three experts all seem to agree this flies in the face of conventional wisdom. Where have they been? When we wrote Investing With Your Values in 1999 (published by Bloomberg, not exactly a fringe outfit), there was already a solid track record of clear parity and frequently out-performance by SRI funds; our own Jack Brill had completed a 5-year New York Times mock-management quarterly feature, running a strong second with the only SRI portfolio. Indeed, the co-authors of our new book were in the audience at the annual SRI Conference in 2005 when David Blood, who had recently launched Generations Investment Management with Gore, told the gathered crowd, “You were right. You’ve been right for 25 years. Incorporating social, environmental, and corporate governance considerations into the stock selection process adds value.” We were happy to welcome Blood to the club in 2005, and we’re surely excited that Generation’s first ten years of results can be added to the steady stream of mainstream reports confirming and expanding on the message that socially and environmentally responsible firms outperform their values-neutral peers.
UPDATE: Fallows generously excerpted this post as part of his ongoing followup thread on the Gore article that features reader feedback. We’re flattered and pleased to be part of that dialogue.
One of Generation’s favorite metaphors also struck us close to home: the idea that looking beyond the narrow question of financial performance to consider a broader “spectrum” of information provides a stronger foundation for making investment decisions. Each of our last two books has explicitly aimed to expand our view of investing,
Tags: ESG, evolutionary strategy, financial assets, sustainable global economy strategy
A recent piece in BloombergBusiness caught our eye: Giving Hippies Key to Portfolio is Not Such a Bad Idea After All. Not to say we told you so, but have you heard the one about Hal, Guatemalan shorts, and phone trades back in the day? Indeed, champions of SRI have always had reassuring results to point to, but in recent months, we’re no longer shouting against the roar of business as usual’s river of denial. A series of long-term trends reports have all come to similar conclusions: companies that embrace environmental, social, and governance (ESG) considerations outperform their more traditional peers. The chart at the top of this post is a good sample, showing two different strategies for choosing more ESG-engaged companies; over the past 7-8 years, doing so has outperformed average returns by a cumulative 12-24%. While we appreciated Bloomberg’s decision to publish our 1999 book, Investing With Your Values, we’re even more glad to see them, along with Morgan Stanley and the Harvard Business School, getting on the bus.
Tags: ESG, financial assets, SRI, sustainable global economy strategy
The US SIF Foundation publishes a biennial report on the current scope of sustainable, responsible and impact investing in the U.S. See latest report.
Tags: ESG, financial assets, investing, SRI, sustainable global economy strategy
This Q & A with Joseph Keefe, president and CEO of Pax World Management (an SRI pioneer), speaks to the value of SRI as a positive force in business and for the planet, as well as offering strong financial performance for investors. Keefe makes the case for SRI as the obvious choice for moving the global economy in a more sustainable direction. Read interview.
Tags: ESG, financial assets, investing, SRI, sustainable global economy strategy
Since 1992, the NI Social Rating (the Heart Rating) has been the leading tool investors can use to get a snapshot of sustainable and responsible mutual funds’ environmental, social, and governance (ESG) performance. The Rating methodology addresses avoidance and affirmative screening, shareholder advocacy, community investing, and the firm’s research process. The Rating does not include consideration of financial performance; see US SIF’s performance charts for that. See the latest NI Heart Ratings.
Tags: ESG, financial assets, ratings, SRI, sustainable global economy strategy
Benefit Corporations are a new legal class of corporate structure, now available in over half the states in the US; Benefit Corporations are charged with not only serving the interests of their owners, but also creating a material positive impact on society and the environment. Learn more and find Benefit Corporations here.
An related initiative is the B Corp network, which while not a legal structure, is open to companies large and small in the US and overseas. To be certified as a B Corp, companies must meet higher standards of accountability, transparency, community service, and environmental sustainability. Learn more about the 1200+ B Corps.
Tags: ESG, evolutionary strategy, personal assets, sustainable global economy strategy, workplace
This website run by Global Reporting Institute (GRI) contains a searchable Sustainability Disclosure Database of the sustainability and CSR reports etc for thousands of organizations internationally. It is searchable by organization, region, sector, etc. Visit website.
Tags: directories, ESG, SRI
Global Reporting Initiative website is a tool for investors to look at the self-reported sustainability efforts of companies. GRI has a searchable database, where one can look up companies by region, sector, size, and other variables. GRI’s database features reports that cover multiple issues, i.e. economic, environmental, social and governance information. Integrated reports cover both sustainable and financial disclosures. Visit website.
Tags: directories, ESG, financial assets, SRI, sustainable global economy strategy
ISO 14000 and its associated standards provide practical tools for companies focused on improving their environmental performance, including environmental management systems, life cycle analysis, and communication and auditing. The ISO site primarily serves companies looking to develop state of the art internal standards; investors may want to learn about the standards, but this is not a directory of companies that have adopted the standards. Visit website.
Tags: certification, ESG, financial assets, SRI, sustainable global economy strategy
The Greenhouse Gas Protocol is an international accounting tool used to understand, quantify, and manage greenhouse gas emissions. The GHG Protocol has been used by some of the world’s largest companies, and is also valuable to government leaders; this page lists the companies that are using this important self-assessment tool. Visit website.
Tags: climate, directories, ESG, shopping, sustainable global economy strategy
Over 5000 companies and cities report their carbon emissions to the Carbon Disclosure Project, which ranks the top performers for both the thoroughness of their reporting, and (separately) for their performance in mitigating and reducing carbon emissions. Their website offers useful tools for searching by company , industry sector, and other terms, and can help users identify climate leaders and laggards, compare companies, etc. Visit website.
Tags: climate, ESG, sustainable global economy strategy