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Community Investing Achiever in the Social Investment Forum 1% For Community campaign since 2002. Calvert Foundation Advisor of the Year in 2004. Learn more!
| Sustainable Investing
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Sustainable Investing: The Art of Long-Term Performance
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In recent years, sustainable and responsible investing (SRI) has emerged as one of the latest buzz phrases in the worldwide investment industry. No longer a fringe strategy utilized solely by investors with strong social and ethical leanings, SRI principles are now widely adopted by citizens of all stripes and colors, from small individual accounts, to family trusts, to some of the largest pensions and foundations.
In Sustainable Investing: The Art of Long-Term Performance, editors Cary Krosinsky (VP, North America, Trucost Plc) and Nick Robins (Head of the HSBC Climate Change Centre of Excellence) pull together a number of essays from leading sustainable and responsible investing practitioners. The essays are presented in four sections: the rise of sustainable investing, new risks and opportunities, sustainability across different asset classes, and the future directions and trends within the industry.
The essays begin by driving home the distinctions between the investment styles associated with SRI including ethical investing, responsible investing, clean tech investing, social investing, and finally, sustainable investing. The authors define sustainable investing as "an approach to investing driven by the long-term economic, environmental and social risks and opportunities facing the global economy. What distinguishes current practitioners of sustainable investing from other approaches is the conviction of their commitment to systematically integrate environmental, social and economic factors within the valuation and choice of assets and the exercise of ownership rights and duties." This of course, stands in stark contrast to those ethical or social investors who merely screen out their favorite social ill, (tobacco, alcohol, gambling, etc) or the clean tech investor who focuses narrowly on renewable energy or pollution control.
The essays continue on, dispelling the common myth that sustainable investing requires sacrificing investment returns, citing academic studies that have demonstrated just the opposite: that sustainable investing over the long-term has at the very least kept pace with mainstream market indices, if not outperforming them.
The international scope of the book truly sets it apart from other works in the field. Many of the companies cited throughout the essays are based in Europe, and the book contains entire chapters dedicated to sustainable investing challenges and opportunities in both China and India. One fascinating case study on the potential impacts of carbon legislation on the largest carbon-emitting company in Europe (RWE, a German coal, lignite and nuclear-based electric utility) drives home the worldwide focus of sustainable investing.
A chapter on sustainability analysis, which starts off with a general explanation of the idea before diving into the details of how this type of analysis can affect a security's beta is a good example of how Sustainable Investing: The Art of Long-Term Performance effectively straddles the line between being sufficiently detailed to satiate the technical investment professional, yet broad enough to remain accessible to the general public.
The book dedicates two chapters to fiduciary duty and shareholder advocacy, conveying the growing importance of these two aspects of sustainable investing.
The final two sentences of the book sum up the essays well: "The scale of investment transformation ahead demands a new paradigm. The challenge for sustainable investing is not to become like today's mainstream but, rather, to replace it.
Book review: Ryan Jones-Casey, MBA in Sustainable Business Candidate, Bainbridge Graduate Institute
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The Difference Makers: How Social and Institutional Entrepreneurs Created
the Corporate Responsibility Movement
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Thank you Professor Waddock. This is practically the book I wanted to write so you saved me from a huge project! (My version also visits the people inside sustainable and responsible investing (SRI) and looks at the evolution of corporate social responsibility (CSR), but focuses more on the former if only because of my own experience, networks, and focus.)
Waddock sets the stage by tying together ideas that emerged over the past few decades about globalization and out-of-control corporate behavior with movements that emerged endeavoring to change those systems from within. Then in their own words, the various players share their emergent ideas with us about how their movements are actively changing corporate and investment landscapes—for the better. Ever wonder how SRI, Forest Stewardship Council, Fair Trade labeling, or Social Accountability International fit together or came into being? Those and many other stories are now at your fingertips here.
The whole thing is laid out nicely for the reader—taking you through the rapid evolution and adoption of SRI and CSR via story and personal accounts, rather than a compilation of cold information as are most other books in this space. I would have included many of the same energetic innovators as Waddock did such as Tim Smith of ICCR, SIF, and Walden; John Ruggie of the UN Global Compact; Amy Domini of Domini Funds; and Joan Bavaria of Trillium and CERES; and then added some others such as Laurie McClain or George Gay, who directly serve citizen-investor beneficiaries of all this ground-breaking SRI and CSR work.
The stories in this book will be eye-opening to anyone with an interest in SRI or CSR and definitely essential reading for all business and MBA students.
The book can also be used as sort-of a candy bowl (fair trade organic chocolates of course). You pick it up and read a couple inspiring stories at a time, tasting this one, then that. I started out academically reading it cover to cover but ended up doing the indulgent relaxed candy bowl thing instead.
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Socially
Responsible Investing : Making a Difference and Making Money
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You feel great that your money is socially responsibly invested and you’ve been doing it for a number of years now. Your advisor has explained how it works several times to you and it always makes sense. But when the subject of investing comes up in a conversation, you feel you’re stumbling around trying to explain what SRI is. If that sounds familiar, you need to look at this book.
Even if you don’t have the time or patience to read the whole thing (268 pages including comprehensive index), at least you can go through it and prepare yourself for that next time when the dreaded topic, investing, comes up. Wouldn't it be great to be able to clearly explain to your brother, mother, or aunt what SRI is all about?
Amy Domini, one of the pioneers in the modern social investment movement, covers the three main strategies of SRI through true stories and lots of examples. The three main strategies are of course screening, shareholder activism, and community investing.
She starts you out with a solid foundation building the context of why we invest in the first place and applies that to the idea of how your investments can provide more than financial results. Then she takes you through a quick history of the SRI movement.
After the fascinating treatment of the three strategies mentioned above, the book also covers how this all fits into the global economy and how our application of SRI strategies is changing the world. So do it for your brother, mother, or aunt—take a look at this book!
"The sweatshop dialogue has led to the development of standards. Over time, a more sophisticated assessment of corporate adherence to these standards will develop, and the tools for deciding which companies are more responsible, and which are less, will evolve. At that point, real screening can take place, but to date only Nike (NKE) has become a boycott target and therefore a divestment target. Corporate responsibility for the existence of sweatshops is only just beginning to be understood. The evolution of socially responsible investing will be profoundly affected by this debate, which is perhaps the most complex issue the field has faced since South Africa..."
"Social screening is not very effective at dealing with issues that lie at the core of the for-profit system such as monopolistic tendencies, aggressive marketing practices, and the like. Such issues are probably better left in the hands of government and communities..."
"Shareholder activism is possible because as the owner of a stock you are part owner of a corporation. In the United States, this gives you certain rights and, arguable, responsibilities. These rights are largely the result of the same legislation that created the Securities and Exchange Commission (SEC) and other shareholder protections mentioned in the last chapter. This legislation gives you, as an investor, the right to receive financial information quarterly in unaudited form, as well as an audited annual report, which we use as the basis for much of our social research."
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The Exception to the Rulers
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"She gets up every morning of every day — long before the rest of us! — to be the only daily voice of truth on the radio in the United States of America. How sad that I even have to write those words! A nation of 300 million, a written guarantee of a free press, and no one will do the job that Amy Goodman does so simply, so profoundly. This book puts the pedal to the metal of all the lies we're told, day in and day out. Amy Goodman is a national treasure, and if you are unable to pick up her signal on the dial, you can now pick up this book, shake your head in disbelief and disgust as you read it, and then put it down so you can go raise some hell!"
—Michael Moore, director, Bowling for Columbine,
and author, Stupid White Men and Dude, Where's My Country?
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Eco-Economy:
Building an Economy for the Earth
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The
Divine Right of Capital: Dethroning the
Corporate Aristocracy
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Investing With Your Values, Making Money and Making a Difference, Brill, Brill, Feigenbaum, 1999, Bloomberg Press. |
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Jews, Money & Social Responsibility: A "Torah of Money"..., Lawrence Bush, 1993, Shefa Fund. |
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Natural
Capitalism: Creating the Next Industrial
Revolution, by Paul Hawken, Amory B. Lovins, L. Hunter Lovins |
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If you have any corrections or additions, please contact us. We go through this list periodically and remove publications that are out of print or out of date. We would like to hear from authors when there is a new book on the subject! Permission to forward this page in whole (with credit for source) is hereby granted and encouraged.
"It is neither wealth nor splendor, but
tranquility and occupation which give happiness."
Thomas Jefferson
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A
word from professor Eric: 
