Over the next 15 years, I think we will see a transition from the old world of socially responsible investing (SRI) to the new world of sustainable investing. By sustainable investing, I mean the full integration of environmental, social and governance (ESG) factors into financial analysis and decision-making. This transition is critical if our industry is to broaden its market and maximize its impact on corporate behavior, on financial markets, and on global society itself.
Subscribe to Green Money The transition from "socially responsible" to "sustainable" investing isn't just semantics. While it is to some degree a question of framing, framing is more than just words - it's definitional - and I believe such a re-framing is necessary if our industry is to reach its potential. There are also substantive distinctions between socially responsible investing, as historically framed, and the more contemporary notion of sustainable investing. Socially responsible investing is largely understood as an alternative investment strategy for those who choose to invest with their values. Sustainable investing, I believe, has the potential to be a transformative investment strategy that revolutionizes investing itself - at a time when market capitalism must of necessity undergo a sustainability revolution equal in significance to the industrial revolution that ushered in the modern period.
Let me be more specific about the differences, as I see them, between socially responsible and sustainable investing:
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