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The Maturation of Sustainable Investment

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Abstract:

Over the past few years, socially responsible investment (SRI), triple bottom line investing (TBLI), clean technologies (CleanTech), and corporate social responsibility (CSR) have become buzzwords, used in both optimistic and derogatory terms. However, at the same time, these interrelated aspects of sustainable investment are contributing to an emerging field of specialized financial practice, indicating that this relatively new field of finance is going mainstream. Several drivers have played a role in bringing this about.

First, many investors have grown impatient with the role of politics in bringing about significant change in the improvement of social and environmental conditions. The political sector seems to be increasingly disconnected from scientific, social, and economic activity. The ability to bring about adaptation and change from economic and investment-based activism has become appealing. The growing popularity of engagement methods to achieve social and environmental change serves as a quintessential example of how these sectors are blending into the political realm. Moreover, mainstream multinational companies such as GE, Ford, BP and Shell have all begun to implement social and environmental reforms without the prompting of legislation or political control. At a time when the political climate in North America and Europe is moving away from regulation, many companies are choosing to selfregulate and invest in social and environmental projects.

Second, some businesses are discovering that waste reduction and energy savings in their manufacturing processes, as well as the adoption of more sustainable technologies, provide more than public relations benefits. Such measures increase profitability and enhance long-term competitive advantage. Much of this is not a result of investment activism, but more a result of seeing the opportunity in looking at capital investments in the long term. General Electric CEO Jeff Immelt recently said, “We plan to make money doing it. We're at a tipping point where energy efficiency and emission reductions also equal profitability” (CNN/Money, 2005).

Document Type: Research Article

DOI: http://dx.doi.org/10.3726/978-3-0353-0377-3_7

Publication date: January 1, 2006

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