What's Happening in Social Investing?A Report from the SRI in the Rockies Conference

by Rona Fried

Blue jeans are common attire at the SRI in the Rockies conference, the annual gathering of the U.S. socially responsible investment (SRI) industry, but don’t let their casual appearance fool you – they mean business. This passionate, activist crowd is bent on transforming the mainstream investment industry from Wall Street’s typical “profit at all costs” analysis to one that places environmental and social considerations on an equal plane. They have made a lot of progress and are proud of having created and nurtured an industry that counts two-plus trillion dollars in portfolios that use one or more socially responsible investment strategies.

Over 500 people gathered in gorgeous Snowbird, Utah, September 25-28. The Social Investment Forum (SIF), the SRI industry trade association, and First Affirmative Financial Network, a SRI financial advisor network, co-produce the conference. Among its many big name sponsors are Calvert, Domini Social Investments, MMA Praxis and Pax World Funds.

Other than the spectacular location and wonderful people, what struck me most were themes that popped out throughout the conference.

The social/ environmental investing community has made tremendous progress and the mainstream markets are finally noticing us. Last year there was much discussion about how to attract institutional investors by helping them understand the connection between SRI investing and fiduciary responsibility. One of the major developments over the past year is that many institutional investors have become involved and see the risks of investing in companies with poor environmental and/ or social records as part of their fiduciary responsibility. The talk this year was about how to keep SRI values from being diluted as more conventional – and very large – players enter the space.

Now the SIF is raising funds to launch a major “Got Milk” campaign to bring SRI into mainstream consciousness for individual investors.

The Moskowitz Prize for Socially Responsible Investing is announced at SRI in the Rockies each year, recognizing excellence in academic research on topics related to SRI. The 2005 prize went to the study, “The Economic Value of Corporate Eco-Efficiency” which examined a long-running debate about environmental versus financial performance by focusing on the concept of eco-efficiency, a measure developed by Innovest Strategic Value Advisors. It concludes that “company managers do not face a tradeoff between eco-efficiency and financial performance, and that the stock market provides a higher value to companies that Innovest rates as above-average on environmental issues. Investors would indeed be served well by incorporating company environmental performance into investment decisions.”

Many conference attendees wore buttons that said, “1% is not enough!” referring to SIF’s successful campaign to direct 1% of all investments to community investing (affordable housing and small businesses). SIF is upping the ante to channel up to 10% of investments toward community.

Today, the full array of investment options are available for socially/environmentally aware investors: numerous stock indexes, hundreds of mutual funds, bonds, and financial planners/portfolio managers. The gaping hole waiting to be filled is green real estate investment options – REITs. There was much excitement during the break-out session focused on this topic – clearly, one or more green REITs are in the works.

Another broad theme was echoed by several speakers: the environmental crisis is upon us, the window for change will not be open much longer. Rather than resting on our laurels, we need to turn up the juice.

Keynote speaker Gar Alperovitz, Professor of Political Economics at U. Maryland said, “Thirty years from now, we’ll look back and see that we helped slow the environmental crisis down, but things still got worse. In order to make the transformation that’s needed, we need to increase our challenges to the corporate and economic structure now.”

He asked the audience, “What would it take for each of you to personally pick up the ball? Will you change one hour of your week’s priorities to get serious about making the kind of life you want to live come to fruition?”

He pointed to the fact that the women’s movement started by small groups of women meeting on an on-going basis and supporting each other in their quest for making change in the world. Throughout history, he said, people you’ll never hear of got together locally and laid the groundwork for transformation, whether it was the women’s movement, the 8-hour workday, worker’s health, or the environment, the process is the same.

Randy Hayes, former executive director of Rainforest Action Network, and now head of sustainability for the City of Oakland, California, is organizing “movement” leaders from around the world to work together to intensify the effort toward transformational societal change. “We’re creating the campaign for the next 25 years,” he said, “and it involves packaging the sustainability thought leaders work into one system and one plan: cradle-to-cradle concepts, the Global Reporting Initiative, eco-economics etc.”

Randy believes that eco-economics is at the core of the change that’s needed – for individuals and corporations to find that “clean” choices are cheaper and more rewarding, whether it’s buying food or clothes or which car to drive. “We can make much of this change in our lifetime,” he believes.

Steve Lydenberg, Chief Investment Officer for Domini Social Investments, one of the original SRI investment vehicles, gave everyone attending his workshop a free copy of his new book, “Corporations and the Public Interest,” if we promised to make a personal commitment to implement one thing from the book.

Like Hayes, his central thesis is that corporations will act in the public interest if they are rewarded for doing so. Food ingredient labels have only been around for about 10 years, he noted, but they have had a huge impact on individual’s food purchasing behavior, providing valuable feedback to food companies. The more companies are rewarded for their ability to enhance society, the more they will do it. He calls for “weath index” to replace the “stock index” (companies that contribute to quality of life, not just make money).

Next year’s conference will be held in Colorado Springs, October 28-31.

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www.sriintherockies.com

Rona Fried, Ph.D. is president of SustainableBusiness.com, the online community for green business: daily sustainable business and investor news, Green Dream Jobs, Business Connections and the sustainable investing newsletter, Progressive Investor. Contact her: rona@sustainablebusiness.com