Ron
   Robins
     MBA

 Founder
& Analyst

Media Coverage of Investing for the Soul

• Report on Business Television's Business Morning

• CBS MarketWatch

• The Financial Post

• Rogers Television's Money Line

• CBC Radio One's Metro Morning

• 680 News Radio

• New Directions Magazine

• Environmental News Network Radio

• The Catholic Register
                    More...

Editorials

• LOHAS - opportunities for ethical investors
• Everyone becoming a Cultural Creative
• Retiring the GDP (Gross Domestic Product)
• The Media & Government Statistics
• Unethical US Job Numbers?
• Unethical Statistics – the US consumer price index?

Shareholder Values

"88% of respondents felt
that it was either “fairly” or “very” important for companies to take environmental, social and governance issues seriously'"
-- F&C Investments
    (UK) May 2008

84% of Canadian shareholders agreed with this statement: "[The] financial community should pay more attention to social and environmental performance when valuing companies."
-- GlobeScan
    (Canada) February 2004

SocialFunds.com -- The act of investing is inherently forward-looking--an examination of present patterns emerging from past performance to divine future trends. Socially responsible investing (SRI) addresses not just financial but also social and environmental performance, so predicting future SRI trends, as a recent study does, encompasses all three of these realms.

Earlier this year, Canadian SRI pioneer Vancity Credit Union commissioned sustainability consultancy Strandberg Consulting to conduct the study. In March and May 2005, consultancy principal and former Vancity board chair Coro Strandberg gathered the opinions of 42 SRI thought leaders via half-hour interviews and wove them into the study, entitled The Future of Socially Responsible Investment: Thought Leader Study.

"The thought leaders were a fairly homogenous group in their views of the future of SRI, with most predicting a positive future, at least in terms of growth and awareness," writes Ms. Strandberg in the study. "What we will witness over the decade, predict some of the thought leaders, is a gradual shift from SRI as an instrument of moral philosophy for moral investors to SRI as an instrument for mainstream investors who are not interested in morality itself but recognize that immoral behavior of companies will hurt their investments."

One interviewee coined the term "moral warming" to describe this trend toward the "mainstreaming" of SRI, whereby traditional investors increasingly assess "moral" (or social, environmental, and ethical) issues in their fundamental analysis, according to the study.

"One view held that far-sighted mainstream firms will abandon their niche SRI products because to have values-based products implies they have other products that are non values-based," the study states. "Instead, these leading firms will have commitments to ensure their entire portfolio of investments is responsible--they will be investing long-term in companies and because of this will be factoring in long-term sustainability issues."

"Integration" is the term the UK Social Investment Forum (UKSIF) uses to describe how the mainstream investment community is adopting tools developed by the SRI community, according to the study. Alongside this external appropriation of SRI strategies, growth is expected to continue within the SRI field, with demand for values-based SRI products from social investors continuing to fill this niche market.

The increasing demand for SRI is expected to lead to increasing innovation. For example, one "hoped-for" development is a shift to "open source" valuation processes and methodologies to broaden access to SRI research. Another potential innovation concerns the development of metrics to quantify the impacts of shareowner engagement.

In fact, shareowner engagement represents another main focal point of the study, which predicts trends toward growing collaboration between SRI shareowner activists and other stakeholders such as nongovernmental organizations (NGOs).

"SRI is an ancillary operation to many other social change movements," the study states. "Where SRI has and will succeed best is by helping others to achieve their ends, largely through making shareholder action and social research available to civil society--applying their tool box in collaboration with others--and through the use of the rights of shareholders to 'open the boardroom door' for groups and ideas traditionally not entertained there."

Looking further at shareowner action, the thought leaders expect to see more collaboration with companies, as opposed to confrontation. They also expect to see a blossoming "cottage industry" of SRI firms specializing in shareowner action and "engagement only" services.

"Some investors will be outsourcing their engagement activities including proxy voting, proxy voting analysis, and engagement resulting in more competitors in the shareholder engagement market," Ms. Strandberg writes. "It is predicted that, for example, pension funds will be pooling their assets on particular shareholder strategies, and, rather than leave implementation to the fund managers, will be engaging external managers to coordinate campaigns across fund assets."

Finally, the study also identifies the potential for significant growth in community investing--"predictions range from a hundred-fold growth to a tripling of assets, likely even outstripping the growth of other SRI niche funds," the study states. As with shareowner action, metrics to measure the impact of community investment will develop.

"To what degree, for example, does micro-finance invest in micro-entrepreneurs who are involved in environmentally destructive activity?" the study asks.

The study ends by identifying developments in the broader culture that promise "a more transformative future for SRI."

"Additional scandals and economic meltdowns will trigger immense soul-searching post-mortems that result in more rigorous controls and regulatory action, further driving SRI value-sets into the investment process," the study states. "Similarly, catastrophes linked to environmental malfeasance can wipe a lot of value off investor balance sheets, not to mention the human toll."

"These developments will serve to further concentrate minds on SRI considerations," Ms. Strandberg concludes.