Most of the planet has been engaged in discussions on how to reduce greenhouse gases (GHG). The 1992 UN Rio conference, also known as “Earth Summit” focused on GHG, which ultimately led to the Kyoto Protocol. Twenty years later, the 2012 UN Rio conference was held again (June 20-22, 2012). In addition to determining where we are with GHG regulation, the focus evolved to a more expansive “the Future We Want.”
On June 26, 2012, John Adams, the Director of the Arbor Group and Geoffrey Ashton (and many others) from Calvert Investments, just back from the Rio conference, sponsored a “greenbag” lunch, which I attended. There were many great themes that came out of that lunch meeting, but I’ll focus on private sustainable and responsive investing (SRI)—and why SRI is gaining traction.
John told how it is a new day in the climate control and that delegates from 140 countries stood arm and arm in solidarity. Unfortunately, the U.S. wasn’t one of them. I think we all know the reason for this: the lack of joining stems from the fact that, in the U.S., it is a political hot potato to fully embrace climate change. A large vocal U.S. populace thinks it is bad science and large number of corporations and their political money are not backing climate control strategies for fear of strangling regulations.
But this is where it gets interesting: SRI private funds are making a difference with global corporations–even those that make clear their disdain for government regulation. What the government (including the U.S.) may not be able to do through regulation, private investments may. For instance, Calvert, which has long had a sustainable and responsive investing (SRI) including a sustainability fund has been around since 1982 that focuses on ESG (environment, social, and governance), has had exponential growth that largely tracts growing acceptance of pan climate control laws and goals. A lot of traditional corporations do not nor are willing to meet the requirements of traditional ESG targets for SRI funds. But Calvert has taken to being an advocate for change with its new Calvert SAGE fund, which allows investing in larger corporations that do not meet a more traditional ESG profile, but are nonetheless willing to make changes in how it does business/designs projects/impacts the environment/treats its workers in order to be seen as part of a profile that investors want.
It’s not hard to see why corporations have “seen the light”. SRI investing is big business. Calvert has over $11B in investments. Sustainability is more than just a watch word. Investors want to see true sustainability reports. Smart companies are seeing that their economic future is intertwined with how they are perceived as sustainable partners/good corporate citizens. And many are taking proactive steps to be characterized as a sustainable business—or at least one that will get on the dialog list with SRI fund managers.
It is no accident that high ranking officers of Calvert and Arbor group were at the Rio conference a few weeks ago. Many of these officers were part of highly visible panels leading up to the main conference that had titles such as “Board Adoption and Oversight of Sustainability,” “The Business Case for the Green Economy,” and “Social Enterprise and Impact Investing.” The world and many corporations are starting to coalesce around the idea that sustainability and economic responsibility are not just watch words, but are the foundation of good business. And these private businesses may become our thought leaders where the politicians eventually follow.