Here’s a radical and counterintuitive proposition for you: what the sustainable finance and investment field desperately needs at this critical juncture is — wait for it — another acronym!
A casual observer might have thought that with ESG (environmental, social and governance issues), RI (responsible investing), SRI (socially responsible investing), CSR (corporate social responsibility), and SI (social investing) already in hand, we were already reasonably well provisioned in this regard. We’re not. I think that we need one more, and the right one just might alleviate some of the intellectual and commercial confusion and anarchy of the current situation, where everyone seems to be clamoring for more “mainstreaming” of sustainable finance and investment, while the aforementioned mainstream itself remains either largely oblivious or, at most, sublimely content with only leisurely (glacial?) movement.
This situation would not be so alarming were it not for the bizarre and pernicious real-world consequences it has spawned. Ponder for a moment just a few of the most outrageous results of the almost Pavlovian rejection of the aforementioned acronyms, tarring them all with the same brush and throwing multitudes of babies out with the bathwater:
Some of the world’s largest and most prestigious foundations give away literally hundreds of millions of dollars' worth of grant money to advance environmental and social causes each year, while having fully 95 percent of their assets invested without even the faintest regard for their environmental or social impacts, which could easily be undoing all of their good work on the program side.
The same is true for the staff pension funds of both the United Nations and the World Bank, despite the enormous efforts that both organizations devote to ameliorating environmental and social conditions worldwide. In the case of the former, the UN came within a hair’s breadth in 2006 of not signing its own UN Principles for Responsible Investment! (I am not making this up)
- By some estimates, less than 5 percent of the assets pledged to support — and implement — the aforementioned UN PRI are subject to a consistent, systematic assessment of their environmental and social impacts or risk. Sadly, some of the most derelict signatories can still be found adorning the podiums of SI/RI conferences, professing their undying devotion to the Principles.
This, folks, is not good. But there is hope on the horizon — a new acronym!
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