Sustainable and Responsible Investing: Transforming the Global Economy

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The annual SRI in the Rockies Conference attracts socially responsible investment industry practitioners and professionals from related industries. In October, 560 participants gathered at The Broadmoor in Colorado Springs, Colorado, to explore and debate ideas about redirecting the flow of investment capital to catalyze the shift toward a sustainable economy. The 2006 conference agenda featured many educational sessions and inspirational keynote speakers, including GreenBiz's own Joel Makower. SRI in the Rockies is produced by First Affirmative Financial Network in partnership with the non-profit Social Investment Forum.

This month, guest columnist, Christine Renner, offers an overview of this exciting event. -- Steve Schueth, Editor, Responsible Investment Forum

Presentations focused on the theme of using investment capital as a tool for transformation.

Of course, the assumption underlying this theme is that our global economy is in need of transformation. Many speakers offered evidence to support the contention that our current economic system has not met its promise to lift the world's poor out of poverty, and that conventional business practices have contributed mightily to an alarming rate of climate change.

Presenters and participants at this year's conference shared an urgency in addressing climate change and recognized a need to simultaneously reverse the causes of climate change and prepare for the impacts of changes already occurring. One such impact is the increasing intensity of hurricanes. David Korten, founder of Positive Futures Network, put numbers to the problem: "From the decade of the 1950s to the first five years of the 21st century, the annual average of weather-related natural disasters increased from 24 per year to 350 per year."

We know that what gets measured, gets managed. Now that we are beginning to measure the various aspects of climate change, we can see action being taken in both the public and private sectors.

The financial sector, especially the insurance industry, is beginning to recognize both the challenges and opportunities that come with dramatic climate change. If climate change creates greater numbers of catastrophic natural disasters, as many scientists expect, it will be advantageous, for example, to have institutions and information systems already in place to respond to such events. As part of a panel on recovery along the Gulf Coast, Ann Duplessis, Senior Vice President of Liberty Bank in New Orleans, stressed the need to create nation-wide networks of financial institutions able to offer logistical support when crises strikes.

The socially responsible investment industry is leading the way by encouraging companies to think and plan ahead. The developing world may be hit hardest by climate change because many developing countries lack the financial capital, infrastructure, and support systems needed to adapt. Efforts within the SRI community to funnel money to underserved communities around the globe may play an important role in mitigating future negative impacts.

Climate change is not the only burning social issue for socially conscious investors. More and more investment managers and fund companies are screening and engaging with companies on labor and environmental issues, as well as the rights of indigenous peoples, disclosure of political contributions, and implementation of equal employment policies that include sexual orientation.

Transparency is the foundation of a socially responsible approach to investing. The more we know about company behavior, the more likely it is that investors will make responsible decisions about what products to buy and what companies to own. Global communication is making it much more difficult for companies to hide substandard business practices. As shareholders and customers learn about companies that are falling short, stakeholder demands for more information and for positive action are being heard in boardrooms around the world.

Sean Gilbert of the Global Reporting Initiative, provided conference participants with a look at the improvements made in the G3 guidelines. Inclusive dialogue and input from practitioners around the globe have shaped the G3 to include streamlined policies and procedures, more detail on results and impacts, and better outreach to public agencies and non-profits. However, U.S. companies still significantly trail their European counterparts in utilizing external verification of report accuracy. Paul Scott, Director of the Corporate Register in London, underscored the need for companies to produce auditable reports if they are to achieve credibility in the global shareholder community.

While critical, measurement alone is not enough. SRI industry practitioners have access to a variety of tools for addressing problems. In response to the problem of how the global economy can provide opportunities for people in developing countries, for example, several presenters shared advances in the availability of private equity investments targeted to demographics traditionally underserved by capital markets.

Jacqueline Novogratz, founder and CEO of the Acumen Fund, discussed the need to bring the people of developing countries into the global marketplace by funneling capital to entrepreneurs in developing countries. Panel participants reported on advancements within community development finance institutions serving Native American communities and among successful microfinance initiatives in South Africa. Presenters also provided information on increasingly popular investment tools such as ETFs, equity collars, and Responsible Property Investing.

Several speakers made the point that adjustments at the margin are not enough. We must transform the global economy in a way that prioritizes life values over financial values. Transforming the global economy will require commitments in both the public and private sectors. We need political leaders and corporate executives with the will to change business strategies to address social problems. We need to develop more corporate cultures which include corporate responsibility in everyday business practices.

The 2006 SRI in the Rockies Conference was once again a reminder to us all that there is a growing financial community working to address these issues from a place of dedication, inclusion, and action.

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Christine A. Renner is Executive Assistant to the CEO of First Affirmative Financial Network. A graduate of Colorado College with a degree in Economics, Ms. Renner has worked for The Nature Conservancy, directed a Fair Trade Coffee Co-op, and worked on Salt Lake City's e2 Business Program designed to attract and encourage economically and environmentally sustainable businesses.

Steven J. Schueth is president of First Affirmative Financial Network, LLC. An independent investment advisory firm registered with the SEC, First Affirmative specializes in serving socially conscious individual and institutional investors nationwide. A former director and spokesperson for the Social Investment Forum, Mr. Schueth lives in Boulder, Colorado.

Mention of specific securities, funds, or companies should not be considered an offer or a recommendation to buy or sell the security, fund, or company. To determine the suitability of any particular investment, please consult with your investment adviser. Remember, past performance is no guarantee of future results.

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