Assessing the future of sustainable investment appears to be very much on the minds of several industry veterans. As things stand in 2012, the fact remains that sustainability is failing to keep up with global over-consumption, and the mainstream capital markets continue to prioritize short-term financial results.

In an article titled "Relevance Achieved" in the fall 2012 issue of Green Money Journal, Amy Domini of Domini Social Investments commends sustainable investors for their successful campaign to pressure corporations into issuing sustainability reports. What was a rare occurrence 30 years ago is now practiced by more than 80 percent of companies, she writes.   

As a result, regulators are now more willing to mandate that companies report on issues such as greenhouse gas (GHG) emissions and asset managers are increasingly considering environmental, social, and corporate governance (ESG) factors in their investment analysis. And academics are reporting more and more examples of outperformance by leading sustainable firms. 

"As society sees the full cost of traditional business behavior," Domini concluded, "SRI (socially responsible investing) will be embraced as the single most important lever towards building a better world than the planet has ever seen." 

Contrasting the growth capitalism still dominant today with sustainable capitalism, Joe Keefe of Pax World writes, "The sustainable investment community's role is vital because the fundamental struggle is between a long-term perspective that fully integrates ESG factors into economic and investment decisions and our current paradigm which is increasingly organized around short-term trading gains as the primary driver of capital investment and economic growth regardless of consequences/externalities." 

"We need to be more ambitious in our agenda," Keefe continued, arguing that sustainable investors must advocate "against economic and investment approaches that ignore ESG concerns." Keefe believes that they must also advance gender equality, and engage with policymakers in critically important initiatives such as public funding of federal elections. 

Image of plant and coins courtesy of Nagy-Bagoly Arpad via Shutterstock.

Next page: Core purpose of ESG investments