Very often when people are discussing responsible investing they’ll use the term “sustainable investing” or the acronym ESG for “environmental, social and governance” investing. They represent differences in the ways investors and investment managers are looking at socially responsible investing these days.
Lisa Leff, a portfolio manager and manager of Trillium Asset Management’s Boise, Idaho office, has an interesting commentary on the Trillium web site about all this. In particular she makes the point that many of the new “sustainability shops” on Wall Street are actually trying to separate themselves from the traditional socially responsible investing camp. While SRI focuses on negative screens and shareholder advocacy fights, the new groups are more forward thinking. She points to Goldman Sachs’ “GS Sustain,” as an example, which bills itself as “a new way to think about investing.”
Another example mentioned is Mercer’s Responsible Investment Service. Mercer is a global HR and financial services consultant, whose site includes the “Evolution of Responsible Investment.” The first generation was about negative screening. The second generation evolved to include “elements of positive screening” that enabled good companies to be rewarded. Finally, there’s the third generation of responsible investment, which is based on the notion that ESG can have a positive impact on long-term performance.
Call it what you will. The mere fact that smart people are taking positions on the evolution of socially responsible investing is all good. Not only has it gone mainstream, but investors are taking it to different levels.