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December 12, 2008
Book Review: Sustainable Investing: The Art of Long Term Performance
by Anne Moore Odell
Editors Cary Krosinsky and Nick Robins new book compiles eighteen new essays that argue sustainable
investing is the key to positive long-term performance and the health of the planet.
SocialFunds.com --
This holiday season, investors are going to bed with of visions of stock tickers dancing in their
heads, not sugarplums. People are nervously recalculating their retirement savings as they watch
the constant gyrations of individual stocks and indexes.
However, individual wealth, global financial
institutions, corporations—both public and private—and even the health of the planet are not riding
on the short-term ebb and flow of stock markets. They depend on long-term investments and long-term
value creation. According to many of the essays collected in "Sustainable Investing: The Art of
Long Term Performance" published by Earthscan, the clearest lens for looking at long-term
investment is sustainable investing that systematically integrates environmental, social and
economic factors.
Krosinsky and Robins have collected essays by some of the brightest
minds of the sustainable investing movement, including Julie Fox Gorte, Valery Lucas-Leclin, and
Stephen Viederman. As many of the authors write, investors are using the tools of sustainable
investing for more than moral assuagement—investors have embraced sustainable investing because it
is delivering positive returns.
Sustainable investing isn't a new phenomenon, but it could
be the newest and best answer to the current troubled economy as investors question long held
beliefs about how capital should be invested. There is already US$5 trillion invested in
sustainable investing funds. This amount increases exponentially if one also considers the
corporate and government bonds—US$120 trillion in 2006 alone—that incorporate elements of
sustainability.
Research from Krosinsky points out that sustainable funds outperformed
mainstream indices between December 2002 and December 2007, with sustainably invested funds showing
18.7% return on average compared to S&P return of 13.2%, and MSCI World's return of 17% during the
same time period.
Sustainable investment's ability to outperform traditional indices and
funds is likely to continue. Robins says, "whether they are huge pension funds or individual
savers, investors are looking for strategies that offer long-term security– and sustainable
investing provides the answer. As the world seeks to stimulate an economic recovery, sustainable
investing in clean technologies, microfinance and social enterprise offer proven routes to
generating wealth and resolving pressing problems such as climate change and global poverty."
The book divides "Sustainable Investing" into four sections which cover a broad range of
subjects, including: the rise of sustainable investing; the new risks and opportunities created by
the current market, such as climate change and clean energy; sustainability across asset classes
other than stocks and bonds; and lastly, what the future could hold for sustainable investors.
The last section of the book, which looks to the future and to developing trends in sustainable
long-term investing, includes an essay focusing on China by Ray Chueng and another essay on India
by Dan Siddy, forecasting the role sustainable investing should play to shape the next century.
One outstanding essay found in the last section of the book is Tessa Tennet's "The Global
Agenda" which contains a wish list for "One Planet Investing." The essay details how sustainable
investing can respond to the challenges of the next twenty years and lays out why sustainable
investing is the only way that a modern capital market can survive. Tennet's seven-point wish list
includes the need for the development of metrics and benchmarks for sustainable investments, the
need for federal governments to create policies that protect long-term development and the
protection of natural resources, and for the United Nations to step up their involvement with SRI
strategies.
In the conclusion, the editors write "the next five years are likely to be
among the most tumultuous to date for sustainable investment." Yet within this tumult rises great
opportunity to slow down climate change, develop new clean energies, and new capital markets that
are "finally ‘fit for purpose' for the social, economic and environmental realities of the 21st
century."
The book ends with a new world where to invest is to invest sustainably: "we
started this book as credit crunched, and we end it as long-standing financial institutions
disappear, having failed either to link reward with responsibility or to appreciate and properly
manage systemic risk. The scale of the investment transformation ahead demands a new paradigm, The
challenge for sustainable investing is not to become like today's mainstream but, rather, to
replace it."
©
SRI World Group, Inc. All Rights Reserved.
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