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December 22, 2005
Book Review--Megatrends 2010: The Rise of Conscious Capitalism
by William Baue
The newest in the Megatrends series advances a framework for conscious capitalism that highlights
socially responsible investing.
SocialFunds.com --
The chapter on socially responsible investing in Megatrends 2010 (Hampton Roads), which seeks to harness the
popularity of best-sellers Megatrends (Warner Books 1982)
and Megatrends 2000 (William Morrow 1990),
will likely drive greater interest in SRI. The Megatrends books have become a kind of
self-fulfilling prophecy: they not only identify significant trends, but also spur them. Author
Patricia Aburdene frames SRI as one of seven "megatrends" ushering in "conscious capitalism," which
fuses free market economics with social responsibility and spiritualism.
"SRI is becoming a megatrend for two reasons, one
'top-down,' the other 'bottom-up," writes Ms. Aburdene. "At the grass roots level, people insist
on 'investing with their values,' as [GreenMoney Journal founder] Cliff Feigenbaum
and the Brills [Investing with Your Values (Bloomberg Press
1999) authors Hal and Jack] would put it."
"At the macro level, after Enron et al., even
Wall Street's institutional investors got the message: Corporate ethics--or, rather, their
lack--can nuke your portfolio," she continues.
Ms. Aburdene acknowledges her limitations,
admitting that she is a relative neophyte to SRI.
"Socially responsible investing is a
huge topic . . . I can't possibly hope to do the subject justice," she writes. "As a trend
tracker, however, I can offer is an overview that might start you on the road to exploring SRI."
Actually, she starts readers down that road much earlier in the book--SRI is the last
megatrend examined (in part because Ms. Aburdene discovered later in her research that "SRI is the
advance team of conscious capitalism" as it "drives corporate social responsibility.") In the
chapter on the second megatrend, "The Rise of Conscious Capitalism," she details how Shelley Alpern
of SRI firm Trillium Asset Management
engages in shareholder activism.
The book chronicles how, on April 24, 2004, Ms. Alpern
presented a shareholder resolution at Chevron (ticker: CVX--then known as ChevronTexaco)
asking the company to report on the health and environmental impacts of its oil exploitation in the
Ecuadorian Amazon. Ms. Aburdene does a great service to the SRI community by explaining to her
broad audience how a nine percent vote for a first-year resolution (which requires only three
percent for re-filing the next year) is a victory, setting a solid foundation for a long-term
campaign.
Elsewhere, Ms. Aburdene suggests a causal link between spiritualism and profits,
which treads into dangerous terrain--the notion of steering ethical decisions based on their
money-making prospects steps down a slippery slope. As well, audiences receiving this message
typically set a higher ethical bar in their evaluation of issues surrounding ethics. Ms.
Aburdene's admittedly limited knowledge of the SRI field, combined with less-than-comprehensive
research (her footnotes are far from extensive), create a vulnerability in this regard.
Ms. Aburdene praises John Montgomery founder Bridgeway Funds, which has "phenomenal" financial
performance and "whose governance practices are simply exemplary," focusing on Bridgeway's
performance-based fees. However, in a September 2004 letter posted
clearly on the company's website, Mr. Montgomery announced that Bridgeway had arrived at a $250,000
settlement with the Securities and Exchange Commission (SEC) for "breaking the rule" on performance-based fees. It is
ironic that Ms. Aburdene exalts as ethically exemplary the very practice that earned Mr. Montgomery
and Bridgeway official censure.
Elsewhere, Ms. Aburdene quotes the cover article
in the Winter 2004 issue of Business
Ethics by Editor Marjorie Kelly: "There is absolute, positive, definitive proof that CSR
pays" (referring to the Moskowitz Prize-winning
"study of studies" by Marc Orlitzky and colleagues.) However, Ms. Kelly
immediately contextualizes this pronouncement in the magazine, pointing out that "researchers don't
speak this way . . . theirs is the language of positive correlations [and] statistical
significance."
In other words, Ms. Kelly tempered her hyperbole, but Ms. Aburdene elides
this contextualization. This creates the potential for misreading Ms. Kelly's pronouncement, and
seems suspect in a book extolling ethics and spiritualism.
The final chapter, "The
Spiritual Transformation of Capitalism," advances some very convincing lines of reasoning. Seeing
as business and spiritualism are both human expressions, it makes more sense to fuse them, as Ms.
Aburdene does, than to insist on an artificial separation between them, as conventional wisdom
does. Ms. Aburdene skillfully deconstructs this either/or equation, pointing out that spiritualism
and capitalism can be a both/and equation.
However, Ms. Aburdene may be crossing the line
when she suggests a cause-and-effect relationship between spiritualism and capitalism. She cites a
Global Environmental Management Initiative (GEMI) report entitled Clear Advantage:
Building Shareholder Value, which presents "compelling evidence" that intangibles such as
environmental, health, and safety (EHS) performance boosts financial performance.
"As
GEMI puts it, intangibles become tangible," Ms Aburdene writes. "As I see it, consciousness
becomes profit."
Many readers will accept this translation of terminology, while others
will balk that she is pushing past linguistic limits. For the former set of readers, the book
confirms and advances a helpful framework for thinking about "conscious capitalism"; the latter set
of readers will find value in many of the book's tenets while remaining skeptical of the
foundational underpinnings of the framework.
©
SRI World Group, Inc. All Rights Reserved.
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