Tuesday, February 27, 2007

SRI Investing Continuing to Grow

I stopped by Harvard's Kennedy School of Government for an early evening seminar entitled Investing in CSR: From Wall Street to Main Street presented by Graham Sinclair, formerly of KLD Research and Analytics and founding member of the Boston Professional Chapter of NetImpact. I met Graham at a few NetImpact meetings around Boston over the past year and appreciated his pragmatic approach to SRI and honest assessment of "green" investing.

I have been reading about SRI, CSR, sustainable business, etc. for the past six years, even managing to read the entirety of various reports by Innovest, WBCSD, UNEP, etc. and did not expect many surprises. There were a few kernels that caught my ear, and made me think again about the future business opportunities in renewable energy and SRI investing over the next few years. In fact, I started thinking (yet again) about an MBA with a focus on sustainable business. That topic may be better left to another post.

Graham led off with a 3 minute Sustainability DVD. Nothing spectacular there. What was spectacular was that it was produced and distributed by Wal*Mart. I saw Jim Stanway, one of Wal*mart's VPs, talk about sustainability at a Harvard Business School event back in 2006. Wal*Mart does have the potential to make an impact on carbon emissions with its immense supply chain reaching down into countries all over the world. Time will tell if Wal*Mart remains committed to sustainability, especially as rumblings of trouble start.

A point Graham made that I found interesting and useful was his comparison of the current struggle to value environmental and climate change risk with the same challenge for high yield debt in the 80's. I am not a finance person, so please forgive me if my terminology is incorrectly applied. Back then, the money managers were able to come up with ways to assess the risk associated with political instability, helping set the cost of capital. It's been done before, we can do it again.

I found myself nodding my head in agreement as he described the placement of approximately 2 paragraphs of SRI/CSR text in the THREE YEAR curriculum for the industry's highest qualification, CFA. That means students learning right now are not learning about SRI, continuing the matriculation of "traditionally schooled" money types. I found myself thinking about my engineering education. Engineers design and build the world around us, the gadgets and gizmos we use, the planes we travel on, and the bridges and roads we take for granted. All these things are immensely energy intensive and will, for the most part, end up in the trash heap at the end of their life.

Sustainability depends upon engineers' and designers' knowledge of life-cycle costs, yet there was nothing, nada, zero in my studies that hinted at that.

The most fascinating thing about "sustainable business" to me is the cross-cutting of everything it involves. I mean everything. Finance, operations, design, construction, consumers, travel, etc., etc., etc. It is a truly multi-disciplinary effort. Perhaps that it why it is so difficult to pin down.

1 comment:

Graham said...

Wayne
It is wonderful to have alert, motivated talent like you looking to move the ball forward. The opportunities are really opening up, and I would ask you to seriously consider the strategy/investment vlauation space - if you haven't already figured out a brilliant clean-tech widget to mak ou wealthy!

With or without an MBA, you are part[s] of the investment value chain. Send the right signals re. sustainability.

NetImpactBoston.org and the Kennedy CSRI are great programs. I look forward to connecting at future events.


PS: Great blog. Getting this all down is important.

GS
http://sri-extra.blogspot.com