Socially Responsible Investing @ The Green Festival

I wouldn’t call myself much of an activist, but I spent a very satisfying weekend in DC attending the Green Festival, an annual gathering of the progressive tribes promoting social and environmental justice (I’m not trying to define those terms – just quoting my gracious hosts).  I’m wary of people on the extreme ends on either side of the political spectrum, because I often find the level of misinformation (and disinformation!) to be beyond my tolerance level.  Yet while there was a fair amount about which to be skeptical this weekend, by and large the discussions were reasoned and moderate.  I was particularly fascinated by the idea of Socially Responsible Investing (SRI, in the biz), in which investors pay a premium both in transaction and opportunity costs over normal investment portfolios in order to ensure that the businesses in which they invest conform to standards of labor, environmental impact, human rights issues, and more.

You heard right: People using capitalism to get the social and environmental justice they seek.  To me, this is a fascinating development.  I really wondered if there wasn’t an unspoken undercurrent of division amongst different factions at the convention:  Those who see the market capitalistic system as a means to an environmentally sustainable end, and those who still believe that, by its very nature, capitalism is incapable of providing incentives for such sustainibility.  

In any event, I really admired the SRI business model, though I’m certain the jury is still out on whether it will gain more influence.  It also raises a very interesting question.  To the extent, say, that investors are taking a hit in the realm of returns in order to ensure that the firms in which they invest conform to “sustainable” standards, the question of whether this is wise investment must turn on whether firms that practice business in a way acceptable to SRI investors are going to be more profitable in the long-run.  This, in turn, will depend on the ultimate causes of problems like global warming, and on whether governments begin to regulate business in such a way that those which received SRI dollars would be more adroit in maneuvering through any new constraints.  

Finally, SRI raises all sorts of interesting research questions, not least the standard willingness-to-pay research that might be used to determine the expected value of new environmental initiatives, international labor standards, etc. to firms making their own investment decisions, as well as to society-at-large.

So I just want to say to (most) of the exhibitors and speakers at the Green Festival that this skeptic was more impressed than discouraged by what he saw, heard, and read this weekend.  Keep up the good work and the impressive degree of innovation. 


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