Responsible versus Sustainable
There’s been a subtle semantic shift over the past few years in the SRI movement, as more companies and industry leaders choose to talk about sustainable investing, rather than socially responsible or responsible investing.
It may seem unimportant on the surface, after all, what’s in a name?, but it’s an issue many people take very seriously.
In a recent article posted on Responsible Investor, philanthropist and writer Stephen Viederman stated that “confusion over terminology describing an investment approach that considers environmental, social and governance (ESG) factors obscures the point of our work linking investing and corporate change.”
Viederman concedes that socially responsible investing, responsible investing and sustainable investing share a common goal: achieving long-term shareowner returns and corporate change, but he insists that the approaches are different.
Viederman believes SRI is about investing with personal values while sustainable investing (SI) is about investing for shareowner value using ESG to assess a company. “SRI employs positive and negative screens to identify good or bad companies across economic sectors; SI ranks the best and worst companies within economic sectors. Thus, relatively few integrated oil and gas companies will likely appear in an SRI portfolio, while the best of these companies will appear in SI portfolios.”
Viederman’s support of SRI or responsible investing is shared by KLD founder and SRI pioneer Amy Domini. In an interview with Responsible Investor earlier this year, Domini expressed concern about the use of the term sustainability. “It’s a bit of a marketing term; a comfort word,” Domini said. “Companies like Boeing have been talking about sustainability for a long time, even if the person repeating the mantra was then disgraced. Personally I like SRI or responsible investment. People say well are you then accusing other investors of being ‘irresponsible’? My answer is, yes, that is what we are saying!”
What do you think? Is there a difference between SRI and sustainable investing? Do names matter? Please share your thoughts.
Originally posted on the SRI Monitor blog on July 9, 2009
