Customer Reviews

Investing in a Sustainable World: Why GREEN Is the New Color of Money on Wall Street

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I thoroughly enjoyed Investing in a Sustainable World. Right from the Acknowledgements, I knew I was in for a treat. The book does a great job making the argument for sustainable investing, juxtaposing it to SRI, demonstrating its overarching merits, deconstructing the standard objections, and demolishing the long-held theories that support these objections. It makes extensive use of case studies and examples, many of which are new even to experienced readers in this space. Chapter 3 is especially informative in that examines the disjunctive approach to sustainability manifest by such premier investment organization as The World Bank, the Yale endowment, and the State of Connecticut. No reason to pull any punches when the evidence is clear. If this book does not move investors to act then I fear we will be wallowing in the mediocrity of myopic investment strategies and returns for much longer than 10 years.

Well before Al Gore became its poster boy, Matthew Kiernan, a pioneer and a visionary, saw early on the outlines of a new sustainability investment paradigm and has for twenty years pursued his goal to "re-engineer the DNA of capitalism". This book is not only a thorough introduction to the case for incorporating extra-financial environmental, social, and governance data into investment decisions, it is also a primer on sustainable investing. Thus, it can be read by specialists and novices alike. It is not a "how-to" guide to investing, but lays out a comprehensive road map showing why a new investment philosophy is urgently needed. Briefly, traditional methods of measuring company performance using financial data are inadequate and do not paint the full picture of a company's potential performance. Financial data are necessarily lagging indicators that form the basis for incomplete speculation about future earning potential. In an interdependent world. however, companies face a broad range of challenges with new cross-border environmental regulations, new social challenges from stakeholders, and a web of complex governance issues. Kiernan argues that the impact of all of these factors should be part of the assessment of any company, and furnishes the methodology and the reasoning behind such assessments. His company, Innovest Strategic Value Advisors, provides world-class research based on this methodology. More and more, the so-called "mainstream" investment world is coming around to his views. The book is written in a lively style that engages the reader, and makes a strong case, based on plenty of examples, for a sustainable investment revolution. Some revolutions are incremental, but Kiernan in this book shows how the framework is now in place for a true change in the way we assess corporate performance and invest responsibly using positive rather than negative screens.

A highly persuasive and coherent guide to using environmental, social and governance (ESG) criteria as the compass for investment decisions and portfolio management. The logical next generation built on early "socially responsible investing" (SRI) practices such as screened mutual funds, shareholder advocacy, and community/mirco investing, this powerful book updates the conventional wisdom, going deeper than 4 other books on similar topics published this year.

The author is the founder of Innovest, one of the top-rated sustainability investment research firms in the world. The book essentially proves that single bottom line accounting and traditional measures are simply insufficient. So-called "intangibles" -- including such central sustainability concerns as environmental risk, human health and safety, basic rights, and principles of effective governance such as stakeholder engagement and transparency -- must be included "as if" they will translate in lasting success.

Finally a book that can shift our assumptions about what works now and what will likely continue to yield "triple bottom line" rewards in the years to come.

A must read!

Here's a book that answers the question: "what can we do to feel better about the mess we're in, without the hard work required to change a paradigm that so destructive?" The answer: well, we can support what we think is the best of the companies that are causing our problems. This will involve looking at what companies and their PR firms come up with to throw us a bone in order to have us perceive them as good guys.

Let's take BP as an example:
The authors are "not recommending the wholesale divestment of companies simply because they are in high-impact sectors, such as oil and gas; that is the approach of the traditional SRI, which [they] categorically reject" [emphasis in the original]. BP is cited as an example of an oil company not to reject because it is "making substantial strategic investments in "sustainability-friendly" energy technologies, such as solar, wind and biomass".

So, having read this book you might have taken their recommendation to reconsider buying BP stock. And where would you be now? You would have supported the company that is causing so much damage to our environment, and you would have lost a lot of money.

The problem is that we have accepted the destructive belief that it's OK that corporations only legal requirement is to make money for their owners/investors. They are, therefore, legally required to externalize costs wherever possible and governments have become accomplices in this, allowing corporations to dump waste into our environment and use up our resources without having to pay for the privilege. Instead, corporations spend tons of money on PR, trying to look like they're really good guys by making gestures which will improve their public image without compromising their profits and without changing the pattern of externalizing costs while internalizing profits.

Milton Friedman has actually stated that it is immoral for companies to act in a socially responsible manner unless it helps their bottom line. In other words, the socially responsible aspect must be insincere because the motive must be to increase profit by fooling the public into believing that the company actually cares about being socially responsible.

This is what happened with BP which is held in some so-called socially responsible or sustainable mutual funds. When its oil rig exploded in the gulf, the company was a major holding of the Dow Jones Sustainability Index. As a matter of fact, at the end of 2008 BP was the second largest holding in terms of money invested by 350 of the socially responsible investment funds surveyed world-wide.

In case you're thinking that BP is the only example I can come up with where the thinking in this book can lead us astray, I can tell you that I could write a book about all the examples. But in order to be somewhat brief, I have chosen the most obvious example. So rather than discuss here pharmaceutical companies which are by far the most profitable of the fortune 500 companies and all the harm they do but I'll just recommend a couple of books: Overdosed America: The Broken Promise of American Medicine by John Abramson M.D. and Anatomy of an Epidemic by Robert Whitaker. Then, for one more example: HSBC is cited in this book over and over again as one of the good guys and is one of the biggest holdings of socially responsible investment funds. Unfortunately, this bank has one of the worst customer satisfaction rates around. It has been on MSN Money's Customer Service Hall of Shame for 3 years in a row. Is this really where you want to invest your money?

We need to go deeper and understand the true workings of corporations. Then, if our species is to survive, we need to change the way corporations do business and we need our governments to do the job they're supposed to do: protecting us, not corporations. We need a paradigm shift.

Here are my book recommendations on this subject: When Corporations Rule the World by David C. Korten; The Corporation: The Pathological Pursuit of Profit and Power by Joel Bakan.