8 trends in socially responsible investing to watch for in 2008 |
Written by SRIStocks.com
This SRI article discusses eight potential social investing trends upcoming in the realm of socially responsible investing in 2008. With green mutual funds, socially responsible stocks, socially conscious investing, socially responsible investment funds, green investment, green investing, sustainable investing, and SRI mutual fundsbecoming more prevalent, corporate social responsibility will be a major emphasis in SRI.
With the popularity of socially responsible investing (SRI) gaining steam, corporations across all sectors are beginning to feel the pressure of accountability in their corporate social responsibility, reflected in their corporate governance, policies, and sustainability reports.
If the growth trend of socially responsible investing continues, then it may become the “mainstream” practice within the next two decades. At that point, the performance advantage of social investing against the market may diminish, as the SRI screens of socially responsible stocks will become priced into market value.
In the interim, there is still much progress to be made in socially conscious investing – and potential returns to be generated. With the sustainability and green investing movements continuing to grow throughout mass consumer industries, there are eight powerful trends that may become the cornerstones of 2008.
Continued push towards technology. As high-technology has been a pillar of the fundamentals of social investing, 2008 will not prove any different. It will be the development of technology that allows the world to achieve better sustainability, ranging in areas from energy to medicine. Considered to be an underlying mega-trend of socially responsible investing, the advancement of technology, and subsequently human productivity, will continue to be a strong foundation in the performance of socially responsible investment portfolios. Renewable energy. Continuing to push forward for renewable energy, socially responsible investors and companies are looking for the new technologies that will turn renewable energy into a cost-effective reality. Powerhouse Google recently announced its new renewable energy technology development initiative, RE<C , which strives to create licensable technologies to energy companies – all while ensuring that renewable energy costs less than coal. When this technology is created, it turns coal into an obsolete financial dinosaur, creating a new evolutionary process of cost-effective renewable energy. Green investment will continue to grow in its quest to find better, more sustainable energy sources. Retirement SRI options. According to research commissioned by the Social Investment forum , the demand for socially responsible investment fund options in their company's defined contribution plan has significantly increased within the last three years. With more consumers seeking social investing options, the growth of sustainable investing influence will begin its further ascent in 2008. Changing tide for all companies. As the movements for human rights, sustainability, and corporate governance responsibility have moved into the mainstream consumer's radar, all corporations will eventually be impacted by shifting perspectives – and held responsible for their corporate governance sustainability practices. In addition, prompted by the growing strength and influence of social investing dollars, which account for $1 out of every $5 of managed investment funds, corporations have no choice but to respond to the changing tide. An exemplary example is Walmart, the black sheep of retail corporations, who recently released its first sustainability report – and also began offering organic food in the stores. Global warming measures. With mainstream financial powerhouses launching “climate change funds,” global warming measures will continue to fuel the growth of socially responsible investing and green investing . With additional calls from both the scientific community and policy makers, companies are taking heed. In addition, there are significant profits to be made. According to the “Carbon Beta” research report published by Innovest Strategic Value Advisors, the corporations who capitalized upon climate change opportunities have performed better than their industry peers. This value can only continue to grow, with government policies moving towards stricter emission controls, benefiting those socially responsible stocks that are geared toward solving the environmental problem. Going green. The socially responsible investing focus on green investments has been a significantly prominent staple of the screening process of sustainability. However, in 2008, expect additional “financially green” investment vehicles introduced to the American market. Commissioned by the United Nations Environment Programme Finance Initiative , a recent report evaluated the “green” financial instruments utilized internationally, especially by European banks. With the growing consumer awareness fueled by media coverage, the report predicted an increased demand for green investing – and related green financial instruments – offered by American banks. In addition, with the launch of several green mutual funds, focused on environmentally friendly initiatives and sustainable companies, the trend of green investments in the financial sector will be a big mover in 2008. Monitoring of CEO pay disparity. According to research by the Institute of Policy Studies , excessive CEO pay has been the one shareholder resolutions area that has received the largest increase in activity. In addition, the Executive Excess 2007 report highlighted that there was minimal correlation between CEO performance and pay, and thus, there is no tangible value of exorbitant salaries to tangible financial results. With the predicted tightening of the economy in 2008, corporations that have conventional rates of CEO pay will win out in financial performance – and in sustainable investing portfolios . Community investing. Having grown five times in value since 1995, community investment efforts will continue to be a leading trend in social investing for 2008. With the private real estate market in American either decreasing or hitting a plateau, the supply of land available for low-income housing and economic projects increases – creating additional opportunities for community investments. |
