Thoughts on Money, Meaning and Mission

How ESG, CSR and SRI Can Have Real Impact
Oct 11, 2016 11:30 AM ET

by Amy Domini, founder, Domini Social Investments and The Sustainability Group 

One of the most stubborn problems facing practitioners of responsible investing is the name game. Despite the fact that the practices of any one firm are almost universally accepted practices at all firms, we ourselves choose to confuse the public with a myriad of names. Business schools ‘teach’ nuances implied by the use of differing titles; our own sales literature emphasizes one language while attempting to position this as an advance over other phrases.

While the use of differing vocabulary may signal to the cognoscenti a subtle difference in target market, these subtleties are lost to the mainstream. As an example, Bloomberg Brief, available to Bloomberg subscribers, which virtually the entire mainstream is, offers a weekly Sustainable Finance Brief. This vocabulary, “Sustainable Finance” is one that they are comfortable with. The September 1, 2016 brief opens with a quote from Mathieu Elshout, director of real estate investments at the second-largest Dutch pension fund. “Our pension is worth more in the future in a liveable [sic] world than in a non-sustainable world." 

The stalwart of conventional investment standards, the CFA Institute, demonstrates that it does not differentiate. Our web search for articles on Corporate Social Responsibility (CSR) as it affects investment decision making finds 61 results, many of which contain headlines for Environmental, Social and Governance (ESG) articles or Socially Responsible Investing (SRI) articles, or even Impact Investing, indicating that they consider all to be a single concept. So why are there so many different titles for the approach? Has there been a progression? And should we support the splintering of names? 

The current rather uninformed textbook story is that first came “socially responsible investing,” which was a simple divestment approach. Next came ESG investing, which looked for companies with stronger environmental or social stories, but was not actually making any difference in the world. Finally we have evolved to Impact Investing, which actually uses business to make the world a better place. I have absolutely no idea where this weird story line got its start. Those of us who were practitioners thirty years ago have had impact as our purpose throughout the period. We argued that only if investors allowed it, could companies be mindful of the double bottom line. Ergo, we must build an investor base that not only allowed focus on the complete scope of corporate activity but also insists upon it. 

During my years with KLD Research & Analytics, we saw our mission as two-fold. Our job was to remove the barriers at the top and to build the demand at the grassroots. We therefore created an index of companies created with social and environmental standards. Though we did not use the ESG phrase, our inclusion of the investor as a stakeholder led us to consider all the issues that have more recently been mysteriously elevated to being deserving of a separate callout, Governance. (My personal preference is to stuff the investor back into the category of people and to stick with people and the planet as our core concerns.) That index did better than the S&P 500. In its new form, the MSCI/KLD 400, it still does better. The track record of the index did in fact move mountains; it undercut the performance-will-be-hurt argument. It made the approach legitimate and called into question the wisdom of Wall Street, too. How is it possible that removing companies from your universe can enhance your return? Is it possible that avoiding problem companies is a good way to make money? 

Read Amy's full blog post at-


Cliff Feigenbaum, founder and managing editor
GreenMoney Journal and
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