One of the ongoing challenges with social investing is figuring out how to define it. The current standard is the United Nations Principles on Responsible Investment, or UN PRI. Many investment firms sign off on it to help meet a standard, but it’s still based on how narrowly each firm defines environmental, social, and governance standards.
The UN PRI was launched in April of 2006, back when everything seemed great in the financial markets. Investors had the time, energy, and resources to develop standard definitions, and weren’t we on some sort of permanently higher plateau?
The financial markets starting falling apart in 2007, and when times are tough, people are not interested in the niceties of social investing. They just want to protect themselves, darn it! But as the markets improve, social investing – however defined – will increase in interest. Companies will have more money to spend on social initiatives, and investors will be more interested in taking different sets of risks than they had before.
Much of this interest will come from the U.S., of course. Europe has other problems right now.
Watch for it. And watch for commentary here!