I'm working on a new project with the Institute for Responsible investment in which we're developing a curriculum of mini-cases for business school students on the topic of ethical investing. Yesterday I had my first interview, in which I discussed some of the draft cases with a portfolio manager who is also a Principal at an ethically-oriented investment house.
Some of his answers surprised me, but also made a great deal of sense. He argued that ethical investing is essentially a rich man's (or rich woman's) business, because without at least $300-$400k invested, the fees aren't enough to buy you thoughtful advice - unless you're being overcharged. And assuming we are never able to prove definitively that social investing comes without cost, the wealthy are better able to absorb the risk that social funds could conceivably under-perform.
So far, the story of GE's surprise drop in profits has not been explicitly tied to sustainability, but I'm sure it will be soon. After all, Jeff Immelt's name has been closely associated with the Ecomagination campaign as his major contribution to both the company and to the sustainability movement.
I've often attested that most investors would join the "socially responsible" camp if only they could visualize the effects of agnostic investment strategies. One analogy I've used: if you knew a company used slavery to make its products, would you invest? Of course not. So where exactly is the line between slavery and, say, child labor? Environmental degradation? Human rights?
Well, I still stand by my point, but I'm willing to admit that my words are not nearly so compelling nor memorable as the "Wormwood Bayne" mock-ad on YouTube. I absolutely love the false self-empowerment ("Today, I will act as if I am the only person who matters....") and the confident values statement ("We just don't give a sh*t!).
This video just might be the best SRI sales pitch to date.