SRI, PRI, ESG and making tons of money, ethically
Published 20th October 2009 - 0 comments - 1709 views -
Let's get the acronyms out of the way first. SRI means "Socially Responsible Investing", while PRI is the "Principles of Responsible Investing" and ESG means "Environmental, Social and Governance investing". Put the three together and you get the ideas driving Earth Capital Partners, a venture capital fund, which was set up last year by Stanley Fink, formerly of the MAN Group. In short, it invests in climate change.
Just to show that we're not talking peanuts here, Earth Capital Partners says it "intends to advise on the deployment of a multi-billion US$ pool into sustainable assets, whilst responding to a wide range of investor needs and priorities." The fund is focussing on renewable energy, sustainable agriculture, clean technologies, water management and environmental commodities.
Earth Capital Partners is new to the party and so is GS Sustain from Goldman Sachs: "The emerging industries we focus on include alternative energy technology and biotechnology. Here, we look for differentiated business models and positive exposure to fast-moving structural trends." Clearly, SRI and ESG are no longer confined to religious groups and other "ethical" organizations known for investing in things that don't pollute body and soul.
ESG is not new, of course, Mercer has been using the ethical metric since 1984 and Trillium Asset Management has been around since 1982. What is new, though, is the awareness in the broader money markets of the impact of sustainability and responsibility. Even the sceptics are getting into the action because the returns look promising. Green is good, as they now say on Wall Street.
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