Investing in a Sustainable World by ProQuest

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									Book Review

Investing in a Sustainable World
Barbara O’Neill

Author: Matthew J. Kiernan
Publisher: American Management Association
ISBN 13-978-0-8144-1092-9



According to a study reported in the April 2009 Journal of                       Chapter 1, “Welcome to the Sustainable Investment Revo-
Financial Planning, many investors are interested in “go-                        lution!,” begins with encouraging news for ES inves-
ing green” when it comes to selecting their investments.                         tors: major Wall Street investment banks (many of which
Allianz Capital, a leading global investment firm, found                         subsequently collapsed or were merged out of existence
that 64% of surveyed investors considered the environment                        as the book was in press) were starting to write reports
as the most desirable investment opportunity among 10                            about climate change, water scarcity, human rights is-
investment categories surveyed. The survey also reported                         sues, “and a host of other topics they have been studiously
a 30% increase in the number of investors who have made                          avoiding.” Moreover, in less than 18 months, the United
environmentally-oriented investments. However, more than                         Nations Principles for Responsible Investment attracted
two of three (68%) respondents indicated that they would                         more than 380 signatories, and a global investor coali-
need to consult someone in the financial services industry                       tion attracted supporters with $55 million of assets within
for help with environmental investing decisions.                                 6 years. Kiernan notes that “the Sustainable Investment
                                                                                 Revolution is driving a worldwide industrial restructuring,
What about investors who want to purchase environment-                           radically changing the very basis of competitive advantage
related investments but lack a financial advisor? Enter                          for companies and, therefore, investors.” He further notes
Investing in a Sustainable World, an extensively well-re-                        that sustainability issues now matter to many companies,
searched and clearly written 300-page book that explores                         citing successes such as the Toyota Prius hybrid car. Chap-
this topic from every conceivable angle. The author, Mat-
                                                                                 ter 1 also discusses factors that are driving the sustainable
thew Kiernan, is founder and Chief Executive of Innovest
                                                                                 investing revolution, distinguishes ES investing from more
Strategic Value Advisors, Inc., the top-ranked sustainabil-
                                                                                 commonly known socially responsible investing (SRI),
ity investment research firm in the world. Dr. Kiernan pre-
                                                                                 describes key environmental and social issues, and out-
viously served as Director of the World Business Council
                                                                                 lines the “four pillars” of ES investing: environment (e.g.,
for Sustainable Development and has spoken several times
                                                                                 minimizing adverse impacts), human capital (e.g., employ-
at the prestigious World Economic Forum in Davos, Swit-
                                                                                 ee retention and innovation capacity), stakeholder capital
zerland. In the book’s introduction, he introduces readers
                                                                                 (e.g., interactions with external stakeholders), and strategic
to environmental and social (ES) or “sustainable” invest-
                                                                                 governance (e.g., how companies handle ES issues).
ing, noting that ES factors are “absolutely and increasingly
critical to the competitiveness and financial performance
of both individual companies and the broader economies                           In Chapter 2, “What’s Taken Us So Long?,” Kiernan at-
and societies in which they operate.” Kiernan also de-                           tributes the slow appreciation of ES factors in investment
scribes six “fundamental truths” about ES investing and                          decisions to both “individual intellectual inertia and collec-
provides a roadmap to the book.                                                  tive organizational inertia” and cites a number of specific



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