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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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