Socially responsible investing (SRI) is an investment strategy that could pave the way for future markets and economies. It’s the inevitable future and the faster one learns, adapts and uses the fundamentals presented, the better it would be for the individual, company and the nation?s growth. The reason it is touted as the inevitable future of invesment is, as we all know that sooner or later we will run out of resources to support man and it will not be long before humankind makes drastic changes to ensure its survival.

While some might feel this is all rather far-fetched, the facts are there for all to see and analyse. The first steps are always the hardest, the adage goes. Change is never easy, but keeping in mind that if you, as an investor or company change your views today, your financial gains in the long run would be substantial and your social responsibilities would be fulfilled as well. The End; Most people today only think of it as a reality that will never come, yet every story of rags-to-riches or rich-to-richer show us the importance of thinking ahead of the curve.

ESG and triple bottom line

SRI is based on environmental, social and governance (ESG) standards. Most companies in India have not yet passed the ESG standards that are basic, essential and may even be a part of many a company’s corporate responsibility. Environmental damage, deaths at public protests against the company, use of child labour, disturbance to endangered species, infringement on public rights and discrimination on the basis of caste, creed or colour are issues that may cause a company to fail the ESG test. Standard & Poor’s, Crisil, and KLD Research & Analytics (the social and environmental research firm), early in 2008 together announced the launch of the S&P ESG India Index -the first index of companies whose business strategies and performance demonstrate a high level of commitment to meeting

ESG standards.

Initiated and sponsored by the International Finance Corporation (IFC), a member of the World Bank group, this index comprises 50 Indian companies that meet certain ESG criteria and have been drawn from the largest of the 500 companies listed on the National Stock Exchange of India, through a two-stage screening process.

The list comprises famous companies and although it has received its fair share of flak for not involving many public sector units (PSUs) which are also ESG-oriented, it is still a good foray and should hopefully make investors aware of those companies adopting a a long-term perspective.

The triple bottom line, a creation of the Dow Jones Sustainability Index in 1999, is an essential part of SRI. Mutual funds and investors in many parts of the world are already using the triple bottom line as an indicator of good results by a company before investing in it. The ?triple bottom line? basically takes into account monetary returns, social benefits and environmental sustainability. Any company that shows a good ?triple bottom line? and not just good returns at any cost, is a socially responsible company and should be supported.

Current scenario

At present, ABN Amro is the only company that floats a fund that invests in sustainable development. This is rather sad in a country of over a billion people, with pollution levels going through the roof, non-existent environmental standards, and an developing economy.

If the price of becoming a developed nation is the further destruction of natural resources and to fill certain pockets alone at the expense of closing minds and hearts, then development is a frightening option. It is only once in a century that a nation gets an opportunity to do something great and show the way and become a global force and leader.

India has been in the shadows and while all optimists do like to believe that we are the next big thing, most realists are still wondering how that is even possible. SRI is one path in front of us that we can harness and use for our nations benefit . “The fortune at the bottom of the pyramid” – a term coined by management guru C.K. Prahlad, is what the country should focus on concretizing.