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Mainstream innovation in socially responsible investing

Rachel Kyte's picture

“Its not the 60s anymore.” This was the refrain heard in the corridors and bars at SRI in the Rockies, the annual bash for the socially responsible investing (SRI) crowd. Today SRI is being taken up, tinkered with and improved by mainstream investment houses.

For example, Socialfunds.com covers the latest Goldman Sachs report to its clients on its Energy Environment and Social (GSEES) Index. This time Goldman ranks companies by considering exposure to new legacy assets in addition to the other categories in the ESG Index: environment, environmental and social management, social, corporate governance, and investment for the future.

Interestingly, new legacy assets are not completely divorced from but rather intersect with environment, social and governance considerations. Goldman understands that for global energy companies “investing for the future” includes assessing community investments – especially in politically riskier countries:

We have categorized around 50 percent of the industry's new legacy assets in very high risk countries, where company investment in education and health is a key part of the stability of the local economy.

For the IFC, who is implementing the management response to the Extractive Industries Review, this adds support to the integrated risk and opportunity approach to companies who seek more than financing as they enter into emerging markets looking to sustainably develop their resources.

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