2. After the Credit Crisis – The Future of Sustainable Investing

Sustainable investing is an investment discipline that explicitly considers future social and environmental trends in financial decision making, in order to provide the best risk-adjusted and opportunity-directed returns for investors. By anticipating these trends ahead of the market, sustainable investing seeks to identify “predictable surprises” that can help ensure shareowner value over the long-term. One year after the publication of our book Sustainable Investing: The Art of Long Term Performance we review anew the investment performance of the sustainable fund universe, and found once more, that the class has been outperforming conventional peer strategies, up through the first half of 2009. We also take a look at what some might call the grandfather of behavioral and long-term investing, John Maynard Keynes, and whose turbulent experience as a market practitioner contributed powerfully to his prescriptions for the reform of capitalism in the Great Depression, and how that relates to current times. We propose two hypotheses – the “reasonable person hypothesis”, and the “resilient markets hypothesis” – in place of the ideals of efficiency and rationality as a more durable basis for investment success. And with evidence mounting that sustainable investing offers the best chance of outperformance in the modern age, we then move to a review of the barriers that remain to incorporation by any investor, and what strategies could be considered towards encouraging maximum adaptation accordingly.