Socially Responsible Investing (SRI) has joined the lexicon of many investors.  John Keefe thinks that needs to change.  He advocates for a shift to "Sustainable Investing," meaning "the full integration of environmental, social and governance (ESG) factors into financial analysis and decision-making."  He contends that only with this change can the industry have the impact on corporate behavior and capital markets that it desires.

What is the difference, you ask?  His article "From Socially Responsible Investing to Sustainable Investing" discusses this at length and is well worth a thorough read.  Keefe covers both the deficiencies found in SRI and the possibilities of sustainable investing.  His focus on the performance and outcome of companies in the environmental, social and governance (ESG) arena rather than on subjective judgment is compelling, and to me it is convincing as well.

If you want just a few snippet, here are some of Keefe's key ideas:

SRI's message is counterintuitive – shrinking the universe of potential investments based on moral judgments is widely believed to penalize performance. Sustainable investing, on the other hand, makesintuitive sense – strong ESG performance characterizes better-managed, more innovative companies that are better positioned than their less enlightened competitors to deliver long-term performance.

SRI really isn't a financial discipline at all, but rather the marrying of various financial disciplines with various values based on the premise that "you don't have to sacrifice performance" in order to do so. Sustainable investing, by contrast, is a financial discipline. It's about performance. It's about aligning ESG performance with financial performance – combining rigorous financial analysis with equally rigorous environmental, social and governance analysis in order to invest in forward-thinking companies with sustainable business models.

… I think the notion of sustainability implies a new conception of wealth, and may even offer a solution to the crisis of capitalism. Why? Because it insists on an alignment of financial outcomes with environmental, social and governance outcomes – not with "values" mind you, but with outcomes. The sustainability imperative requires that corporations and markets behave differently; it demands that wealth-creation strategies be made, well, sustainable – that we no longer tolerate poverty and injustice and environmental degradation as the necessary byproducts of market capitalism.