The Economist, a sober British weekly, summed up the events in the United States as follows: “The political dysfunctionality of America has been on display as never before, to the nation’s shame. And it can still do plenty of harm to a very sick economy.”

It’s easy, under these circumstances, to join the “doom and gloom” chorus. I obviously don’t know what other disasters will come down between the time I finish this column and the time it is published, but I thought it might be useful to look for some silver linings or unexpected developments. So here goes.

Did you see where Ralph Nader has taken up shareholder activism again? Few people remember Nader’s early and influential shareholder campaigns at General Motors in the early 1970s. He is, of course, best known for his role as a consumer advocate and as a presidential also-ran who siphoned off enough Democratic voters in 2000 to enable George W. Bush’s election. Now Nader has a new target: Cisco Systems.

In an interview with the Wall Street Journal, Nader disclosed that he owns 18,000 shares of Cisco, now worth about $288,000. Nader is a longtime Cisco shareholder. When he was running for President a decade ago, his stake was worth $1 million – and Ralph doesn’t appreciate this performance. In June he shot off a letter to Cisco’s longtime CEO, declaring that it is time for him to do something for the long suffering shareholders. He suggested a special dividend of $1 a share and an increase in the regular dividend from 24 cents a year to 50 cents. “If they can’t give shareholders value, they have to give cash,” said Nader.

Ralph Nader becoming a crusader for shareholders – who would have thunk it? Nader was, of course, one of the first to use the proxy statement to advance social issues – he mounted a campaign against General Motors in 1970 – but this marks the first time he has gone to bat for shareholders who have seen their stock languish for more than a decade.  He may have opened up a new career path for himself.

One of my favorite companies is the Seattle-based specialty department store chain, Nordstrom, one of only four companies that have graced every list Robert Levering and I have done since 1984 identifying the “100 Best Companies to Work For” in America. Nordstrom has stores all over the country but it has never found a way into New York City – until now. In August it opened a store in Soho called Treasure & Bond. It’s less than one-tenth the size of a regular Nordstrom and it has a different mix of merchandise – housewares and rugs, for example. The idea is to give the company some experience in the New York market. A Nordstrom store will follow later on.

But here’s the interesting feature of Treasure & Bond: all the profits will go to children’s charities.

I always look forward to the weekend edition of the Financial Times, where the third page of the second section is devoted to an interview over lunch with someone prominent from academia, the arts, politics or business. In August, staff writer Peter Aspden took Diego Dalla Valle to lunch at the celebrated Milanese restaurant, Il Bareto al Baglioni. Dalla Valle runs the luxury goods company, Tod’s, founded by his family in the early years of the twentieth century.

For lunch they both had my favorite Italian dish, veal Milanese washed down with a Montalcino red. They rarely prepare it anymore in Italian restaurants in America. Because of its shape, it’s sometimes called “elephant’s ear.”

Tod’s recently pledged Â20 million to support the restoration of the Roman Colosseum, the most visited tourist destination in Italy. Work starts in September and will take two to three years. When completed, it will look just the way it did centuries ago. Della Valle explained this investment as follows: “We have an obligation to do things for our country. To create a sense of solidarity. Our country is made by proud Italians.”

In the United States corporations put their names on ball parks. Dalla Valle promises that Tod’s will not commercialize its restoration of the Colosseum. We can all subscribe to his idea of what a corporation should be about.

But do you know what’s in your alma mater’s portfolio? Your donations to your university’s endowment support its operations for years to come.

Across the country university presidents have focused on greening their campuses. LEED-certified buildings have been built at many schools, alternative sources of energy from wind to methane digesters are being installed, and hundreds have signed up to the Presidents’ Campus Climate Commitment. These efforts certainly conform to the standard vision of college in America as an idyllic bastion of thoughtful, liberal consideration, where research and teaching are done and administrations make carefully considered decisions in the best interests of their students and stakeholders.

Yet investment policies have lagged, perhaps because investment decisions are often detached from the general campus culture. In some cases the offices are even hundreds of miles away.

Institutions of higher education are 501(c)3 public-benefit institutions with a mission of education and research and an obligation to serve the broader community. One can envision a world where colleges invest money locally in their community and in sustainable investments worldwide, fulfilling their broader mission while still make substantial investment returns.

The Responsible Endowments Coalition (REC) is working to make that vision a reality while training the next generation of responsible investment leaders. REC works with students, faculty and administrators to promote responsible investing of all kinds, from shareholder engagement to community investment.

In one recent example, students from Carleton College in Minnesota represented the school’s Responsible Investment Committee at a recent annual meeting of 3M Corporation. They spoke in support of a shareholder resolution addressing the company’s political contributions policy, which lags substantially behind those of many other companies.¹ Their outspokenness garnered substantial press in the local media, drawing attention to the company and the school, where otherwise the topic may have gone without much coverage.

Students who are involved in responsible investment gain substantial experience working with administrators and confronting corporate power. They leave school to become leaders who understand the power of money and how to use it to do good things.

In another example, students at Fordham University saw the great disparity between the school and its Bronx neighborhood. They describe the school as “a beautiful campus with walls” and have been disappointed with its relationship to the community. The student group Fordham For The Bronx pressed the university to invest money into community development financial institutions – community controlled organizations that provide better services to low-income communities.

Students from Fordham attended REC’s conference at Columbia in the fall of 2010, organized teach-ins and events on campus, and after building student support, successfully convinced their administration to invest $500,000 in two community investment institutions in the Bronx, Bethex Federal Credit Union and Amalgamated Bank.

Higher education’s $350 billion dollars in endowments is money that should be aligned with its mission.

REC is advocating nationally for responsible investment at colleges and universities, but these institutions need to hear from their graduates as well.

To press your alma mater (or your child’s) to change its policies, write to your university’s president when you make your next donation. For more information visit REC at www.endowmentethics.org

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1. The proposal was co-sponsored by Trillium Asset Management and Walden Asset Management.

It is exciting for me personally and for Trillium to be involved in the emergence of Impact Investing as a vital piece of the larger Sustainable and Responsible Investing (SRI) industry.

I recently had the privilege of attending both the Skoll World Forum and the Social Venture Network’s spring conference. These organizations, among so many others, are working to find innovative solutions to the world’s most pressing challenges. While attending the Forum, I also had the opportunity to meet briefly with Archbishop Desmond Tutu, who was one of the keynote speakers. The Archbishop spoke appreciatively of the work of Shared Interest, a fund that invests in South Africa’s future. The Forum also featured a screening of a short film documenting Ceres’ history of addressing sustainability challenges such as global climate change.

As shareowners, SRI practitioners have actively raised social and environmental concerns to companies, engaging with corporate America to create change. It is our experience that most companies (like most people) have a mixed record of strengths and weaknesses, and many of them prove open to overtures from concerned shareowners.

As a part of SRI, impact investors specifically invest in companies and organizations that can generate financial returns as well as an intentional social or environmental goal.

For nearly 30 years, Trillium has offered its clients the ability to achieve this impact by investing a portion of their assets through our Community Investing portfolio. Our clients have partnered with domestic and international loan funds, as well as venture funds, to provide capital for affordable housing development, small business creation, childcare centers, sustainable agriculture cooperatives and renewable energy companies among other social and geographic issues. These investments provide loans and financial services to individuals and community organizations that traditional commercial banks often fail to serve.

Even with the incredible momentum of impact investing, there remains a lack of transparency and standardization in how funds define, track, and report social and environmental performance. This limits the ability of investors to understand the impact of their investments.

Trillium supports the efforts of the Global Impact Investing Network (GIIN), an organization that is committed to increasing the effectiveness of impact investing. To address these challenges, GIIN is expanding upon work initiated by the Rockefeller Foundation, the Acumen Fund, and B Lab to develop and promote a common framework for reporting the performance of impact investments.

As it reaches scale, impact investing will continue to be a powerful complement to philanthropy and government efforts to address many issues including eradication of disease, stabilization of climate change and provision of basic social services. From our earliest days, Trillium has been a leader in helping our clients participate in community/impact investing. Trillium is committed to expanding our clients’ ability to invest in market-based solutions to the world’s most pressing challenges.

In the 1950s, I began driving Fords. I am not sure why. They were always breaking down. At the same time I began following the entry of foreign cars into the United Sates as a reporter for Advertising Age. It was just a trickle at that point – and Detroit treated it as a laughing matter. The U.S. has these long highways, and these small cars would never make it here, said the moguls at General Motors, Ford and Chrysler.

Journalists love incisive, eye-catching leads and I had one of my best in 1959 when I crafted this opening sentence on a story sent to Chicago, where Ad Age was then published: “Doyle Dane Bernbach, the agency for El Al Israel Airlines, the Israel Tourist Office and Levy’s Real Jewish Rye, was today appointed to handle the advertising for the German import, Volkswagen.” On Monday when copies of the issue arrived in New York, I was horrified to find that the subordinate clause listing DDB clients had been excised. The editors in Chicago explained to me that they thought the clause was irrelevant. I remember screaming into the phone: “Didn’t you guys in the Midwest hear about the Holocaust?”

In 1971, I moved from New York to the Bay Area, and I saw at first hand how the imports were beginning to take over the California market. In Marin County, where I now live, kids grew up not knowing what a Chevy or Ford looks like. We used to have one billboard in Marin along the 101 Freeway that cuts through the country. It was used to advertise GM cars. People began going out at midnight to tear it down. Finally, GM gave it up. So now we have a billboard-free county.

These reflections came to mind as I was reading Steven Rattner’s new book, Overhaul. Rattner is the Wall Street pro appointed by Barack Obama to orchestrate the bailout of General Motors and Chrysler. Both companies went, hat in hand, to Washington to accept bailout funds from TARP (Troubled Asset Relief Program), and both went into Chapter 11 bankruptcy to enable them to emerge as slimmed-down versions of their old selves. The priority for the Obama administration was to save General Motors. Chrysler was considered expendable.

And Chrysler was ticketed for oblivion until Sergio Marchionne, the feisty CEO of Italy’s Fiat, arrived on the scene, ready to take the reins. We – the U.S. government – were so delighted to have a possible savior of the company that we said: “You want Chrysler? Here, take it, please.” So Fiat now controls Chrysler even though it only owns 20 percent of the shares. And it didn’t have put up a single lira for it. Chrysler’s largest shareholder is the United Auto Workers retiree healthcare trust. It owns 55 percent.

The reshaping of the auto industry has been dramatic. GM discarded its Oldsmobile, Pontiac and Saturn brands. It sold off Saab and Hummer. Ford shut down its longstanding Mercury brand. Ford also gave up on Volvo passenger cars, Jaguar, Aston Martin and Land Rover, brands it had acquired along the way. Volvo went to a Chinese company, Geely. Jaguar and Land Rover are now owned by the big Indian conglomerate, Tata.

We are no longer the world’s largest automaker. That distinction belongs to China, where output is over 15 million cars a year, compared to the 11.5 million rolling out of U.S. factories. And GM is no longer the No. 1 automaker. That title belongs to Toyota. Ironically, China has become GM’s biggest market. The Chinese are nuts about Buicks. More Buicks are sold there than in the U.S. And they are being built there.

In Germany, after bitter bumper-to-bumper combat over four years, Volkswagen and Porsche are about to be melded into one company. It’s not clear who is buying whom. They will have a portfolio of ten brands: Volkswagen, Audi, SEAT, Skoda, Bentley, Lamborghini, Bugatti, Porsche and Scania. The Rolls-Royce brand now belongs to BMW.

Everyone is the world wants a car but the United States is no longer the prime supplier. As for me, I’m driving a Honda Civic.

I recently saw The Informant, starring Matt Damon as Mark Whitacre, the Archer Daniels Midland whistleblower who exposed his company’s blatant conspiracy to fix the price of lysine, an additive given to feedlot cattle and other livestock.  I remember reading the book of the same name by New York Times reporter Kurt Eichenwald, and how amazed I was at the details of this conspiracy. Whitacre and other ADM executives met with their peers at competing companies in hotel rooms across the world where they fixed lysine prices and apportioned the market shares each of the companies would get.

If that wasn’t enough, Whitacre, who had been diagnosed as bipolar, was stealing money from ADM — $9 million, in fact, stashed in a secret Swiss bank account.  His loopy behavior is caught so well in the movie that it provokes peals of laughter from the audience.

I have long been interested in writing a book on the portrayal of business in novels, plays, films and television. It has always struck me as ironic that in the country most celebrated for its business acumen, this esteem does not show up in literature or the dramatic arts.  On the contrary, business people have been generally derided or despised in popular media, long before the current scandals delivered a host of new examples of perfidy in the executive suites.

So The Informant joins the library of artworks and popular culture wherein the villain you love to hate is the businessman or business woman (see sidebar). It’s quite a legacy.

The events of the last two years will no doubt inspire new works that illuminate the seamy side of capitalism. Writers will have a rich lode of material to work with:  Bernie Madoff, Bernard Ebbers, Richard Scrushy, AIG, Fannie Mae, Freddy Mac, Countrywide, Merrill Lynch, General Motors, Chrysler, Siemens.

Siemens strikes me as an especially good candidate.  With 420,000 employees, the German company is the 13^th largest private employer in the world.  It has gone through a gut-wrenching shakeup that saw two CEOs ousted because of a bribery scandal.

When I first started to write about social responsibility in business forty years ago, bribery was a prominent issue.  American companies argued that they were disadvantaged in global markets because competitors engaged in bribery. In 1978 Congress prohibited U.S. companies from paying bribes, ostensibly putting the issue to rest.  Not so.

In 2005, prosecutors in Germany and the Securities and Exchange Commission began uncovering a well-organized, massive, and routine system of bribery deployed by Siemens. The different units in the company maintained kitties to dole out these bribes all over the world.  The telecommunications unit had an annual bribery budget of $40 to $50 million.  The bribes were usually 5 to 6 percent of a contract’s value but in especially corrupt countries it could go as high as 40 percent.  The budget for Greece alone was $10 to $15 million a year.

All told, Siemens spent $1.4 billion on bribes from 2001 to 2007.  Five million went to the son of the Bangladeshi prime minister to win a mobile phone contract.  In Argentina, Siemens put up $40 million in bribes to secure a contract to produce national identity cards.  In Israel, $20 million went to government officials for a contract to build power plants. And so on.

Siemens did not deny the charges.  In fact, it cooperated with the prosecutors.  In the end, it paid $1.6 billion in penalties, the largest fine ever levied on a corporation for bribery, and $1 billion to for internal investigations and reforms.  How could it add up to so much? Siemen’s law firm assigned 300 people to the case — lawyers, forensic analysts and staff members. The lawyers and an outside auditor racked up 1.5 million billable hours.

Lucky Siemens has deep pockets.  With $123 billion in revenues in 2008, it was the 30^th largest company in the world.

And what a good movie it would make…

There Will Be Blood, Michael Clayton, The Constant Gardener, Wall Street, Glengarry Glen Ross, Erin Brockovich, The Insider, All My Sons, Pretty Woman, The Hucksters, Mad Men, Black Gold, Babbitt, Sister Carrie, The Bonfire of the Vanities, Gain, Underworld, The Axe, American Pastoral, Moral Hazard, The Man in the Gray Flannel Suit, Microserfs, The Spiked Heel, A Civil Action, Citizen Kane, Silkwood, Boiler Room, The Hudsucker Proxy, Robocop, The Financier, The Octopus, Something Happened, The Jungle, Modern Times, The Power and the Glory, Sabrina, Rollover, Putney Swope, Rising Sun, Jurassic Park, Bodies Electric, Ragtime, JR, Cash McCall, Red Harvest, Other People’s Money, The Tin Men, My Cousin Vinny, Trading Places.

Your investment career started in 1984 at Lehman Brothers.  How did you find your way into SRI?

My first experience with socially responsible investing (SRI) came a bit early in life. Growing up I had a keen interest in the stock market and actually made my first investment in a mutual fund at age eleven.  With only $500 saved from shoveling driveways, mowing and raking lawns, I decided a balanced mutual fund was the best way to start investing. The fund I selected was Dreyfus Third Century Fund, which was one of the earliest SRI mutual funds.  It made intuitive sense to me even back then that investing should include looking at the sustainability of the business practices of the companies you are investing in.

After graduating from Rensselaer Polytechnic Institute, I was recruited to work as part of the technology equity research team at Lehman Brothers in 1984.  While working at Lehman, I began to explore incorporating environmental, social, and governance (ESG) factors into the research I was doing. In 1989, as I shifted into the consumer growth space, I began to incorporate these factors into my research.

What was attractive to you about Trillium?

Trillium is one of the iconic brands in the SRI world that I first interacted with as a client.  While looking at incorporating ESG factors in my research at Lehman, I met Joan Bavaria of Franklin Research, as it was known then, and was an early subscriber to their newsletter Insight.  Joan, along with a number of the early visionaries in the field, had encouraged my thoughts of building a franchise within the sell-side that incorporated these broader issues.

I had long admired the work of both Joan Bavaria and Trillium and was quite humbled to have received a call asking if I would consider the role of CEO of the company.

Trillium’s been a pioneer in SRI research and advocacy since 1982. The field has grown exponentially since then in assets under management, the range of investment products offered and in many other ways.  How do you see Trillium evolving in this more competitive environment?

I was pleased to find in my due diligence of Trillium that not only did the company have a brand with authenticity in the area of SRI research and advocacy, but a solid long-term 10 year track record of investment out performance. This is a competitive advantage that I do not believe is well known in the marketplace. Trillium has a long and well- established leadership role in shareholder advocacy. This commitment will remain as strong under my leadership and is a distinct differentiator versus our competition. The firm also was an early pioneer in the field of community investing. This is also a key competitive advantage.

What do you envision for the future of Trillium?

Trillium is one of the oldest and strongest franchises in the SRI industry.  We have been incorporating environmental, social and governance factors since 1982.  As the broader investment universe is beginning to look at these factors as a meaningful long-term contributor to alpha generation, I believe we are in a very enviable position.  We, in the SRI community, have long been waiting for institutional investors, particularly the endowment, foundation and retirement plan market, to recognize the benefit of incorporating non-financial metrics into the investment process. That day is finally arriving and Trillium stands to be a major beneficiary of this trend. I believe we will look back five years from now and still stand as the largest independent, employee owned firm in the SRI industry.

Investors are beginning to sit up and take notice of smart grid technologies, especially since the Obama Administration’s stimulus plan directed over $4 billion to the young industry. There’s been much talk about how a smart grid can reshape the utility industry, but smart grid technology also will bring about changes for you and me. This spring Google offered a glimpse with the introduction of PowerMeter, a web-based widget that displays and tracks information on home electricity use in near real-time. Turn on your heater and watch your energy use spike. Put on a sweater instead, flip the heater off and feel gratified watching your energy bill fall. Similar technologies are being developed by large players such as Microsoft and start-ups such as Tendril. Some companies are focusing on bringing this technology to smart phones, such as Trilliant’s Energy Valet, being developed for the iPhone.

Accessible to about one percent of U.S. households, Google’s PowerMeter isn’t yet ready for primetime. Fortunately, there are other tools already available for the rest of us. In July Microsoft released  Hohm, an application that offers customized tips for saving energy. I tested Hohm with my mother and she was relatively pleased. After surviving a fairly tedious survey that takes an hour to fully complete, she was given a personal energy profile including a dozen energy saving tips prioritized by costs and savings. Some suggestions were too generic, but others were very helpful. She got detailed advice on a water heater upgrade she’d been thinking about, plus a few simple fixes that can save her hundreds of dollars a year and reduce her carbon footprint by thousands of pounds.

While Microsoft’s Hohm offers good suggestions for one-time home improvements, Black & Decker’s Power Monitor is better suited to change everyday habits like forgetting to turn off the lights. The Power Monitor is a handheld display that wirelessly connects to a sensor attached to a regular meter.  The portable Power Monitor then displays the cost (per hour or month) of current energy use. You can also isolate the cost of running individual appliances like a TV or toaster. The Power Monitor reminds me of the Toyota Prius and its dashboard display of its engine and fuel mileage. Just by monitoring this display, many Prius drivers learn to drive differently and conserve fuel. For some, it has become a game of sorts.

It’s nice to see tools like PowerMeter, Hohm, and Power Monitor making it easier than ever to conserve electricity at home. While the rocky economy has delayed many wind and solar projects the advantages of energy efficiency remain strikingly clear – using less is cheaper and cleaner than using more.

There are many people who surely throwing up their hands, saying: “Enough already. Why do we have to put up with this endless recitation of atrocities?” The best answer is probably Evans’s remarks at the end of his new book:

Most of us who lived through the Third Reich and fought in its wars are no longer with us. Within a few decades there will be no one left who remembers it at first hand. And yet its legacy is still alive in myriad ways.…The Third Reich raises in the most acute form the possibilities and consequences of the human hatred and destructiveness that exist, even if only in a small way, within all of us. It demonstrates with terrible clarity the ultimate potential consequences of racism, militarism and authoritarianism. It shows what can happen if some people are treated as less human than others. It poses in the most extreme possible form the moral dilemmas we all face at one time or another in our lives, of conformity or resistance, action or inaction in the particular situations with which we are confronted.

Evans’s history begins, “On September 1, 1939 the first of a grand total of sixty divisions of German troops crossed the Third Reich’s border with Poland.” I was 12 years old on that day and I remember looking at the headlines and recognizing that this was not good news for Jews. My father, his brother and his sister had made their way out of Eastern Europe to the United States in 1920. The rest of the family remained in a village that was alternately Hungarian, Czechoslovakian, Soviet, and is now Ukrainian. Very few Jews live there anymore. I have photographs of my grandfather, grandmother, uncle, aunt and two cousins – people I have never met. I don’t know whether they were exterminated at Auschwitz or shot on the spot.

The point Evans makes about the moral dilemmas faced by people confronted with evil actions has direct relevance to social responsibility initiatives in the business world. How does a company respond to sweat shops in China, genocide in Darfur, sexual and racial discrimination in America? European companies that kowtowed to Hitler and were complicit in his demonic programs faced a backlash after the end of the war. Companies like Bayer and Daimler-Benz were asked to compensate their slave laborers. The giant insurance companies, Generali in Italy and Allianz in Germany, and the Swiss bankers were hit by a bevy of lawsuits over assets appropriated from Jewish clients. When families filed claims to get the proceeds from life insurance policies, companies demanded proof of death. Is it possible that executives of these companies didn’t know that death certificates were not issued at Auschwitz?

The Final Solution was so large and brutal that even when the slaughter was revealed, it was discounted as being “beyond belief.” And while Jews were the primary victims, others were also persecuted: gypsies, homosexuals, the mentally retarded, Poles, Russians, Italians. The Russians fared worst; 3.3 million Red Army POWs died in German captivity.

As the war wound down, the Germans accelerated their killing machine. Up to half of the 700,000 inmates of concentration camps at the start of 1945 were dead four months later. One was the young Dutch diarist Anne Frank, who died of typhus. Another was Lou Ernst, the first wife of the surrealist painter Max Ernst, who was shipped to Auschwitz on the next to last train. And perhaps my grandparents and their children were caught in those final days of the war since the Hungarian Jews were the last to be rounded up for extinction.

The European enthusiasm for high gas taxes has led to more efficient cars and greater use of mass transit.  Yet US federal gas taxes are stuck at 18.4¢ per gallon.  Add that to the weak state excise taxes, averaging 20-30¢ per gallon, and the U.S. has some of the cheapest petrol this side of Venezuela.

Clever greens are figuring out ways to recast the politics of pollution taxes. Green for All and the Apollo Alliance are forming diverse networks that connect improved environmental policy to economic justice and opportunity. Better energy policy may require finding other regressive taxes to cut, offsetting higher taxes on polluting fossil fuels. The most promising choice is the payroll tax funding social security. Unlike income taxes, which poorer people don’t generally pay, the payroll tax is 12.4% (split between employer and worker) starting on the first dollar of wage income – but only for the first $106,800 of earnings.  And those rich enough to be living a life of leisure don’t pay a penny of this tax. It’s very regressive.

Exempting the first, say, $10,000 of low-income workers’ wages from social security taxes would be the equivalent of a $620 tax cut.  A $1 per gallon federal gas tax (funding social security) would soak up $620 from someone driving 12,400 miles per year at 20 miles per gallon.*  With a payroll tax cut and a gas price increase, a low-income worker could simply keep doing what they are doing, having no net impact on their pocketbook or the funding of social security. However, these higher relative prices for gas would immediately create incentives for all drivers to consider more energy-efficient vehicles, and less costly alternatives such as biking, carpooling, trip combining, walking and mass transit.

So yes, higher gas taxes are still a great idea, and they can make life better for struggling working people, not worse. 

* Maybe less. If gas prices don’t rise by the full $1, the $620 tax burden is split between the driver and the station owner.

by Milt Moskowitz

My stepson worked for 17 years at Bear Stearns before it disappeared last year into the bowels of JPMorgan Chase in the shotgun marriage arranged by the U.S. government. He is doing very well today, taking time off to consider his options.

He misses the excitement of deal making. His major deals involved structured financial products collateralized by mortgage-backed securities, the root cause of the current upheaval in the economy.  AIG was his top client.

Bear Stearns was not a company that made it into the portfolios of social investment companies, despite having one of the most innovative philanthropic programs in the business world. Every senior manager at Bear was required to prove, every year, that she or he had donated at least 4% of their income to charities of their choosing. Charities such as the United Way and United Jewish Appeal are said to be devastated by Bear’s collapse.

The culture of Bear always fascinated me, and it is artfully delineated in William Cohan’s book, House of Cards: A Tale of Hubris and Wretched Excess on Wall Street. Cohan traces the last days of the firm in rich detail, distilled from interviews he conducted with 16 former employees, and many who chose anonymity. He tells it so well that even though you know how it turns out, you are swept along with the suspense as all-night deliberations rattle on.

It’s not clear that Bear Stearns had to die. The firm fought to the end to maintain its franchise. But when you are leveraged 30 to 1 and rumors start to circulate that other banks do not want to lend to you, it doesn’t take long for the curtain to fall. In fact, it took only two days in the second week of March 2008 for Bear Stearns to see that, after 85 years, it had no future.

Some of the adjectives often used to describe Bear Stearns were: scrappy, aggressive, quirky, independent, cut-throat, street brawler. Went their own way. Didn’t pay a lot of attention to the niceties. The top echelon was studded with champion bridge players.

One insider interviewed by Cohan contrasted Bear Stearns with Goldman Sachs. At Bear, if they just did a deal with a customer, a trader might say: “I just ripped that f—er’s head off.” At Goldman, they would say about the same deal: “That was a very attractive and commercial price [we] purchased those securities at and I think we will have a very interesting economic opportunity in the near future.”

Cohan’s book is full of interesting tidbits like that. Jimmy Cayne stepped down as CEO in January 2008 but stayed on as chairman. In March, Cayne decided not to wait for the formal sale to JPMorgan and opted to sell his 5.6 million shares for $61 million. Although he had worked at Bear for 39 years, Cayne, at that point, was no longer technically an employee. Ace Greenberg, who had hired him and was Bear’s CEO for 15 years before Cayne deposed him in 1993, was still working for the firm – and he charged Cayne the non-employee commission of $77,000 for that sale; an employee would have to pay only $2,500. And so it goes.

Was Bear’s free-wheeling culture the reason for the firm’s demise? That’s hard to say. Every other investment banking firm was behaving in the same manner. The final verdict in Cohan’s book goes to Alan Schwartz, the last CEO of Bear. He said:

“I’m sure we will figure out how to prevent something like this from happening in the future. Wall Street is always good at fighting the last war. But these things happen and they’re big, and when they happen everybody tries to look at what happened in the previous six months to find someone or something to blame it on. But, in truth, it was a team effort. We all f—ed up. Government. Rating agencies, Wall Street. Commercial banks. Regulators. Investors. Everybody.” (Of course it’s somewhat self-serving to blame others when the finger is pointing at you.)

My stepson puts it more succinctly: “Wall Street is all about greed. It was that way in the past. It still is.  And it probably will be in the future.”

The Wall Street shops are defining their approach as “sustainability” or “ESG” (environment, social and governance) investing. Goldman Sachs recently launched GS Sustain, as “a unique global equity strategy that brings together ESG criteria, broad industry analysis and return on capital to identify long-term investment opportunities.” Mercer, one of the world’s largest investment consultants, built its global Responsible Investment team to “integrate ESG considerations into investment management processes in the belief that these factors can have an impact on financial performance.” UBS has integrated sustainability themes into both its Wealth Management and Global Research divisions, launching products like the UBS Eco Performance equity fund. The former head of Goldman Sachs joined forces with Al Gore to form Generation Investment Management, a firm founded with “an investment approach based on the idea that sustainability factors – economic, environmental, social and governance criteria – will drive a company’s returns over the long term.”  No doubt, the current tumultuous market has presented some bumps in the road for some of the firms involved, but almost certainly the theme of sustainability investing is here to stay.

This is all very positive news for the investment community at large and indeed the planet. These ideas – that people and the environment matter to profits – are just what we’ve been advocating for years! What’s really exciting is there are now more resources and depth to ESG research than we’ve ever had access to before.

But this mainstreaming of sustainability investing also presents something of a threat to longtime SRI practitioners. The new sustainability shops have worked hard to differentiate themselves from traditional SRI – that is, us. The claim is that the new ESG approach improves upon traditional SRI in that it is forward-looking and focused on uncovering investment opportunities in a more sustainable world, without being hampered by negative screening and without taking on controversial shareholder advocacy.

The fact is, forward-looking ESG research is far from new to us. SRI practitioners have been researching and incorporating sustainability concepts into our investment practices for years. For nearly three decades, our research has been focused on the intersections between ESG issues and financial performance – we just didn’t call it that. As we see it, SRI firms have really been providing what could be called “ESG Plus” – adding client-tailored screening, change-making advocacy and high impact community investing on top of our sustainability-focused investment methodology. These “plus factors” are essential to our approach, and for the long-term, we remain committed to keeping the SRI in ESG.

But as the world of financial services restructures, it may be the opportune time for traditional SRI firms to collaborate with Wall Street’s new sustainability initiatives on the ESG mission we have in common. Our experience, dedication and long-term perspective on issues like climate change, water scarcity, poverty, and executive pay, combined with the larger firms’ deep research capabilities and resources could be a powerful force. Indeed, at what may turn out to be a critical inflection point in history, by working together the investment community could play a critical role in defining the path to sustainability.

Some of the other systemic risks embedded in financial markets are barely on the radar screen of most investors.  These range from unregulated pollution causing global warming, to the worrisome increase in nuclear proliferation during the Bush years.  Preventable increases in sea levels might warrant more investor attention than, say, which large-cap growth manager should be hired or fired.  There might not have been a worse piece of news for long-term investors over the last decade than Pakistan’s A.Q. Khan passing on nuclear secrets to other countries, yet there is no widespread investor effort to reduce the nuclear threat.

Why don’t investors pay more attention to these massive risks, and try to do more to reduce them?  The answer lies in an almost totemic belief that markets go up in the long run.  In fact, financial asset values don’t inevitably rise, even over twenty and thirty year periods.  Market outcomes are conditioned by the public and private governance systems in which they operate.  By influencing these governance systems, investors working together can reduce market risk and positively influence long-term market outcomes.  To do so, however, will require accepting that markets do not magically inflate, and that investor passivity is in fact a very risky strategy.

Some large institutional investors are starting to wake up to the latent risks in the system and their role in mitigating them.  Investors responsible for over $15 trillion in assets have signed on to the UN Principles for Responsible Investment, which state that ‘environmental, social, and corporate governance (ESG) issues can affect the performance of investment portfolios.”  Investors with over $7 trillion in assets (including Trillium Asset Management Corporation) have joined the Investor Network on Climate Risk (INCR), which has been pushing for more analysis and disclosure of the potential impact of climate change on corporate performance.  Capitalizing on the regime change in Washington, INCR’s members are advocating strongly for improved public policy to ensure global emissions reductions.

It is an enduring irony, last learned during the troubles of the 1930s and 1960s, that no group has a greater self-interest in vigorous public governance than the investor class.  The door has opened for substantial public policy reform not only in the financial sector, but also on other critical issues affecting long-term investor outcomes.  These range from energy and the environment, to health care, income distribution, and global security.  With the widespread use of mutual funds and other diversifying strategies, virtually all investors large and small have a stake in eliminating environmental, social and governance failures in the service of their long-term portfolio returns.  Investors of the world, unite!. 

In the heart of the Patagonia region of Chile, the multinational consortium of financiers, HidroAysén, is proposing to build five hydroelectric dams on the Pascua and Baker Rivers. The dams, if built, would flood two pristine rivers and nearly 11,000 acres of Chile’s most biologically rich forest, agricultural and ranching lands. Included in this area would be some of the world’s rarest forest types and the habitat of a critically endangered species – the huemul deer, a Chilean national symbol.

Beyond the direct impact of the dams, the dams’ transmission lines would require clear-cutting forested areas for at least a thousand miles. The route would traverse 64 Chilean communas, including some indigenous communities, and would damage fourteen areas that have been granted protected status under Chilean law because of their unique environmental values and vulnerabilities.

Most Chileans oppose these plans. Over 30 Chilean governmental agencies have joined Chile’s forestry agency in publicly expressing strong concern about the potential environmental and social impacts of the plans – and many of them have called for the outright rejection of HidroAysén’s inferior environmental study.

In response, a group of Chilean and American environmental organizations including International Rivers, Friends of the Earth, ForestEthics, Rainforest Action Network, Environmental Defense, Sierra Club, Natural Resources Defense Council and Pacific Environment, have been fighting the dams for many years. The campaign has included the usual tactics employed by the environmental community over the years, but this year they have begun to put pressure on the network of companies that are both directly involved and indirectly implicated by the project.

One of those relationships includes Home Depot. CMPC and Arauco are two Chilean timber companies that play a pivotal role in the project consortium. They also happen to be suppliers of wood products to Home Depot – in fact, the company is by far the largest source of sales for the two companies.

Now you may be saying to yourself, didn’t we already cross this bridge with Home Depot years ago? And you would be right. In 1999, as part of a broad settlement involving a number of organizations including Trillium Asset Management Corporation (“Trillium”), Home Depot committed to eliminate the purchase of wood and wood products from endangered regions around the world by year-end 2002.

In 2003 as a part of that process, CMPC, Arauco and Home Depot made widely publicized, written commitments to protect Chilean forests. In that agreement, Home Depot committed “to provide for the protection of native forests in Chile.”

Trillium, in cooperation with a group of other shareholders, is leading an engagement with Home Depot focused on Home Depot’s commitments to protect the native forests of Chile. Home Depot’s relationships with the timber companies offer an important leverage point that can add to the growing pressure on the proposed dams.

The situation also presents serious reputation risk to the company. Not only have some of the best-known environmental groups come out publicly and forcefully in calling attention to Home Depot’s relationship with the proposed dams, but in the past sixty days more than 5,000 customers have written to the company to say they will no longer shop at Home Depot because of the proposed dams controversy.

For both of these reasons we believe that Home Depot must take a positive, meaningful and public stand against these proposed dams.

 “When power leads man to arrogance, poetry reminds him of his limitations. When power corrupts, poetry cleanses.” 
~John F. Kennedy

As I write this, toward the end of 2008, the world is looking crazier and scarier than ever.  I don’t want to add to the multitude of punditry already in place. It’s time to seek the wisdom, clarity and solace of poetry:

    

ANYBODY FOR MONEY   Ogden Nash

Consider the banker
He was once a financial anchor.
To pinch our pennies he would constantly implore us,
And if we wouldn’t pinch them ourselves, he would
     pinch them for us.
Yes, bankers used to be like Scrooge before he encountered
     the ghost of Marley,
But along came TV and now they are Good-Time Charlie.
The bankers have only themselves to blame for the recent
     wave of holdups and embezzlelements I think
         highly probable,
They are behaving so provocatively robbable.  

  

  

WORLD BANK BLUES   Allen Ginsberg

I work for the World Bank yes I do
My salary was hundred thousand smackeroo
I know my Harvard economics better than you

Nobody knows that I make big plans
I show Madagascar leaders how to dance
How to read statistics & wear striped pants

We’ll loan you money to expand production
Pay our yearly interest, for your own protection
Tighten your belts, we’ll have no objection

Get people working on mass market land
Cut down forests, for your cash in hand
Or superhighways money where Rainforests stand

I just retired from my 20 year job
At World Bank Central with the money mob
Go to AA meetings so’s not die a slob

Walk the streets of Washington alone at night
The job I did, was it wrong or right?
Big mistakes that’ve gone out of sight?

It wasn’t the job of a bureaucrat like me
To check the impact of the Bank policy
When debt bore fruit on the world money tree.

THE ECONOMIST’S SONG   Stanley Kunitz

Come sit beneath the tariff walls
Among the scuttling unemployed,
The rodent pack; sing madrigals
Of Demos and the Cyprian maid
Bewildered by the golden grain,
While ships with peril in their hulls,
Deploying on the lines of trade,
Transport the future of gangrene.

  

  

HARLEM Langston Hughes

What happens to a dream deferred?
     Does it dry up
     Like a raisin in the sun?
     Or fester like a sore -
     And then run?
     Does it stink like rotten meat?
     Or crust and sugar over-
Maybe it just sags
     Like a heavy load.
Or does it explode?

THE JEWISH TIME BOMB   Yehuda Amichai

On my desk there’s a stone with AMEN carved on it, one
     survivor fragment
of the thousands upon thousands of bits of broken
     tombstones
in Jewish graveyards.  I know all these broken bits
now fill the great Jewish time bomb
along with the other fragments and shrapnel, broken
     Tablets of the Law
broken altars broken crosses rusty crucifixion nails
broken houseware and holyware and broken bones
eyeglasses shoes prostheses false teeth
and empty tin cans of lethal poison.  All these
fill the Jewish time bomb till the End of Days.
And though I know all about these, and all about the End
     of Days,
this stone on my desk gives me peace.
It is the touchstone no one touches, more philosophical
than any philosopher’s stone, broken stone from a broken
     tomb
more whole than any wholeness,
a stone of witness to what has always been
and what will always be, a stone of amen and love.
Amen, amen, and may it come to pass. 

Enter the B Corporation^TM, “setting the new corporate standard for social and environmental performance.”The vision of “B Corp.” is to institutionalize and scale the for-benefit corporation. The goal is to take responsible businesses to the next level of organization and performance through three strategies: 1) Meeting comprehensive and transparent social and environmental performance standards, 2) Institutionalizing stakeholder interests, and 3) Building collective voice through the power of a unifying brand.

At Trillium Asset Management Corporation (“Trillium”), we decided to take the plunge and become a B Corp. The first step was filling out a detailed survey on our approach to products, practices and profits. Given our longstanding mission-driven business model, we figured we’d ace this test. And in fact, we did score well enough to easily qualify as a B Corp. But like the large corporations we engage with to increase transparency, the process of filling out the survey was instructive. It shined a light on areas in which we can improve our practices ranging from involvement in local communities, efforts to reach out to underserved populations and supplier diversity.

We have also committed over the next year to review our company’s bylaws. B Corps “redefine the best interests of the corporation to include the consideration of employees, consumers, the community and the environment.” This shouldn’t be much of a stretch for us. Our longstanding mission statement, on the back of every employee business card, explicitly embraces multiple bottom lines and broad stakeholder constituencies. These include clients, concerned investors, employees, and other persons and organizations working to build a just society and a better world.

B Corps’ third initiative is to build a powerful brand image similar to trusted labels such as Fair Trade Certified^TM and Energy Star. B Corp is using member licensing fees to pursue co-branding, media/web relations and marketing partnerships. Branding may have more impact for consumer products B Corps like BetterWorld Books or King Arthur Flour than for professional services companies like Trillium. And in fact many of the better-known founding B Corps are progressive consumer brands such as Numi Tea, Indigenous Designs, Dansko and method.

We at Trillium are pleased to join the expanding community of responsible companies at B Corp. We look forward to the day when for-benefit corporations are codified in state and federal law as strongly supported business models. And we encourage large, publicly traded companies to become B Corps as the next step toward institutionalizing greenwash-free, mainstream, responsible business.

James Grant, editor of Grant’s Interest Rate Observer, asked out loud in the July 19 Wall Street Journal why there has been such little public outrage “at Wall Street’s damaging recklessness,” as there had been in previous crises.  I looked back myself at some of this outrage:

• In 1896, 36 year-old William Jennings Bryan delivered what has been called “the most effective speech in the history of American party politics” at the Democratic convention that nominated him for President. Railing against the gold standard and for the income tax, Bryan said: “There are two ideas of government. There are those who believe that, if you will only legislate to make the well-to-do prosperous, their prosperity will leak through on those below. The Democratic idea, however, has been that if you legislate to make the masses prosperous, their prosperity will find its way up through every class which rests upon them.” And to those who press for the gold standard, Bryan replied: “You shall not press down upon the brow of labor this crown of thorns, you shall not crucify mankind upon a cross of gold.”

• In 1915, prior to his Supreme Court appointment, Boston lawyer Louis Brandeis testified before Congress on the size of corporations and the role of trade unions. He said: “I think all of our human experience shows that no one with absolute power can be trusted to give it up, even in part. That has been the experience with political absolutism; it must prove the same with industrial absolutism. Industrial democracy will not come by gift. It has got to be won by those who desire it. And if the situation is such that a voluntary organization like a labor union is powerless to bring about democratization of a business, I think we have in this fact some proof that the employing organization is larger than is consistent with the public interest. I mean by larger, is more powerful, has a financial interest too great to be useful to the State; and the State must in some way come to the aid of the workingmen if democratization is to be secured.”

• In his first inaugural address, Franklin D. Roosevelt declared: “Only a foolish optimist can deny the dark realities of the moment…Plenty is at our doorstep, but a generous use of it languishes in the very sight of the supply. Primarily this is because rulers of the exchange of mankind’s goods have failed through their own stubbornness and their own incompetence, have admitted their failures, and have abdicated… The measure of the restoration lies in the extent to which we apply social values more noble than mere monetary gain.”

There is very little of that outrage around today.  Dennis Kucinich, perhaps.  Maybe Ralph Nader.  But you are not going to hear it from ex-Goldman Sachs CEO Henry Paulson, now Secretary of the Treasury, or Robert Rubin, another ex-Goldman CEO, former Treasury Secretary and now senior counselor at Citigroup, a company heaped with hosannas not too long ago.  And you’re probably not going to hear much of it from the two presidential candidates.

*                          *                         *                         *                         *                         *

To me, the epitome of the current financial crisis was the rioting that occurred in July at the Karachi Stock Exchange in Pakistan.  Like stock markets all over the world, the Karachi exchange has taken a beating this year.  It is down more than one-third since reaching a record high on April 21.  Investors there became so agitated by this decline that they organized protest marches resulting in the breaking of the Exchange’s windows.  Some demanded that the Exchange close its doors.  The Financial Times interviewed a few protestors.  “I am upset because I am constantly losing money,” said one.  Another said: “For me, this is just murder for my economic future.”

These guys apparently never realized that a stock market sometimes goes down.

China has dualism down to an art, and an Olympic sport for that matter.  Dualism – the contrast between power and peace, light and dark, yin and yang – has long been recognized in eastern traditions, where the coexistence and balance of opposites is revered. These Olympic Games have embodied contradictory behavior but have been far from harmonious.  The Chinese government’s fervent desire for a fresh image has only reinforced existing stereotypes, despite an effort to achieve nothing less than perfection. The problem with perfection is that it is balanced out by imperfections, and the overarching control of an authoritarian government has created more than a few:  the arrest of human rights activists and journalists; the revocation of 2006 Olympic sprinter Joey Cheek’s visa to prevent him from attending the games (Cheek is the co-founder of Team Darfur, a coalition of Olympic athletes raising awareness about the Darfur genocide); the exploitation of the workers who built the stadium; allegations of underage gymnasts winning gold; and Lin Miaoke, the lip-syncing, adorable Chinese girl who replaced an ‘inferior’ looking 7 year-old in the Olympic ceremony limelight.

But it is not just China who is caught up in a sea of contradictions, unable to maintain a perfect façade.  The sponsorship of the “genocide Olympics” has put many a Corporate Social Responsibility policy under examination, as companies have failed to live up to idealistic mission statements.  Despite the seeming position of power corporations hold in the Beijing games (contributing a ton of money), the sponsors have dodged appeals to advocate for human rights in Sudan and Tibet.  Money still trumps values, even in the age of “enlightened” corporations who espouse social and environmental ethics.

China’s role as a leading oil extractor and arms provider in Sudan continues to enable a mass genocide of the Darfuri people.  Does this not warrant action?  At least a strong word from sponsors (whose Olympic expenditures averaged $73 million a piece)?  Not, apparently, if it falls beyond a company’s “sphere of responsibility.”  In an effort to gain traction on the issue, Trillium Asset Management Corporation (“Trillium”) wrote to Olympic sponsors last September, reiterating the reputational risks associated with sponsorship and asking sponsors to leverage their access to the Chinese government to affect positive change.  Few responded, and those that did said it was a problem for diplomats, not corporations.

That would be true in a perfect world where regional actors or the United Nations stepped in to solve problems with unlimited resources and trustworthy intentions.  In reality, the ongoing massacres of hundreds of thousands should trouble the conscience of any and all actors with potential influence. The Olympics are an outstanding testament to the human potential to balance the head and the heart.  Perhaps the next evolution in corporate potential will prove the coexistence of making money and doing good.

I was there at the birth. The column I now write made its debut on the front page of the first issue of this newsletter in 1983.

I served on the board of directors for eight years.

Founder Joan Bavaria lived in an apartment in my Mill Valley home for 10 years.

My stepson, Blaine Townsend, who lives with me along with his wife and three children in this same house, now manages the San Francisco office of Trillium.

When I look at the business landscape today, I am astounded at the changes which have occurred over the past 25 years:

• In 1983, there were only four mutual funds which specifically applied social considerations to investment decisions. Today, there are more than 60.
• In 1983, 136 major corporations had African-Americans on their board of directors. Today, blacks serve on the boards of more than 260 companies.
• The number of resolutions on social issues presented to companies in proxy statements has tripled since 1983 — and they gain much wider shareholders support than they did 25 years ago.
• In 1983, we didn’t have any organizations bringing people together around social responsibility in business. Today, we have a myriad of them, including the Social Investment Forum, Business for Social Responsibility and the Social Venture Network.
• And who would have thought in 1983 that members of the Rockefeller family would band together to challenge the head-in-sand policies and practices of Exxon Mobil, the original source of their fortune?

What’s indisputable is that Trillium has been the catalyst for many of these changes. Two organizations, the Social Investment Forum and Ceres (Coalition for Environmentally Responsible Economies), were hatched at Trillium. I can recall Joan coordinating the principles of Ceres on the kitchen table in her apartment in my home. Pioneers such as Amy Domini and Steve Lydenberg were once employed here.

In my first column, I noted the sparse information available about corporate social responsibility in mainstream business publications like Fortune, Barron’s and Forbes. That was one of my preoccupations as a journalist. I wrote and published a newsletter, Business & Society, for six years (1968-1974), my first book, Everybody’s Business, published in 1980, profiled 318 companies and was billed as “the irreverent guide to corporate America,” and as Franklin was launched, I was working on my next book, The 100 Best Companies to Work for in America, published in 1984. But I did point out in that first column that new information sources were beginning to appear — and indeed, Franklin Research & Development, was one of them. The founding of Kinder Lydenberg Domini (now KLD Research & Analytics) was still a few years off.

Trillium, from the start, did its own research to determine the social profiles of publicly-traded companies. In fact, those people who subscribed to this newsletter, then called Insight, received a steady stream of information about corporate responsibility and irresponsibility. This newsletter turned out to be a prime source of information for financial advisors setting themselves up as managers of socially responsibility portfolios. I remember that at board meetings the question occasionally came up: Why are we publishing this information to help our competitors?

Incidentally, that first issue of Insight had a box entitled “What Would We Buy?” And the recommendations were: Quaker Oats, Wheelebrator Frye, Betz Laboratories, Evans & Sutherland, Herman Miller, Johnson & Johnson and Digital Equipment. Such are the ravages of capitalism that only two of these companies (Herman Miller and Johnson & Johnson) still function today as independent entities.

Prior to launching Franklin Research & Development, Joan had, thoughtfully, invited everyone in the country who had a connection to corporate social responsibility to attend a symposium on social investing. I mingled at a condo in Lewis Wharf with these participants, among whom were the late Robert Schwartz, who managed social responsibility accounts at Shearson/American Express, Stuart Baldwin from the Council on Economic Priorities, Randy Barber from a pension advisory service for labor unions, Steve Moody from U.S. Trust, Wayne Silby from the Calvert Group, Tim Smith from the Interfaith Center for Corporate Responsibility and Jamie Heard from the Investor Responsibility Research Center.

I recall getting on a plane to return to San Francisco, thinking: “These are certainly do-gooders. But what do they know about running a business?”

It was one of the more colossal misjudgments of my life.

I recently spent four days at Bainbridge Graduate Institute (BGI) as a Change Agent in Residence, joined by the renowned Native American environmentalist Winona LaDuke, the nation’s leading expert on employee ownership Corey Rosen, and the Chief Operating Officer of the Gates Foundation Cheryl Scott. BGI is a pioneering leader in sustainable business education and in just five short years is already developing an international reputation for its authentic and powerful learning community, infusing sustainability throughout a business curriculum.

BGI’s motto, Let’s Change Business for Good, is reflected in each and every course listing, such as: “Finance, Accounting and the Triple Bottom Line,” “Classical & Ecological Economics,” “Sustainable Operations,” and “Creativity and Right Livelihood.” The school’s popularity is growing like a weed, fostering a new generation of socially conscious, highly skilled business leaders.

BGI’s innovative delivery model includes nine long weekends per year on Bainbridge Island, WA at IslandWood’s 255-acre environmental learning center. This uber-green, gorgeous setting helps attract some of the most innovative professors from other, more traditional institutions around the country. The academic faculty co-teaches courses along with creative entrepreneurs and experienced business professionals. IslandWood’s ecological simplicity adds to the monthly BGI magic, recharging the action-oriented innovators to continue pushing the boundaries of sustainable business practice. A web-based, distance learning and social networking platform called The Channel knits the community together in between the monthly convenings.

The long BGI weekends are called Intensives, and it is no doubt intense to spend what feels like 72 continuous hours immersed in inter-generational teamwork, research, presentations, networking and socializing. In their first year, BGI’s students engage in action learning projects within corporations, helping engineer sustainability into existing business models. In their final year, students form teams to design entrepreneurial, sustainable businesses from scratch, and some of these are becoming a reality.

The risk-taking and enchanting founders of BGI, Gifford and Libba Pinchot, acted from the deep belief that fundamental reform of business education is required for positive systemic change. In recognition of their inspiring achievement, BGI won the inaugural Joan Bavaria Award for Innovation in Building Sustainability into the Capital Markets at April’s Ceres conference in Boston. The development of entrepreneurs rooted in the multiple bottom lines of profit, people and planet is laying the groundwork for a more sustainable and conscious capitalism, consistent with Joan’s and Trillium’s mission over the last quarter-century.

BGI now needs to take another leap and focus on its own long-term sustainability, including more expansive fundraising and the development of a diverse and engaged leadership Board. I have been asked to serve as a Trustee at BGI, and look forward to working with this joyous and energetic community to change business for good.

The investment ecosystem has reached a tipping point and the interest in responsible, sustainable investing is surging. Asset owners with over $10 trillion have signed up to the UN Principles for Responsible Investment. The Investor Network on Climate Risk now has over $5 trillion behind it. The leading investment consultant to Foundations will now provide Mission Related Investing services. More corporations are institutionalizing sustainability concepts into their organizations and business education is inching away from the blinkered study of money making toward imagining socially positive enterprises with multiple bottom lines. A recent online survey by Cone Inc. found that 79 percent of full-time workers under the age of 25 want to work for a company that cares about how it affects or contrib­utes to society.

As the new players under this growing sustainability tent get to work, they will eventually pose the most fundamental of questions: what is the objective of investing? By custom, and at times by regulation, the answer has been: maximize risk-adjusted financial returns. With this narrow, short-term view, environmental and social considerations have been deemed in conflict with maximizing wealth. Yet, can we really thrive while ignoring the explicit bottom lines of environmental sustainability and social justice?

The easy-to-grab, low-hanging fruit in sustainable investing is being harvested with a single-bottom-line approach. Activities that reduce the use of fossil fuels enhance the financial bottom line. With $100 oil, the obvious win-win activity is energy ef­ficiency. Wal-Mart has gone all-in for a definition of sustainability focused primarily on reducing energy use by the company, its suppliers and its customers. This is a wonderful development, but only the first of many toward a truly sustainable economy and financial system.

Here at Trillium Asset Management Corporation we are im­proving our own sustainability performance through an inspiring grassroots effort initiated by our newly formed Green Team. The Greens recently sat us down, vegetarian pizza in hand, as we watched the clever, concise and internet-delivered Story of Stuff. In 20 minutes the narrator, Annie Leon­ard, illustrates the social and environmental damage our current straight-line production system generates, from extraction to production, distribution to consumption and, finally, disposal to landfill. She ends with a vision of an alternative production sys­tem that is circular as opposed to linear, that recycles as opposed to exploits and that is cognizant at every juncture of the human impact of the material economy.

This kind of deep sustainability thinking prompts a recasting of the most fundamental investment questions. As investors and capitalists, we embrace investing for financial return. The evolved fiduciary question becomes: what is the best risk-adjusted, long-term financial return we can generate that is sustainable and restorative from both a human and planetary perspective? Going down this essential path means acknowledging that many legal investments are neither moral nor sustainable, damaging the soul as well as the environment and risky in the long run. Truly sus­tainable investing expands the definition of wealth generation, risk and return, illuminating the complex tradeoffs we all face as individuals and institutions.