Investing, through allocation of capital, has always had an impact on society. But increasingly, the potential impact on society is factored into the original decision to invest. Sustainable and Responsible Investment (SRI), a USD 7 trillion industry, is one of the more popular terms used to signify this development. SRI's future appears promising as the United Nation's Principles for Responsible Investment initiative (UN PRI) has grown to 570 signatories representing USD 18 trillion of assets.
This course explores SRI within traditional asset management and alternatives; hedge funds and private equity as well as liquid and illiquid investments.
The SRI issues discussed are that of motives, implementation and impact. First, we highlight the diversity in motives that drives investors into SRI. We then use a framework that will guide the discussion for the rest of the class. This introductory part also summarizes the current state of SRI, and the challenges it faces. With this background in place, we focus on two critical components of this movement: Implementation and Impact. How should we incorporate sustainability related variables into investment management? What would we like to do and what can we do today? How does a specific implementation style affect investment returns? How does it affect society? In exploring these issues, we highlight the strong link between implementation and impact.
The various issues discussed in the classroom are presented in the context of investment management with the use of guest speakers, investigation of real-life business models, and a discussion of career opportunities.
Vinay Nair was a Columbia Business School faculty member from 2009 to 2016.