Net Impact and MBA's in Boston, who is investing in SRI?

NetImpactBoston, the professional chapter of Net Impact in Boston "New-generation leaders using business for social impact", had its first face-to-face gathering last night at Grafton St Grille in Harvard Square.

A good showing from locals [Maddy, Tammy, Mark O., Chris, Kerry, Amy, Mark R., Birud, Tom, Alex., Kristin, Reese, Chris and me] with surprise visit from Net Impact professional chapter leader in Triangle/NC, Heather. It was excellent to see and meet professionals from different fields, but all looking to build a network using business skills and sustainability as cornerstones to leading a better world. With over 12,000 members in over 100 chapters, NI is healthy and growing. I hope to measure its impact from the SRI perspective over the next 5 years. I have a strong sense that NIB is going to work.

Alex from HBS was there, and asking about roles in SRI at mainstream money managers, like SEI Investments, my old firm in Philadelphia where John Diederich is heading up the SRI at SEI Investments in the investment management unit (IMU). Alex was amusing, relating how she had spoken with a money manager over the summer who said investors "should have no emotion". The money manger's own father died of lung cancer but invests in tobacco stocks!

As always I harvested data-points from my market: I polled members, before last night, on their CSR/SRI thoughts and actions. Nothing like making it personal to see where people are and can get to! One of the best indications of the interest of professionals is the quick build of the NIB membership - now 43 members with no advertising, only using NI alumni networks and word-of-mouth.

In a survey to NetImpactBoston members with 43 respondents in October 2005 I asked four targeted questions with possible answers of 1. Always, 2. Mostly, 3. Seldom, 4. Never, 5. N/A:

Will you pay 20% premium for a good/service from a socially responsible firm?
10% (4)
71% (29)
20% (8)
0% (0)
0% (0)
Do you currently invest in a socially responsible investment fund/stock?
7% (3)
17% (7)
17% (7)
17% (7)
43% (18)
Will you stop purchasing from a company with poor CSR record or reputation?
10% (4)
74% (31)
12% (5)
0% (0)
5% (2)
When you choose/chose your career firm, how important is/was CSR record or repuatation?
37% (15)
44% (18)
7% (3)
0% (0)
12% (5)
Total Respondents
42

From an SRI point-of-view, it was instructive. The response in this demographic - all college-educated, most with graduate degrees, all of whom you assume have some money/investment literacy and CSR understanding:
1. Around a quarter of respondents "Mostly" or "Always" choose SRI
2. Fully 43% seem not to be investing - another worrying sign of the dissavings pattern in the US.

Most compelling for SRI research point-of-view, is the interest in tying consumption and career decisions to company CSR performance. All important elements in the mission of SRI, and with more pressure points, the opportunity to make the case that CSR is the business of business, perhaps. Mr Friedman just flinched?! Not likely, and the NI membership self-selected, but maybe another step toward something better.

I wonder what statistics I could get if we had a bigger sample. A reason to follow up at the Net Impact conference at Stanford 10-13 November. Looking forward to it, with Al Gore, Chairman of Generation Investment Management. Interesting note from SRIiR (the major SRI retail conference in the US) is from David Blood, co-founder of GAM and former player at Goldman Sachs, that they have only raised $80m since inception 6 November 2004. Proof of the power of consultants and the need for a track record before funds flow? My South Africa experience in money management reminds me that 18 months was average for institutional sales.

I look forward to hosting a great SRI panel on “Expecting Returns: How well can socially responsible investments perform” with Nancy Pfund of Bay Area Equity Fund, Lila Preston of Generation Investment Management [founder of the London Business School NI chapter], and Devin Zeller of Calvert. I am also hoping that Lloyd Kurtz can be there, host of SRI Notes.

What is the average person thinking re. SRI? I cannot say, perhaps we will find more pressure through the HNW channel from managers of Separate Accounts programs. At an institutional level, there were two positive comments recently, one from UBS inLondon and one from Goldman Sachs in NYC re. demand from marketplace leading them to look at SRI a little more. More on that later.