This year’s 22nd annual SRI in the Rockies conference (held, of course, in New Orleans) tackled a range of issues dogging the socially responsible investment community. Key topics included energy, community investment, risk management and shareholder engagement. A combination of keynote speeches and smaller, breakout sessions, the conference also managed to touch on a variety of specific topics over the course of 72 hours. One such breakout session delved into the burgeoning field of socially responsible alternative investments.
The breakout session, led by the president of a consultancy group, the director of the center for philanthropy at the Tellus Institute and a managing director / founder of a socially responsible venture fund, offered a bird’s eye view of this nascent corner of the SRI landscape. It also offered a few tangible takeaways.
First, there is strong and growing demand for socially responsible alternative investments. Unfortunately, it will take time for this demand to be met. Investors need a long-term track record in order to attract sizeable allocations, especially from institutional players. However, it’s difficult if not impossible to put together such a track record without the support of large-scale investors. Although this almost seems like a vicious circle, the experts leading the panel felt, given enough time, the problem would solve itself. They also agreed that there is no quick or easy fix.
Another interesting trend that caught my eye: socially responsible investing as a strategic advantage. David Kirkpatrick, a managing director at SJV Ventures, noted that his fund’s emphasis on SRI had helped differentiate it from other investors competing for deals. This makes logical sense. Entrepreneurs like to partner with investors who share their worldview. When a sought-after business is choosing from a pool of interested investors, why wouldn’t they go with the team that speaks their language?
Finally, I was struck by the pure number of attendees eager to learn more about alternatives. No single session garnered as much interest as this panel on alternatives—even standing room was limited. Clearly there will be challenges, but the future looks bright. For financial entrepreneurs looking to break into the field of socially responsible investing, I would recommend taking a closer look at this subset. For reasons beyond the scope of this article, the SRI community has focused much of its energy and attention on mutual funds. Rather than fight for a voice in an already crowded field, why not play a foundational role in what by all accounts should prove to be a growing sector for years to come?