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Chapter 12 Case: Sustainable Investing: Pax World Helping Investors Change the World

For Tomorrow

We at Pax World understand that investing is rooted in one’s aspirations for a better, more secure future—it’s really all about tomorrow. Moreover, we believe that Sustainable Investing is an investment approach that is particularly focused on the future—a methodology that searches for better-managed companies that are better positioned for long-term business success. We think our Sustainable Investing approach is right for the times, and is right for our investors.

Pax World (http://www.paxworld.com/about-pax-world/why-invest-pax)

Learning Objectives

  1. Understand socially responsible investing (SRI) and its relationship to sustainability.
  2. Describe how SRI compares with traditional investment approaches.
  3. Explain the key elements of SRI.
  4. Understand the size of the market for SRI, both absolute size and relative size to total investment market.
  5. Discuss SRI market growth prospects.
  6. Explain the key challenges of implementing a socially responsible approach to investments.

In a speech to the Boston Economic Club on June 15, 2010, Joseph Keefe, president and CEO of Pax World Management, LLC, stated,

We need a new design. We need to take this moment in time to imagine what the Next Economy might look like—an economy that is both post-Sustainability Crisis and post-Financial Crisis. It seems clear to me, first of all, that over the next few decades, market capitalism will need to undergo a Sustainability Revolution equal in significance to the Industrial Revolution that ushered in the modern period. In order for this to happen, corporate behavior, market behavior and investor behavior will need to change. In each case, they will need to become more sustainable—which means, among other things, to behave in a way that focuses more on the long term. Investors can play an important role in this great transformation, as well they should: the transition from an industrial age economy powered by coal and oil to a sustainable economy powered by clean energy and new technologies will unleash a new era of economic and investment opportunities. Sustainable Investing, as I am using the term, is not only a strategy to hasten this historic transformation, but also to harvest the potential investment returns associated with it.Joseph F. Keefe, “Sustainable Investing and the Next Economy” (speech, Federal Reserve Bank of Boston, June 15, 2010), http://www.paxworld.com/about-pax-world/viewpoint.