Steven Lydenberg. Berrett-Koehle Publishers. 170 pages. £16.99 hardback
This is a timely publication about moving socially responsible
investment on to the next level. The goal, according to Lydenberg, is
to shift business thinking and practice towards the creation of
long-term wealth, which he defines as creating value for stockholders,
employees, customers and communities. He claims the means to this noble
end is to improve the quantity and quality of corporate social and
environmental data, thereby allowing the market to take externalities
into account.
The heavyweight emphasis (one might even say silver-bullet status)
given to data-oriented reforms clearly reflects the author’s personal
career: Lydenberg was one of the founders of US-based socially
responsible investment research company KLD Research & Analytics
and is the chief investment officer for Domini Social Investments.
Perhaps this also explains the implicit optimism in the book about this
single-strategy solution.
Disappointingly, however, some of the more fundamental dilemmas about
the market-based approach are not seriously addressed. For example,
does improved data really change the short-termism driven by discounted
cashflow models and speculative trading? And how does increasing the
supply of information reconcile with already lacklustre demand among
analysts and other stakeholders? What about the cumulative impact of
all the companies that are not large, high profile multinationals and
therefore fall outside the SRI data net?
Despite leaving critical questions such as these unanswered,
Corporations and the public interest still offers a highly readable
account of some of the progress that has been made in the socially
responsible investment field, as well as the challenges that remain if
we hope to make companies more responsive to their stakeholders and
accountable for their impacts on society and the
environment.
Wayne Visser
