Long Live the SRI Brand

EnergyHEDGE Newsletter; January 15, 2007

About the only time I listen to the radio is in taxis, and New York cabs are all tuned to either traffic or stock market news. Drivers like to play stock tips now that OTB is not what it used to be and they’ve all got cell phones. So I may be behind the times when I tell you that over the holidays, I heard an ad for Vanguard ETFs (Exchange-Traded Funds). I had no idea the acronym had become a consumer term, and wondered at what point it had crossed over.Hearing the term ETF made me wonder, once again, about the acronym SRI, or Socially Responsible Investing. At SRI in the Rockies, the industry’s annual meeting for financial planners, I heard several people talking about how the name “SRI” didn’t work. Granted, the subject always came up after they found out I was a brand strategist, so in effect I prompted the issue by my presence. Even so, the fact that the name is still in flux made me wonder.

When I saw that the Institutional Investor conference on the specialty is called “Socially Responsible Investing,” implying that the term is well-seated enough to use as a promotion with this audience, my puzzlement became concern. Why the disconnect?

True, SRI in the Rockies attendees are marketing to a different audience, mainly financial planners who are helping individual and family clients express their values through investing. Still, why the resistance to a term they’ve put on the map, to one that has been in place for the 20 years they’ve been holding the SRI conference?

Their objections to the term are all over the map. Some don’t like it because the word “responsible” is a turn-off to traditional investors who feel “responsible” means managing for the best return. “Responsible” also infers the risk-reduction side of SRI and fails to give credit to its vast opportunities. Others resist the word “social” as implying “socialist.”

Even before I’d heard that the institutional world had accepted “SRI,” the lack of support for the SRI brand in the personal finance world made no sense to me. First, it comes just as the category has reached – as virtually every speaker at SRI in the Rockies called it – “the tipping point.” What better time to put aside differences and unite behind a common brand? Certainly, the VC’s attending a different flavor of socially responsible investing conference, CleanTech, understand the importance of rallying beneath a common banner. At that conference’s lunch, one of the founders of the six-year-old conference got up and exhorted the crowd to put aside differences with their brand name (yes, there are objections to CleanTech too) and just get out and build the brand.

There is every reason that now is the time to build the SRI brand with consumers. First, it is difficult enough for individuals to invest in an ethical mutual fund if they don’t know what to ask for. I wrangled with a 401k phone rep over this issue. I told him I wanted to allocate part of my retirement to a socially responsible fund, and he didn’t know what I was talking about – he’d never heard of SRI! How much more likely that consumers will invest in socially responsible funds if large fund sponsors can make it easy for them. While the lack of standards makes this a scary prospect to some like Paul Hawken, standards will come once the industry reaches critical mass, just as they did with the term “organic.”

The time for building the SRI brand is defined by consumers themselves, who are embracing the notion of putting their money where their hearts are. But despite the plethora of SRI funds, 79 SRI funds, according to Time.com., it is difficult to do sothrough conventional means. Consumers could demand that the largest funds that don’t offer SRI Funds start doing so, especially if they use a consistent terminology. The ETF example I mentioned at the start of this article proves that consumers accept acronyms – Vanguard would never spend money on a commercial touting its ETFs if it hadn’t done its market research first. If every consumer looking for an ethical investing option demanded an SRI fund, their voices would have more power.

Think of the benefits of a strong SRI brand. The more individuals’ money flowing through these funds, the more powerful they will become. At the same time, the message of corporate social responsibility will spread beyond institutions to financial consumers. The impact on corporate behavior if “Joe Six-pack’s” become shareholders through a common fund could be enormous. We know what will happen because we watched what happened with stocks in general at the advent of 401k’s, when retirement money moved into the stock market. To bring it home to the fearless readers of EnergyHEDGE – think of the impact on clean energy stocks!