Last Updated Dec 23, 2009 3:43 PM EST
BNET: How did last year's economic crisis and fall out affect SRI?
Nair: It's unclear what the end result will be, but there are two contradictory effects going on. On the one hand, there is a greater recognition of the fact that we need more sustainable industries and sectors, and that there is a serious need to rethink those business models that are purely short-term oriented, such as the short-term policies at banks, etc.
The negative effect could be that people are much more focused on returns compared to any other aspect. This by itself is not a negative, but if this is combined with the inherent idea that sustainability will hurt your returns, then it will be a problem.
Luckily, we've seen increasing evidence over the last four or five years that sustainability is improving returns. So I think the negative effect is going to be muted.
BNET: What are some of the future challenges that SRI faces?
Nair: The single biggest challenge is to document that you can do SRI in a return-oriented manner. I think people are tired of ethical approaches to SRI. Ethical approaches will remain a niche industry. It will never be a mainstream industry.
The second is, while many people don't dispute the importance of these variables, what they claim is, it's impossible for them to separate out credible sustainability from the "green washers," people who are doing this for marketing reasons. I think that's another new challenge for the SRI industry to be able to create some kind of measure or rating standardization, which would separate out the green washers from credible SRI companies.
BNET: Can you give an example or two of some of the ways SRI has impacted society?
Nair: One is clearly you can already see the range of products that are being offered across retail outlets that now advertise the supply chain more carefully, whether it's produced on an organic farm in Peru or handcrafted somewhere. We know a lot more about the supply chain through the demand that investors make.
The second is that, directly because of environmental demands, a lot of the laws that would not have passed 10 years ago are getting passed. That's because the corporate lobby against these laws are vanishing. Corporations don't lobby against laws that investors really want, and increasingly the resistance against these environmental laws is falling off on the corporate side.