Mainstream investors are reportedly only interested in environmental, social and governance (ESG) issues that will have a "material" impact on the company (higher or lower profits) -- more specifically a near-term impact. On the other hand, traditional ESG investors do not want to invest in companies that have a negative impact on society or the environment -- that are a risk to the community and ecological balance, not just to that company.

Social investors often assert that companies that manage their social and environmental responsibilities will ultimately do better financially. Sometimes it turns out, however, that the negative ESG risks are not material risks to a company in the short term.

Laws and regulations have not caught up with the latest externalization of impacts. Even where they have caught up, the legal costs and regulatory fines are often minimal as a percentage of revenues that can be obtained by ignoring and externalizing these impacts.

Legal costs, paying for protection by security forces of a foreign state, etc., are all part of the "cost of doing business". Generally there is no material impact on the company in the relative short term (next quarter to next year). The stock price stays up or even improves, ignoring these factors.

Focusing a moral lens on corporate behavior more clearly reveals potential long term impacts, sometimes five to ten years before they may become relevant to stock price. Many mainstream investors are not focused on the long term.

It may be, however, that this disconnect is narrowing as communication improves. Word travels faster today. Indentured servitude/slavery in the Amazon or child labor in western Africa has the potential to do brand damage - a real, though sometimes "intangible" material cost.

Investors learn that people are dying for lack of affordable drugs and find it troubling. Sweatshop labor is no longer acceptable mainly because investors and customers are learning more about it from nongovernmental organizations and investigative reporting.

The long-term focus of the moral perspective may actually be shortening because of the speed of communication today.

"Finally, I hope that the great thinkers here will dedicate some time to finding ways for businesses, governments, NGOs, and the media to create measures of what companies are doing to use their power and intelligence to serve a wider circle of people." -- Bill Gates at Davos, Switzerland, "Creative Capitalism," January 24, 2008

Mr. Gates appears now to be joining the social investing movement. What a welcome development! He wants measures because he wants recognition for these activities, because recognition brings rewards to companies: inspired employees and public approbation. And I would add: social investors investing for the long-term. His speech calls on companies to do what social investors have been asking companies to pay attention to and what KLD has been measuring for many years -- the social and environmental impact of corporations, especially on low-income groups.

Microsoft Corporation's efforts to expand its beneficial impacts for low-income citizens beyond philanthropy into its business model are recent, as Mr. Gates acknowledges in his Davos speech. These efforts are recognized by KLD in our company profile of Microsoft. KLD's evaluation of Microsoft's efforts is that the company is not yet a leader in this regard, but it is making a start.

In 2007, Microsoft expanded its Unlimited Potential program to include initiatives beyond charitable giving. For example, the company had 110 Innovation Centers around the world that offered software development assistance, business skills training, employment programs for students, and market incubation. Microsoft planned to open an additional 90 centers by 2009.

The company also had research and development initiatives focused on meeting the needs of technology users in emerging markets. In addition, Microsoft was exploring alternative business models that would make it easier for individuals and small businesses with limited or irregular income to acquire computers, such as subscription and pay-as-you-go options.

I hope that some of the "great thinkers" at Davos will help Mr. Gates recognize that many investors have been basing their investments (rewards to companies) on "measuring what companies are doing to use their power and intelligence to serve a wider circle of people."

For example, through investment choices and shareholder resolutions, social investors have urged companies to provide responsible financial services to low-income citizens and have criticized firms with predatory lending practices.

Other examples include social investors pressing pharmaceutical companies to make medicines affordable and available in low-income countries and in the U.S. where they are unaffordable to low-income citizens.

Reflections from the meeting of the International Working Group (IWG) of the Social Investment Forum, meeting at the Santa Ana Pueblo, New Mexico, Nov 2-3, 2007.

"We are all indigenous peoples," said Larson Bill, a leader of the Western Shoshone. "Some of us have preserved the knowledge longer." He went on to say that "climate change" hit the first peoples of North America in 1492, with the results of destroyed environment and human lives, forced migrations, and cultural devastation.

Larson believes that some indigenous peoples have preserved enough of the knowledge so that there is still time to share it for the sake of all of us now experiencing climate change.

As we were also learning at the IWG about alternative energy projects, it was clear that humankind is in a period of return to the indigenous knowledge of ecological and social balance.

This indigenous knowledge includes acknowledgment of the human tendency, including their own, to greed and ignorance, the tendency to mess up the balance. But the myths stress (and preserve) the value of balance and sharing over exploitation and greed.

Indigenous peoples now reside on empty, "undeveloped" land where they are able to innovate with the alternatives to oil energy that we all need - wind and sun.

Can we respect indigenous "development" values this time around, rather than spread exploitation and impoverishment of land and peoples?

Larson Bill invited all to the 15th Indigenous Environmental Network Protecting Mother Earth Conference: Answering Mother Earth's Call for Healing - Reaffirming Our Roots

July 17-20, 2008 Newe Sogobe (Western Shoshone) Territories So Ho Bee (Southfork Pow-Wow Grounds in Lee, Nevada)

Topics to include: Traditional L.A.W.S. (land, air, water, sun); Energy, Global Warming and Climate Change; Rescinding the Doctrine of Discovery; and Youth and Elders.

Hosted by the Western Shoshone Defense Project (WSDP) and sponsored by Indigenous Environmental Network (IEN).

(For more information contact IEN at 218-751-4967 or ien@igc.org)