The concept of socially responsible investing is believed to have existed since 1500 BC, with an account in the Pentateuch—the first five books of the Bible believed to have been written then by Moses. The books refer to a Jewish concept called Tzedek wherein owners had not only rights but also responsibilities in how holdings were used, one of which was to prevent any immediate and potential harm. The next reference is dated 609-632 CE, with Riba, one of the governing principles in Qur’an, that aims to prevent exploitation from the use of money. By the 1700s, the concept started to evolve to reflect the state of the world and society, and take institutional roots—Quakers prohibited members from participating in slave trade and Methodists resisted investments in what were deemed ‘sinful’ companies—giving birth to what is referred to as the ‘exclusion list’ today.

As investors started aligning their investments with their values, world events like the Vietnam war, anti-apartheid movement, and the Exxon Valdez oil spill in Alaska started bringing together investors and public interest groups, urging companies to adhere to standards of social responsibility. The Nike child labour and sweatshop scandal in the 1990s saw consumers react strongly to news of poor labour practices with protests and boycotts. The brand took a huge hit, sales suffered and the company had to start laying off people. The stakeholder group was in place.

In 2003, the Equator Principles came into being, bringing together banks and financial institutions to provide sustainable project finance. They became a pioneering model for industry coalitions focused on spreading responsible business standards. In the next few years, the UN in collaboration with the Swiss government initiated the WCW (Who Cares Wins), leading to coining of the term ‘ESG’ (Environmental, Social, and Governance) standards.

Today, terms like sustainable investing, responsible investing, impact investing, investing for impact, ESG, UNPRI, and SDGs frequently form part of investment strategies. This widespread adoption has been aided by research establishing ESG as a risk mitigant and demonstrating the business case and improved financial returns. It has also been aided by huge financial disasters that have stemmed from weak or absent ESG management frameworks, and of course, it has been aided by the expected capitalistic benefits from such strategies, that the original concepts set out to mitigate in the first place.What do I mean by that? With the rapid growth in global wealth, the levels of investment activity have grown as well. Global FDI totalled $1.39 trillion in 2019. The growing capitalism has been accompanied by a growth in global awareness, and a rise in pools of capital which are interested in ‘giving back’.

This includes private investors looking for alignment between investments and their personal values and institutional investors looking to satisfy demands from their constituents to integrate sustainability within their investment criteria. It also includes the millennial investor, which according to a survey by Morgan Stanley, is twice as likely than other investors to invest in companies with significant positive social or environmental impacts.

Incorporating forms of responsible investing into the investment strategy, offering ‘returns plus’ and ‘differentiated’ strategies that will outperform peers, has fast become the answer to raising trillions of dollars. One can call it a combination of market forces, business imperative and fund-raising savvy. And data seems to weigh in favour of the last. As per the International Institute for Sustainable Development (IISD), of the $30.7 trillion in assets under management for sustainable investing in developed countries in 2019, $19.8 trillion was based on exclusionary screening, the easiest to implement and only $0.50 trillion was in strategies with the highest ESG impact potential. The IISD also forecasts aggregate assets with an ESG mandate to reach $160 trillion by 2036, an increase of 433% from 2018.

It is clear that responsible investing is here to stay, by whatever name. It has found a strong connect with the market and the investors who led the movement back in early 2000s are delighted. So delighted, that they are almost resting on their laurels, feeling like their work is done. Is it?

Within the numerous terms associated with responsible investing, the overall framework and components have stayed the same in the last 17 years. Yes, the standards get updated to reflect experience, but the key issues and their hierarchy have stayed relatively constant. With the rapid pace of technological innovation and increasingly significant roles being played by start-ups with tech-enabled business models, the risk and responsibility framework needs an update. Carbon emissions are no longer concentrated in fossil fuel, data centres have a strong carbon footprint as well. Governance has taken on increased importance with fragmented cap tables and varied investor interests. How about responsible use of technology? The evolution of responsible investing seems to have stopped and even glaring societal problems like diversity and inclusion – think #metoo, #BlackLivesMatter—continue to be outside the purview of the institutional investment mandate.

Yes, there is the occasional headline made by a Goldman Sachs or a BlackRock and the efforts by the ILN (Investor Leadership Network) and Canadian institutions. There is also the occasional DFI (Development Finance Institution) effort—be it Gender Lens Investing or Gender Smart Investing or Wefi or 2x Challenge which, by the way, have not been integrated by the DFIs within their own investment operations. There is also a lot of tokenism. As per the World Economic Forum, it will be 257 years before men and women have pay equality. We are not even talking minorities here.

It surprises many people, but the ‘G’ in ESG stands for Governance and not Gender, which is considered implied and included. I say that the scale of the issue and the level of effort required to resolve the issue warrants a specific focus. It is time for responsible investing to resume its evolution.

Views are personal. The author is founder of WinPE. She is also a private equity investor and independent board member.

Follow us on Facebook, X, YouTube, Instagram and WhatsApp to never miss an update from Fortune India. To buy a copy, visit Amazon.