The Differences Among Socially Responsible, Impact, and Common Good Investing: The Latter Is the Future of All Investing (2024)

I was one of the founders of our modern methods of both socially responsible and impact investing. In 1982, the Calvert Socially Responsible Mutual Funds, of which I was one of the founders, was the first family of such funds and today the Calvert Group has over $12 billion under management and is the largest family of such funds. In 1975, I was also one of the founders of the Institute for Community Economics, one of the first designers of impact investment funds (in those days we called it "community investment").

What distinguishes the three kinds of investments in the title of this paper from each other is the priority of each. Our priority each moment determines everything else we do. All secondary priorities honor and yield to the leadership of our highest priority.

Socially responsible investing allows the priority to remain maximizing the financial return to the shareholders. It just asks that it be done in a civil way. For socially responsible investors and mutual funds to invest in companies some minimum socially responsible standards of behavior in relationships with the environmental, employees, community, and safety need to be met.

The highest priority of impact investing is one or more good things it wants to perpetuate in the society. A good relationship with employees may be most important (cooperatives, ESOPs, employee education and career support). Or the relationship with the environment may be most important (having its packaging and operations have a low negative effect on the ability of the environment to renew itself). Or the relationship with the community may be most important (charitable and educational organizations, microloan and other poverty alleviation programs, low income housing, and adequate health care). It may operate as a for-profit or non-profit organization. It may finance its operations with donations, debt, or equity.

What distinguishes it is that one or more of its highest priorities are to perpetuate things that are good for the people involved and us all.

I believe the next layer in the maturation of investing is common good investing. This is where the freely chosen highest priority in all we do - and in all directions at all times - is the common good of us all. I believe it is also the inevitable future of all investing. Here is why.

If two people come together, they have two choices: they can compete or they can cooperate. If they choose to compete they have chosen to regress to the highest layer of maturity we knew before we developed our elaborate languages and the skill of self-consciousness. This is the highest layer of maturity of lions, tigers, and bears. If, however, they choose to cooperate, they have chosen to use these two skills to reach an agreement, an agreement to give priority to the common good of the two of them thereby ending competition as their primary way of relating.

Cooperation is when all the parts give priority to the whole. If many people agree to do this, it is called "a human society."

It does not make any difference how the society is structured, as a democracy, dictatorship, communist state, or theocracy. How it is structured is secondary. Each structure has as its highest priority the common good. It is this priority that determines everything else. Every other act has to honor and accommodate the highest priority. The above are just different ways of doing it.

At least, that is the intention. As we know, people easily declare the common good is their highest priority and fail to accomplish it as the priority in their behavior. There is much that has to be learned to be good at this skill, especially the skill of the layers of maturity of being a human being. They will be described below.

So when a CEO like Larry Page of Google is sitting at Charlie Rose's round oak table, Charlie needs to ask him this question, "Which is the highest priority of Google, the common good of us all or the financial interests of a few shareholders?"

Larry may answer, "By law our highest priority has to be the financial interests of the shareholders." If so, Charlie then needs to say the following: "Then you have left our human society. Members of our now global human society are either giving priority to the common good or they have left it. So we now need to tell everyone that Google has left our global human society and is in competition with us with its self-interest being its highest priority. We need to bring attention to this so more and more people will stop buying your products because by doing so they are sabotaging their own best interests and the best interests of us all."

If Larry responds, "Of course our highest priority is the common good of us all. That comes before any of the secondary agreements we have reached in our societies, such as our responsibility to provide a return to the shareholders. The intentions of all of the secondary agreements we make in a human society are to perpetuate the common good. That is fundamental. Any of these secondary agreements are just that: secondary in importance."

Then Charlie Rose can respond, "I am so glad to hear you say that. Google is clearly a lovable member of our global community. How can we help Google be even more successful?"

The confusion about these different kinds of investing has arisen because there has been a lack of awareness that it is the priority that determines whether investing is socially responsible, impact, or common good investing.

Common good investing is the future of all investing. Get ready for a deep dive into a further explanation of why.

In case you haven't noticed, there are layers of maturity of being a human being, and, therefore, of the agreements within human societies. At the lower layers we assume that the fundamental assumption about reality we unconsciously picked up when we learn a language is accurate - that the universe, like the words in a language, is an immense number of separate parts. It is not. This is, however, something that is necessary to create the elaborate languages we have created which, in turn, allows us to be self-conscious: to know what we are doing while we are doing it, to think about the past, plan for the future, and consistently execute the plan in the present.

The reason nature throughout history has been labeled the "uni-verse" is because it is an indivisible whole: everything is connected to everything around it. Time and space (the perception that separate parts are real) is a mutually agreed upon illusion. It is, however, not a bad illusion. It is a very good illusion. It is as valuable as the reality of the oneness of nature: it is this mutually agreed upon illusion that allows us to create our elaborate languages (there are over 6,000 of them on Earth) and to become, as a result, self-conscious parts of the universe. It is the cooperation between this good mutually agreed upon illusion and the reality of the oneness of nature that allows the indivisible universe to be self-conscious through us.

It is only at the higher layers of human maturity that we stop assuming separate parts are real and discover that unconscious assumption is a misuse of language. The purpose of our elaborate language skill is to allow us to be self-conscious; it is not meant to define reality.

Just as an apple tree goes from being a seed to being a sprout, and then branches, leaves, buds, flowers, and apples in that order, it is possible for a human being to go from being a baby, to being a toddler, then a child, teenager, adult, elder, and mature elder in that order. No layer can be skipped and we can die still assuming that one of the lower layers of maturity is the highest layer.

Our nation, the USA, is the oldest democracy and we are very proud of being the first modern democracy. However, as happens at each layer of maturity, we become drunk on it. We think it is the highest layer until we have enough pain that reveals to us that there must be a higher layer of maturity. We keep going back to intensifying our use of it to be happy because it made us so much happier when we discovered it that we think it could still do it. This is a good thing. It turns the skill of that layer of maturity into a habit. This is essential. It has to be continuously and habitually operative to be sustained as part of the container of who we are when we turn the focus of our attention to discovering the next layer of maturity and eventually discover it: each layer builds on the one before it.

When it becomes clear that re-emphasizing our skill at the current highest layer of maturity is not bringing about consistent happiness, we begin looking for what will. Only the next layer of maturity will bring us the consistent experience of more happiness. Nothing else can do it.

A baby enters the world without the skills of language or self-consciousness. She begins to recognize differences: mommy-no mommy, milk-no milk (toddler layer). At this layer having enjoyable relative feelings is most important. Next she learns the words of a language and becomes aware of separate parts (time and space - I am over here and the candy is over there). I call this the child layer. Here the priority is getting what we want, for instance, candy. At the teenage layer she discovers that she has the right of individual free choice: she can create the multiple choice questions rather than only answer to those presented by others. Now exercising our right to individual freedom is more important than wants or relative feelings.

Next she discovers that the most important free choice is her fundamental belief: she gives all of her power to it and obeys it. At this adult layer she may choose to be a scientist such that her primary question at all times is "What would Albert Einstein do?" Or a capitalist such that her primary question at all times is "What would Steve Jobs do?" Or a Christian such that her primary question at all times is "What would Jesus do?" Most of us are operating at this layer of maturity today: we are deciding whether or not to keep the beliefs we inherited from our parents and, if we want different ones, choosing them instead.

The next layer of human maturity is the elder layer. This is when we discover the accurate fundamental belief: anything can be put into words so we can represent in words the accurate fundamental truth about life. It is that the universe is an indivisible whole. We, frankly, do not yet understand scientifically how this can be the case, but we do now know this is true. (Science has come to the conclusion that time and space - separate parts - are not real: A Jewel at the Heart of Quantum Physics by Natalie Wolchover, Quanta Magazine, September 17, 2013, https://www.simonsfoundation.org/quanta/20130917)

This is the layer of maturity and fundamental belief upon which all of our agreements on Earth will increasingly be based. Practically, it is freely choosing to give priority to the common good in all we do: in our relationship with ourselves, romantic relationships, parenting relationships, friendship relationships, political relationships, business relationships, and all other relationships.

As individuals and as a global human society we are maturing into the elder layer of maturity. This is why common good capitalism, corporations, and investing will, sooner or later, be the primary form of each.

By the way, the highest layer of maturity, and there is a highest layer just as there is a highest layer of maturity for the apple tree, has been discovered by many throughout history: Lao Tsu, Buddha, Abraham, Jesus, Muhammad, Mahatma Gandhi, Martin Luther King, Jr., and many others. It is often not easy to recognize that this is true of these people because their followers, operating at lower layers of maturity, have defined what they taught in the terms of those lower layers of maturity. What is important to note is this: many have discovered it, lived it, and endeavored to teach it in a way that it would not be easily forgotten.

As we begin to live as if the universe is an indivisible whole, we ultimately discover we are still not always happy. Eventually this reveals to us that there must be a higher layer of maturity we do not know. We intuitively know that being consistently happy while living this life is our birthright. Therefore when we discover we are not consistently happy, we naturally and effortlessly begin searching for the next layer of maturity, even if we do not know that is what we are doing.

We can eventually discover that we are still unhappy because we are still giving priority to our physical body's self-interest. We are also, therefore, acting as if it is in conflict with everyone and everything else. Yet we now believe the universe is an indivisible whole.

The last layer of human maturity is when we discover we are still giving our power to a second thing that does not exist: the belief that the universe is an indivisible whole. Yet we now do not believe there is a second thing to receive our power. Eventually we discover that the only way to stop doing this is to give priority to the experience of the oneness of nature, not a belief about it (a separate part).

The experience you and I are having right now does not have anything preventing us from experiencing the entire universe. We are just focused on writing or reading this. If the universe is an indivisible whole, then our immediate experience is the experience of the oneness of nature. Giving highest priority to our direct relationship with it has us keep all of our power and end giving it away to a second thing that we now know does not exist. I have labeled this highest layer of human maturity the mature elder layer. This, by the way, is also the exercise of full individual freedom: we are not giving our power to a second thing such as a relative feeling, want, free choice, or belief.

To change our conditioned behavior to be consistently in alignment with this we discover we need to make three changes, one of which we have already made: our fundamental belief. Each is a way of having language be fully present, so we can continue being self-conscious, while not having any of our unconscious behaviors acting as if the universe is an immense number of separate parts. Not changing any one of these three behaviors will end our experience of consistent happiness.

They are changes to the content, context, and process of language being present, the three fundamental dimensions of self-consciousness. These changes are necessary because language is always between us and whatever we are thinking or perceiving.

The content is now accurate: our fundamental belief is that the universe is an indivisible whole. The context becomes accurate when we change our self-definition to be: I am the universe first and my physical body second. This will have us automatically give priority to the common good: it is now are primary self-interest.

The other possible fundamental pattern of think is to give priority to priorities. This is best represented with a perpendicular line:

Etc.

There are not factors of time and space in priorities. So this pattern of thinking accurately represents the oneness of nature. Yet we are still able to have the other pattern of thinking present and second in priority: there are still separate parts - highest priority, second highest priority, etc. This allows language and the skill of self-consciousness to remain present as well.

Fully mature people use both patterns of thinking at all times; they just give priority to "the priority pattern of thinking" over "the this or that pattern" while fully doing both. This also explains why moral behavior throughout nearly all of history has been defined as "freely choosing to give priority to the common good."

What is the best unique particular act for the common good is something only each individual can know in the moment of action. So it is essential that we each learn to keep our power, all of it.

Our social agreements are constantly maturing: there was a time when we accepted slavery, discrimination against women and minorities, and destroying the environment. Many of us, and more and more of us each day, are now maturing beyond participating in these activities.

So the reason I am confident that eventually all investing will be common good investing is because maturation is fundamental in nature. Unlike evolution, it does not have factors of time and space. When I learn something I did not know, nothing has changed in time and space. I just know something I did not know before. Therefore, maturation is fundamental in nature and, as such, it cannot be stopped.

Human beings once did not know one of our elaborate languages and now every baby on Earth learns one (child layer). At one time none of us knew the importance of honoring each person's right to exercise individual freedom and now much of the planet does (teenage layer). Thus, the day will come when we will all recognized that the universe is an indivisible whole and stop giving our power away to any beliefs, including the most accurate one. Instead we will each keep our power, all of it, and use our self-conscious attention skill to give priority each moment to our immediate experience. We will then primarily use our direct relationship with the experience of the oneness of nature to identify the best unique thing we can each do - no one else is ever standing where we are each standing - for the common good of us all. It may be picking up paper towels that missed the trash container in a public bathroom, assisting our teenager to understand the pain of being rejected by a friend, or bringing about peace between and among nations.

What we will each know is that the only thing that sustains the consistent feeling of pure joy is doing in this moment whatever we can uniquely do for the common good. It is the only priority that provides the consistent experience of happiness, our birthright.

This will, of course, include how we run our companies and how we invest our money. Therefore, I believe common good capitalism, corporations, and investing are inevitable, the next layer of maturity beyond socially responsible and impact investing. Maturation is fundamental in nature and cannot be stopped.

(The next article will be "How Wall Street Will Enthusiastically Support the Emergence of Common Good Capitalism.")