In his first week in office, President Obama proposed major overhauls of environmental and financial regulations. These changes have long been championed by investors concerned with companies’ environmental, social and governance (ESG) performance, and few were surprised that a new regime has brought a new policy agenda.

In this time of recession and scandal, however, some familiar faces in American business – including former SEC Chairman Harvey Pitt and Wal-Mart’s Lee Scott – are also setting a different tone. Mr. Pitt has announced ten lessons that investors should learn from the current crisis, while Mr. Scott has committed the world’s largest retailer to “a sustainability program to remake the entire company.” These are welcome moves, but ESG investors should ask whether this new attitude will outlast today’s crisis mentality.

“A Friend in Need is a Pest”

In his presentation to the third annual “Distressed Investing Conference” in Las Vegas, Mr. Pitt invoked terms that will be familiar to the sustainable and socially responsible investment (SRI) community. His ten lessons mentioned “transparency,” “due diligence,” “trust” and “risk management.” These themes are in tune with members of the Social Investment Forum and mission-driven advisors like Gary Moore, but Mr. Pitt’s eighth lesson may hit a false note:

“8. If you don’t speak up, no one will hear you. There will be a window that will strongly influence the outcome of the regulatory landscape and what it should look like at the end of the process. A friend in need is a pest, like a wedding crasher. Get to know regulators and legislators before you need them.”

This seems to suggest that regulatory capture is part of the cure, at a moment when it seems like more of the disease. Among those not attending the “Distressed Investing Conference,” there is broad support for stronger regulation. Investors should remain wary, however, of how “friendly” regulators and regulated may become.

In this context, the Wall Street Journal’s Kara Scannell notes that as new SEC Chair Mary Schapiro was sworn in Tuesday, “the Senate Banking Committee probed the role of her former organization, the Financial Industry Regulatory Authority, in missing Bernard Madoff’s multibillion-dollar scandal.”

The Social Responsibility of Wal-Mart

“As businesses, we have a responsibility to society. Let me be clear about this point. There is no conflict between delivering value to shareholders, and helping solve bigger societal problems.”

This affirmation of corporate social responsibility (CSR) is not a quote from Timberland’s Jeffrey Swartz, or Van Jones of Green for All. Surprisingly enough, this rejection of Milton Friedman’s limited view of CSR comes from Lee Scott, the CEO of Wal-Mart, the world’s largest retailer. The New York Times reports that under Mr. Scott, Wal-Mart “has begun to democratize environmental sustainability.”

Reporters Stephanie Rosenbloom and Michael Barbaro detail Wal-Mart’s commitment to greener practices in its stores and throughout its supply chain. They also emphasize that Wal-Mart does not consider this effort to be an act of altruism. Increased energy efficiency and less wasteful packaging reduce overhead, and perhaps more importantly for Wal-Mart, they also reduce “headline risk.”

Bad publicity for Wal-Mart’s labor and environmental policies had turned customers and community leaders against the company, according to a 2004 study done for the firm. This realization helped motivate a crucial shift in corporate culture: Wal-Mart has committed to engaging outsiders, from climate scientists to its Chinese suppliers.

This spirit of engagement is encouraging, but as with the investment world’s embrace of transparency and risk management, it is important to note what hasn’t changed. The Times piece notes that labor leaders are still critical of Wal-Mart’s compensation and health care practices.

It also describes a more subtle parallel with Harvey Pitt’s call to “get to know regulators and legislators before you need them”:

“[Mr. Scott] … intends to increase the retailer’s lobbying muscle in Washington, especially regarding health care, energy and sustainability.”

In other words, ESG policy discussions among investors, companies and governments will - and should - continue. Changes at agencies like the SEC and companies like Wal-Mart are welcome, but investors’ commitment to research, engagement and accountability remains vital, no matter how green corporations get – or who’s in the White House.