2017 Social Impact Report
Natural Investments is involved in a variety of efforts with our industry colleagues that facilitate positive economic, social, and environmental change, including shareholder engagement with companies and public policy advocacy. Some of our efforts in 2017 include:
We signed a letter to the dozen major banks, including Wells Fargo and Citibank, that are financing the Dakota Access Pipeline, urging them to avoid legal liabilities and financial and reputational risks associated with financing the controversial project—and to advocate publicly for the rerouting of the pipeline away from tribal land.
We signed a global investor statement to leading consumer and agriculture companies asking them to adopt zero—deforestation policies for sourcing key agricultural commodities such as palm oil, soy, beef, paper, and lumber. Deforestation in Latin America, which is largely caused by commercial agriculture, is a leading contributor to climate change, and the recent Soy Moratorium in Brazil proves that the rainforest can be protected while expanding agricultural production.
We signed a letter to sixty of the world’s largest banks calling for more robust and relevant climate-related disclosure to be supplied to investors on four key areas: climate-relevant strategy and implementation, climate-related risk assessments and management, low-carbon banking products and services, and banks’ public policy engagements and collaboration with other actors on climate change. Banks have an essential role to play in ensuring that we meet the Paris Climate Agreement goal of “making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development.”
We supported shareholder engagements with three top carpet manufacturers—Mohawk, Shaw, and Interface—to encourage them to develop plans for sustainable carpeting redesign to make it more recyclable, to use higher levels of appropriate recycled materials, to develop national recycling goals, to help develop end markets for discarded carpet, and to take at least shared financial responsibility to implement these actions.
We signed a letter to major motion picture studios urging them to eliminate tobacco depictions in youth-rated movies. We believe this is warranted to protect the company’s reputation and consumer base, to avoid legal liabilities, and to eliminate the reputational and potential financial risks caused by the company being associated with this public health issue.
We signed a letter to Sanderson Farms asking that the company reduce unnecessary antibiotic use in healthy chickens in order to minimize the factors causing antibiotic resistance throughout the ecological system, including among humans. The recommendation asks the company to protect its long-term shareholder value by reducing material risk from reputational damage, litigation, and future regulation.
We signed a letter to Chevron, which has an oil and gas production contract with the government of Myanmar, asking the company to encourage the government to not maintain business as usual at a time when the country’s military is engaged in a violent crackdown on the Rohingya ethnic minority. We expressed concern that the company’s long-term value, as well as its reputation, is at risk through its complicity in operating in an oppressive regime and recommended that the company urge the government of Burma to act quickly to improve economic development and social justice in Rakhine state to resolve violence between the government and the Rohingya.
We joined the Workforce Disclosure Initiative, which aims to secure comparable annual workforce reporting from companies worldwide on issues such as fair wages and labor standards, including working conditions.
Your Dollars at Work for a Resilient Future
One of the most important questions socially responsible investors ask is, “What impact does my dollar have?” At Natural Investments, over $400M of clients’ assets are placed in socially responsible, sustainable, and impact investments.
$385M in assets are in stocks, bonds, and mutual funds with environmental, social, and governance (ESG) criteria, in which a variety of avoidance and affirmative screens filter the investments to steer clear of the practices and sectors you don’t believe in, put pressure on companies to change their behavior and support companies and projects that lead to a more just and sustainable society.
We know that you strongly believe in strengthening local economies. Over $70M is invested in community development products, including municipal bonds and community development notes that support affordable housing, schools, healthcare clinics, assisted living centers, small businesses, and appropriate infrastructure that strengthens communities and protects ecosystems.
Finally, because you wish to support resilience and evolve the economic system through innovation, $30M of assets supports high-impact private investments in such areas as regenerative farmland, economic development of indigenous communities, water restoration projects and clean energy.
National Policy Advocacy
Natural Investments signed onto SRI industry advocacy letters on a variety of policy matters in 2017 addressing social, financial, environmental, and governance issues:
We signed a letter to the President and Congress urging them to support the critical work of the Consumer Financial Protection Bureau in order to protect businesses, families, and communities from abusive financial practices that crippled the economy ten years ago. We specifically asked that they oppose any legislative attempt to weaken the mandate of the agency to provide transparency and fairness in the financial marketplace.
We signed an investors’ statement on the Executive Order on Immigration, adding the SRI industry’s voice to that of GE, Nike, Starbucks, Apples, Microsoft, Google, JP Morgan Chase, and Goldman Sachs, in opposition to the White House order. Not only would the order violate the human rights of immigrants, it is likely to inflict damage on the economy. We are well aware of and appreciate the contributions of immigrants and guest workers to the US economy, as they comprise 16% of the labor force.
We signed on to a letter to Congressional leaders urging them to block the GOP-led anti-human rights amendment to the FY2018 budget appropriations bill that would remove the Conflict Minerals provision (Section 1502) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. That provision requires that companies to disclose annually whether any minerals originated in certain oppressive regimes in countries on the African continent, where such minerals are mined.
We signed a letter to Congress urging members to support the bipartisan Dream Act of 2017 in order to provide just immigration reform to safeguard the wellbeing of our immigrant population and to drive U.S. economic growth and long-term business prosperity.
We signed a letter to the head of the Environmental Protection Agency asking that the agency not implement its proposed rule, “Repeal of Carbon Pollution Emission Guidelines for Existing Stationary Sources: Electric Generating Units,” which changes the legal interpretation of the Clean Air Act to undermine and repeal the Clean Power Plan. We encouraged this administration to lead the charge to unleash investment in clean energy sources, drive innovation, and bolster international efforts to curb climate change—by supporting the EPA in moving forward with the Clean Power Plan and maintaining the necessary staffing and expertise to protect our air, water, and land for future generations.
We signed a letter to the Chairman of the Federal Communications Commission asking for the maintenance of net neutrality rules found in Title II of the Communications Act in order to maintain a strong competitive framework and prevent discrimination by providers that will harm small businesses.
We signed a global investors’ letter to the governments of the G20 nations conveying our strong support for the Paris Climate Change Agreement and called on global leaders to further drive investment into the low-carbon transition by aligning climate-related policies, phasing out fossil fuel subsidies, and including carbon pricing where appropriate—as well as implementing climate-related financial reporting frameworks, including supporting the Financial Stability Board Task Force on Climate-related Financial Disclosures’ recommendations.
We helped US SIF: The Forum for Sustainable and Responsible Investment (US SIF) craft a letter representing our industry to the Senate Banking Committee that features seven proposals to stimulate economic growth, including:
- mandate annual ESG reporting on issues such as climate change, diversity, inclusion, and political contributions;
- protect the rights of shareholders to file shareholder resolutions;
- assert global leadership in combating climate change by ending fossil fuel subsidies, support the Clean Power Plan, and incentivize investment in clean energy;
- preserve the consumer protections made possible by the Dodd-Frank Wall Street Reform and Consumer Protection Act;
- endorse only qualified persons for SEC Chair and Commissioners;
- request that the Government Accounting Office update and expand their 2005 study on global corporate social responsibility in order to define and coordinate such practices; and
- urge the Board of the Federal Thrift Savings Plan to expand investment opportunities available for federal employees to include sustainable, responsible, and impact investment options.
We sent a comment to the SEC asking that the commission not remove the Pay Disparity Rules of the Dodd-Frank Wall Street Reform and Consumer Protection Act that protect access to information by consumers and investors about material company risks associated with their compensation policies and practices.
“How a company is managed, including salary levels, is material to the bottom line, as the value companies place on labor impacts productivity and morale of the labor force,” wrote Natural Investments Managing Partner Michael Kramer. “Companies with governance or compensation problems set off warning lights for investors and threaten the companies’ long-term performance. The rule will foster corporate accountability and provide investors with material information to better assess investment risks, and provides clear guidance to companies on some of the effective ways to be profitable.”
Natural Investments donates 1% of gross revenue (not profit) to charitable organizations that are transforming lives, communities, and the future of society. Our advisors select organizations they wish to support with 1% of their income, while the firm’s donations focus on national groups that are helping to reform and evolve the economic system. Some of the new organizations we contributed to in 2017 include the Center for Inclusive Entrepreneurship, Force for Good Fund, Life Asset, Mission Investors Exchange, Project Drawdown, Project Equity, Regenerative Finance, Responsible Wealth, Women for Women International, and Yes! magazine.
“Best for the World” Award
For the fourth time, Natural Investments was rated “Best for the World” by B Lab, the national organization certifying B Corps worldwide. This award is reserved for the top 10% among more than 2500 B Corps that are certified based on a company’s commitment to responsible environmental, social, and governance policies and practices. Natural Investments, now in its 11th year of certification, receives high marks not only for the types of investments it facilitates for investors in addressing social and environmental issues, but for our own internal practices regarding ecological footprint, supply chain commitments to buying local and green, our civic engagement and charitable giving, and our transparency and accountability.