You may be wondering why a group of financial advisors who are on a mission to transform the world into a more equitable place would venture into the political arena. It’s a good question, and it’s one with an important answer. Right now, strategies for using investing as a tool for social change are under attack. The Security and Exchange Commission is trying to scare pension funds away from socially responsible investments by rolling back rules put in place during the Obama era. In Congress, Republicans are trying to strip
There is no question that the political world is wildly turbulent these days. If you are like me, you may often fall prey to the depressing news coming out of Washington, D.C. Every day it seems like some environmental regulation is being rolled back, the government is oppressing a new group, or that we are on the brink of a budgetary crisis. All of this is before we even talk about global warming. So what is a progressive investor to do?
I was recently reminded of a line that President Bill Clinton likes to use, which is to look at “trendline not headlines.” In today’s world, there couldn’t be better advice. In the age of clickbait headlines, social media frenzy, and scary sound bite news, this can be hard to keep in mind—but the trendline does tell a more accurate story.
So let’s take a dive into some trend lines and see what is actually happening.
With all of the chaos happening in Washington, DC it can be hard to keep up with everything that is changing. While your advisors here at Natural Investments stay up to date on a wide variety of policy issues, we particularly want to highlight a bill that would have a large impact on our industry and our ability to advocate for social change.
Earlier this year Republicans in the House introduced HR10 The “CHOICE” Act. CHOICE stands for Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs, but in simple terms this bill is a massive give-away to large Wall Street firms. It destroys much of the regulatory framework put into place under the Dodd-Frank reforms. And, most disruptive to socially engaged investors, it puts limits on the shareholder activism work that is so critical to our ability to impact change at the businesses we invest in on your behalf.
In January I had the privilege of visiting with one of the micro-credit lenders that Natural Investments clients help to fund. We had a trip planned to Panama, so I decided to take the opportunity to meet with PROCAJA, the on-the-ground lending agency that chooses recipients for small loans funded through Envest Microfinance which some of our clients are invested in.
I met the PROCAJA team in the small town of Ocu. The people at the branch were very gracious as they got us up to speed on how they are structured and the types of clients they serve. As with most Envest-funded programs, loans are generally under $1000 and are targeted to individuals who are starting or growing a small business.
Also in keeping with other micro-credit programs, they’re very successful in getting these loans repaid. Unlike many banks, they use a very hands-on approach. In addition to the standard visit with the person requesting the loan, to assess their current business and their plans, the recipients needs to get neighbors to vouch for them; this creates a natural community of support and accountability. After the loan is made, regular follow up visits track how things are going and identify ways to improve. All this ongoing support, including financial training if needed, leads to the failure rate being much lower then at most banks, which often provide no follow up or support.
After this overview at the branch of office we went to visit four people who are currently using microcredit loans to build nancial stability.
Recently I had the opportunity to work with several of our partners on shareholder resolutions. At Natural Investments we believe shareholder activism is an essential part of using your money to make an impact and help push for a more just and prosperous company.
Shareholder activism is a simple concept, though it can be complex both in its practice and in how we determine success. When you own a share of a company you are a part owner. As a part owner you are allowed to file resolutions—similar to proposing a ballot referendum in your county or state. In some cases, the dialogue with management that we have at this point becomes the foundation for achieving our goals, even without a shareholder vote. If the Board of Directors decides to put it to a vote,
One of the important items we work on behind the scenes at Natural Investments is Shareholder Activism. The idea is fairly simple – it’s the process of using our legal right as shareholders in a company to vote and try to influence the behavior of the companies we own.
Recently I had the opportunity to represent Walden Asset Management and other shareholders at the annual meeting of RPC, a company based in Atlanta, GA. Walden decided to bring this shareholder action for a simple reason. RPC had claimed to be adopting sustainable practices but they weren’t disclosing them publically. So while Walden (and many of us) would say that it’s good to be conscious about sustainability, the lack of disclosure to the shareholders and outside parties left us needing to know more specifics. You see, RPC is an oil field services company, involved in both exploration and maintenance, including emergency services. As you can well imagine, this is a field in which the specifics of their sustainability practices is of utmost importance. You may also wonder why an SRI mutual fund holds such a company. The fact is that many SRI funds hold energy-related companies as part of their sector diversification strategy; and, as in this case, they often see their ownership as an avenue for making change.
For these reasons, Walden approached the RPC and said we would like to propose a shareholder resolution that company produce an annual sustainability report. Such reports were almost unheard of in corporate America 20 years ago but have now become common and even expected among major companies. Walden said that they believed in the company, and thought they were doing good work – but that the time had come to publicly disclose their sustainability practices.
As a member of the Millennial generation, I was excited to see this recent article that confirmed what I’d long suspected: each succeeding generation is more committed to Socially Responsible Investing than the preceding one, with over half of Millennials saying they consider social responsibility as an important factor in their investment choices.
This shouldn’t be surprising news given that millennials seem to support a broader and more progressive agenda from environmental concerns to GLBT rights. As we talked about this article around the office it raised some very good questions:
First, even though people say that social responsibility matters to them, have they brought this priority to their investment advisors, and have the advisors taken action? And second, as “Green” continues to become cooler and more mainstream, how much of the SRI world is about marketing and how much of it is based on impact?
At Natural Investment’s we take these two questions very seriously. We actively engage our clients in questions about what matters to them and then turn around and push companies to make progress on the issues that matter to you. We’re constantly looking for ways to deepen our positive impact in the world, whether through community investment notes, or investing in companies that are building community, not just profit.
I encourage you to read the article (here’s that link again). More importantly I challenge you to ask both yourself and your current investment advisor those two questions. Their responses may say quite a bit about how sustainable your investments truly are.
How many times have you read a news story and said “I never want to support that company”? Many of us have had moments where we’ve felt compelled to join a boycott of certain industries or companies. However, for those of us trying to lead intentional lives it’s sometimes difficult to sort out who “the good guys” are. Luckily in this day and age there’s an app for that!
A free Android and iOS app, Buycott, lets you scan items right there in the store and see who the corporate owners are. Scan some Dixie Cups and you’ll learn their manufacturer, Georgia-Pacific, is owned by none other than Koch Industries! The app also includes connections with activist campaigns; for example, the Demand GMO Labeling campaign is included, and will let you know if that box of cereal you’re about to buy was made by a company that’s contributing to anti-labeling initiatives—or, conversely, supports labeling laws.
As reported by Forbes:
The app itself is the work of one Los Angeles-based 26-year-old freelance programmer, Ivan Pardo, who has devoted the last 16 months to Buycott. “It’s been completely bootstrapped up to this point,” he said. Martinez and another friend have pitched in to promote the app. (An update notes that the small company has been overwhelmed by the surge of new users—it’s #10 in Apple’s App Store, with up to 600 new signups per minute!—and it had to be removed from the Android store temporarily to fix some glitches. Pardo says he’s working to “get in in decent shape but I’ll eventually need some sleep!”)
While as in all things, an app can’t be much more than a simple tool, it’s a great step in the right direction for transparency and consumer rights. While we still might advocate for getting your food from a local farmer who you can actually meet in person, this is a fun and powerful way to bring more intentionality to your shopping trips.