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Jim Cummings

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NI Newsletter Spring 2017

Newsletter Contents

Download NI Newsletter Spring 2017 (pdf)

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NI Advisors featured in Seattle Weekly

Seattle Weekly had a nice piece this week that begins by discussing recent protests against Wells Fargo’s bankrolling of the Dakota Access Pipeline, and expands into a broader exploration of the hurdles that some people encounter when they ask mainstream investment advisors to help them avoid putting their money to work in ways that are counter to their values:

That experience isn’t uncommon, say two of the advisors at Natural Investments, LLC, a “sustainable, responsible and impact” (SRI) investment firm with a branch in Seattle. “What people tell us when they find us,” says Ryan Jones-Casey, director of client services, is often something like, “’I’ve heard that I can do socially responsible investing, but I talked to my advisor at JP Morgan, and he said I’m going to lose money; he said it’s not worth my time.’”

The article’s author turned to two of the most recent additions to Natural Investments’ team for comments and additional perspective. Eric Smith and Ryan Jones-Casey joined forces with NI in 2016, and are fitting in great. We’re now up to fifteen offices nationwide, staffed by our collaborative team of independent investment advisors.

The Seattle Weekly article, So You Want to Divest from DAPL.  Will the Financial Industry Let You?, is well worth reading in full. Meanwhile, here are a couple more excerpts that include thoughts from Eric and Ryan:

Letting the past predict the future, brokers lean on old patterns and ideas about what makes money on Wall Street. Like, “I don’t want to learn something new; I’ve always done it this way,” says Smith. Not to mention that “a lot of people in the financial services industry tend to be relatively conservative,” he adds, so if some of the political aspects of SRI “[don’t] fit their philosophy, they don’t want their clients to do it.”

Certainly, “fear is a powerful barrier to change” in investing, says Jones-Casey. But he and Smith argue that a company that is resource efficient, watches its carbon footprint, and cares about human rights “is a more enlightened company,” and this kind of enlightenment “is actually the very thing that will lead to better financial performance over the long term. But that kind of thing is not at all the dominant paradigm in the financial services industry.”

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NI’s Greg Pitts featured in Reuters investing article

We were pleased to see that our very own Greg Pitts was one of the three investing professionals quoted in a recent Reuters article on responsible investing, written in the wake of the California natural gas leak.  The theme of the piece was investors who are just now realizing that their 401(k) or mutual fund portfolio includes many companies that they’d rather not be involved with, and that returns are likely to be the same or better if they are more discerning.  Greg’s primary point was one that we don’t hear often enough:

For many, legacy is going beyond the amount of money that they hand down. People want to make the world a better place for their kids – and are using their investments to do that.

Greg Pitts mans Natural Investments’ NY offices in Ithaca and New York city, and works with clients from other regions electronically.

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Fast Company highlights NI’s corporate philanthropy program

Fast Company recently ran an article on Building the Business Case for Doing Good, a topic that’s obviously right up our alley.  So we were very pleased to be among the companies that the author reached out to as she was putting it together. The topic was workplace philanthropy, and Natural Investment Managing Partner Michael Kramer outlined our 1% giving program, whereby our collaborative team of independent advisors decides where to direct their portion of the annual gifting. Thanks to Fast Company for including us!

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Frazier featured in Financial Advisor magazine

NI’s James Frazier was recently profiled in Financial Advisor magazine, the trade magazine for our industry.  The focus was on his recently-launched Local Investing Resource Center, a groundbreaking web-based training program that aims to help both entrepreneurs and potential investors get up to speed on the best ways to put local money to work supporting local businesses.

It’s a great piece, and we urge you to check it out.  One of the interesting takeaways was his discussion about wanting to engage advisors in the effort. “I’d like to add a guide for financial advisors that would discuss what the different approaches are out there, how we do it and how other firms do it in terms of participating in that conversation around local investing. . . The money (clients) invest with local investments goes away from us and we can’t bill on that, so it’s tricky,” he continues. “Hardly any advisors out there encourage local investments, but being an advisor who’s willing to support it gives you a lot of loyalty and respect from clients, which ultimately is a business builder. And that’s what I’ve seen personally.”


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Minerals from conflict zones: do we have the right to know?

In his column this month, NI’s Michael Kramer takes aim at a recent court decision that tossed out a provision in the Dodd-Frank financial reform rules that required mineral companies examine whether the tin, tantalum, tungsten and gold in their products may be contributing to conflict in the Congo and surrounding countries.  This information is then available to manufacturers who use such raw materials in their products.  The challenge by the National Association of Manufacturers is especially counterproductive, since the rules have been working well for the past several years.  As Michael notes:

More than 1,300 companies filed proper disclosure with the SEC last year, proving that in reporting their supply chain due diligence activities and findings, they are able to make responsible mineral sourcing purchases, thereby removing an important business risk that affects labor conditions in those countries and shareholders around the world that invest in these companies. In addition, over 125 mines in the DRC have been certified as “conflict-free,” meaning they are not under militia control, and 200 more will be certified this year.

That American business interests would file a lawsuit to undermine the obvious success of these international initiatives reflects their ongoing solipsism, particularly that of the U.S. Chamber of Commerce, in opposing any regulatory oversight that assures environmental, social and governance responsibility.

Clearly, they are on the wrong side of history. Businesses can and surely do operate successfully and profitably in this sector without contributing to brutal and oppressive regimes operating in politically volatile countries where abuse is commonplace.

Read the whole article here.

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A look at limits of the post-collapse political/regulatory response

Earlier this month, Salon ran a hefty excerpt of Barry Eichengreen’s new book, “Hall of Mirrors: The Great Depression, the Great Recession, and the Uses—and Misuses—of History,” which examines the ways that Wall Street managed to minimize the structural and regulatory changes that many had hoped would follow after the near-collapse of the financial system.

This excerpt focuses on comparisons between the political and regulatory response in 2008 and those taken after the Great Depression; while Eichengreen clearly feels we fell far short this time, he also tells the tale in a way that helps make sense of some of the factors—beyond Wall Street power-plays—that contributed to the lackluster response.  He notes that several of the proposed banking reforms were vehemently opposed by smaller community banks, which apparently felt that their smaller operations would be overly burdened by new requirements aimed at cooling the excesses of banking giants. And he looks closely at many of the particular elements of what he calls “Obama’s competent response,” acknowledging the fiscal and political constraints that stood in the way of some of the more vigorous proposals to ease the burdens of homeowners and Main Street.

The whole piece is worth a read; this concluding paragraph captures its essence:

The experience of the 1930s suggests that radical reform is possible only in the wake of an exceptional crisis. Absent that crisis, business as usual remains the order of the day, and radical reform that threatens to disrupt such business is ruled out. An exceptional crisis halts such business for a time. The problem starting in 2009, if it can be called a problem, was that policy makers managed, just barely, to prevent a 1930s-style crisis. There was still business as usual to conduct. Radical reform that interfered with customary banking practices could be criticized as jeopardizing the recovery then slowly getting underway. This left only strengthening the existing system, as opposed to replacing it. And the incremental nature of the reform process, which unfolded slowly as new rules implementing Dodd-Frank directives were proposed by the regulators, allowed concentrated interests, notably the bank lobby, to re-form and mobilize in opposition.

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Redefining the green movement

Michael Kramer

Our very own Michael Kramer was recently the subject of a glowing profile in Ke Ola, a magazine published in his home state of Hawai’i.  Titled The Triple Bottom Line: Michael Kramer redefines the green movement, the piece offers a good sense of Michael’s personality and of his lifelong commitment to creating a better world.  From activism in high school and college, his later work with permaculture and the Youth Ecology Corps, and continuing to his present life as a Natural Investments advisor and a leading advocate for evolutionary economic models in Hawai’i and nationwide, Michael’s story is inspiring.  Here’s a tidbit, but click on through that link above to read the whole thing!

Michael, a former student activist, has lived these principles all his life. As a child growing up on the outskirts of Los Angeles, he says his life’s passion began with a displaced family of owls when he was eight years old.

“It was fairly rural where I lived on the edge of the city, and I felt very connected to nature there. There was a family of owls living in a couple of huge trees. I listened to them every day,” Michael remembers.

He continues, “I came home from school one day and the trees had been cut down. I was just distraught. My mother noticed how upset I was and she pulled out a cassette recorder and said, ‘Why don’t you say how you feel?’ I gave my first speech. It was like a little campaign speech around the importance of saving the trees.”

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Slow Money Inspires NI Advisors

Financial Advisor magazine recently ran an in-depth article on Slow Money, the nationwide network that channels capital into local food systems.  We’ve featured the Slow Money movement in our newsletter and on this blog since its inception, and several Natural Investments advisors have been enthusiastic supporters of its national and regional groups, so it was no surprise to see two of our team featured in this article.

Carrie vanWinkle helped form Slow Food Kentucky, where over 80 members now meet three times a year to connect small food operations with potential investors.  After building a personal relationship, members arrange loans directly with the farmers, at interest rates of 3-5%.

“I think people sometimes come into Slow Money––or local investing more broadly––with the right intentions, but they get caught up in financial return rather than the whole return, which is financial-plus,” Carrie says. The 3% to 5% loan rate “seems to be a pretty fair rate of return in today’s environment.”

The national Slow Money network also helps those with no local group to find avenues to do “regenerative investing” (see this recent post for more on this emerging high-impact field).  NI’s Malaika Maphalala did just that for a client in Vermont who made a significant loan at 5% interest to Coyote Creek Farm, a grass-fed beef and chicken/egg operation in Texas.  As reported by Financial Advisor:

Coyote Creek would be part of the regenerative portfolio, and Maphalala took it upon herself to do due diligence on its expansion plans. “It took years to come to fruition, but I followed the process on my clients’ behalf to make sure it was investment ready,” says Maphalala, who’s been active in the Slow Money Northwest chapter in Portland. . . . “The couple is dependent on earnings from their investments,” Maphalala says. “Because they’re retirees, in the impact sector it’s very important that investments be real safe regarding reliable annual returns.”

In addition to investments in the form of direct loans, Slow Money is also creating a parallel model that leverages philanthropic donations to grow local food systems.  Woody Tasch, Slow Money founder, notes that this “would relax some of our transaction mentality and build on the idea that we’re trying to build something over 25 years. . . . Instead of thinking about this as return-agnostic investing, you can think about this as super-positive return philanthropy.”

Read the whole article here.

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