Have you been inspired by Bill McKibben’s call for divestment from the industries that are profiting from the continued spewing of greenhouse gasses into our overburdened atmosphere? Do you wish you were on the Board of Directors of a college so that could make a difference by getting on the divestment bandwagon? Well, we felt the same way, so we created a new portfolio for clients that lets you do just that.
The Natural Investments Fossil Fuel Free Portfolio, available from any of our advisors, includes ten fixed income and equity funds across six global asset categories that exclude fossil fuel extraction and exploration companies, and it is available to investors who wish to have conservative up to a moderately aggressive portfolio. A portion of the advisory management fee is donated to non-profit organizations working on climate change and sustainability issues. The portfolio will also be available for 401(k) plans on the Social(k) platform soon.
Consistent with Natural Investments’ role as one of the nation’s leading sustainable, responsible, and impact investment advisors, the portfolio includes many other environmental, social, and governance criteria in addition to excluding fossil fuels. Exclusions include tobacco, alcohol, military contractors, firearms, gambling and nuclear power, while the fund specifically includes clean technology, renewable energy, and green economy companies. Other corporate practices that inform the selection of portfolio’s domestic and foreign holdings include labor standards, workplace and Board diversity, pollution and toxicity, animal cruelty, human rights, and product safety. The fixed income portfolio, which includes short- and intermediate-term, high yield, federal agency, foreign, and responsible corporate bonds, also includes community development bonds to alleviate poverty, supports loans to low-income homeowners, students, farmers, and small businesspeople, and expands appropriate infrastructure such as public transportation and housing, schools, and hospitals.
While the Fossil Fuel Free Portfolio is primarily a retail product that uses mutual funds, Natural Investments maintains a version for accredited investors that uses separate account managers in order to exclude additional fossil-fuel-related industries such as transportation, auto parts, and engines.
Here at Natural Investments, we’re always looking ahead, yet also aware that we can’t ever quite see what’s over the horizon. In addition to reading a wide range of the latest economic thinking, we’re curious about bigger-picture guides to our possible futures. Will we muddle along, or find a way to break through to a saner social order? What about breakdown – how can we deal with our sorrows about what is already being lost? Several recent books have nourished our hearts and minds in these realms; perhaps you’ll find yourself drawn to look more deeply into one or more of these prisms through which today’s world can be seen.
Joanna Macy’s new book, written with Chris Johnstone is Active Hope: How to Face the Mess We’re in Without Going Crazy, helps us to face our sorrow and uncertainty about what is happening in these years, while maintaining our sense of gratitude and connection with things that feed us. Joanna and Chris don’t pretend that they know we’ll find a way to dodge catastrophe; rather, they invite us into the adventure of the uncertain outcome: “When we know the future isn’t yet decided, there is room for us to play a role in influencing what happens.”
Other recent books paint vivid pictures of the ways that we could succeed in remaking the world, though they approach the knife’s edge of our times from very different places.
In a very different take on “natural” investing, a housecat in England has won a year-long portfolio challenge, beating out teams of three professional investment managers and business school students. Orlando had a fantastic 4th quarter, surging past the professional team on the basis of his finely honed technique of tossing his favorite toy mouse onto a grid of companies he could invest in.
The stock management challenge was organized by The Observer, which reported on the results in January. Orlando managed to end the year up by over 10% from his starting stake of five thousand pounds, while the pros gained about 3%, and the students lost about 3% on the year—though the students hold bragging rights for the final quarter, during which they beat even the surging Orlando.
The Observer notes that
The result indicates that the “random walk hypothesis”, popularised in economist Burton Malkiel’s book A Random Walk Down Wall Street, is perhaps truer than we thought. Burkiel’s book explores the idea that share prices move completely at random, making stock markets entirely unpredictable.
We wouldn’t go that far, but neither will we be turning to Orlando for advice: the Observer notes he is unavailable for consultation because of a claws in his contract.
A piece on the Orion blog by author and activist Jeff Clements shares some compelling stats about the concentration of money in politics, and highlights how widespread the call is to change that.
First the bad news:
During the 2012 election, just one half of one percent of people made up 80 percent of the more than $6 billion in political spending. Worse, a mere 149 donors made up 75 percent of the estimated $1 billion in Super PAC money raised from individuals.
And the problem isn’t just in Washington: Chevron spent $1.2 million on city council races in Richmond, California, a city of 100,000 where it owns a refinery where an August explosion sent thousands to area hospitals for treatment.
But Clements also surprised me with the news that eleven states, including such radical outposts as Montana, have passed ballot initiatives calling for a 28th Amendment to the constitution to overturn aspects of the Supreme Court’s Citizens United ruling, and related rulings that have given corporations something like the status of humans, especially as related to free speech:
In Montana, for instance, 75 percent of voters endorsed a ballot initiative calling for a 28th Amendment to overturn Citizens United. The policy of Montana is now clear enough: (1) corporations do not have Constitutional rights; (2) unlimited spending in elections corrupts both elections and government and contradicts the political equality of all Americans; and (3) the voters of Montana instruct their elected representatives to work for passage and ratification of the 28th Amendment.
In addition, over 500 cities and towns have passed similar measures, and a decent chunk of the incoming Congress has this on their agenda (73 members of the House and 25 Senators).
There’s still a long way to go, though: to formally propose a Constitutional Amendment, 2/3 of the state legislatures would be need to approve bills to convene a Constitutional Convention that would consider the change. Or, a proposed Amendment must pass both the House and Senate by a 2/3 supermajority. After either of these proposal routes, the Amendment must be ratified by simple majority in 38 states (three quarters of the states), either in state legislatures or state conventions.
Still, if Montana and Colorado (which passed a similar popular vote initiative this year) can agree on this, then there may be the makings of an unexpected bipartisan movement. Polls show huge majorities of both Republicans and Democrats want to see corporate, union, and other outside spending on political campaigns limited.
One place to track, and participate in, the growing chorus is the FreeSpeechForPeople.org website (co-founded by Clements), where you can read the text of two proposals that are before the House of Representatives: the People’s Rights Amendment, introduced by Congressman Jim McGovern, which declares that “the words people, person, or citizen as used in this Constitution do not include corporations…”; and the Udall Amendment, proposed by Congressman Tom Udall, which gives both Congress and the States the Constitutional right to regulate campaign contributions
This month’s GreenBiz.com column by NI partner Michael Kramer backs Bill McKibben’s campaign urging institutional divestment from companies whose primary businesses profit from the continuing reckless exploration, extraction, and burning of fossil fuels. Just after publication, it’s the lead story on the GreenBiz home page.
Yes, one can profit in the short term off these industries, or get in on the latest environmental insanity caused by hydraulic fracturing, but this process of extracting financial gain from environmentally stupid business practices must end, especially if one claims to invest in a sustainable or responsible manner. To invest in fossil fuels as if there were no real consequences ignores their direct contribution to ecosystem collapse. Do we truly want to wait until the effects of climate change are irreversible and life threatening before we realize we should change our behavior? The warning signs are already upon us.
South Carolina recently became the 12th state to allow companies to incorporate as Benefit Corporations, which provides a legal foundation for pursuing social and environmental purposes in concert with a company’s profit-making goals. Traditional corporate structure requires profit maximization for shareholders.
Brady Quirk-Garvan, of NI’s Charleston affiliate, Money With a Mission, said Natural Investments will use the new South Carolina law to encourage other mission-driven businesses to become benefit corporations. “Here’s a way to distinguish yourself,” Quirk-Garvan said. “There’s a lot of marketing hype about being green, but this is the next step for people who are actually willing to write it into their bylaws.”
Natural Investments Advisor Greg Garvan concurred, saying “This is a proud day for South Carolina. We are now on the cutting edge of social enterprise business. For 20 years we’ve helped individuals connect their values and their financial life – now businesses have the ability to bring that same intentionality to their legal structure”
In early April, 650 leaders from around the world met at the UN in New York for a High Level Meeting on Wellbeing and Happiness: Defining a New Economic Paradigm. Yes Magazine provides a good overview of the meeting, which began with stirring statements by the Prime Minister of Bhutan, the President of Costa Rica, and UN Secretary-General Ban Ki-moon, who cited Aristotle and Buddha in calling for the replacement of our current economic system with one based on happiness, well-being, and compassion. “Social, economic, and environmental well-being are indivisible” he said. See many of these opening statements on this conference website.
During the meeting, John Helliwell, Lord Richard Layard, and Jeffrey Sachs introduced the World Happiness Report, a study they prepared for the conference. The report found that money and economic growth have a relatively weak correlation to happiness; happiness is much more strongly associated with things like community engagement, having lots of friends, doing work you love, and feeling a sense of trust in others. Altruism, too, is essential; a world that makes equity, care, and compassion more possible will be a happier world. As the authors write:
The realities of poverty, anxiety, environmental degradation, and unhappiness in the midst of great plenty should not be regarded as mere curiosities. They require our urgent attention, and especially so at this juncture in human history. …if we act wisely, we can protect the Earth while raising quality of life broadly around the world. We can do this by adopting lifestyles and technologies that improve happiness (or life satisfaction) while reducing human damage to the environment.
Natural Investments has been recognized as ‘Best for the World’ in a list of U.S. businesses with less than 10 employees creating the most overall positive social and environmental impact. Natural Investments and the other ‘Best for the World’ businesses earned a score in the top 10% of all Certified B Corporations with 10 employees or less, and, on average, 50% higher than the average score of nearly 2,000 other sustainable businesses that have completed the B Impact Assessment.
The B Impact Assessment, governed by the nonprofit B Lab, is the most rigorous, comprehensive, and comparable independent assessment of overall corporate impact in the country, and shows the relative value businesses create for society by comparing nearly 200 individual metrics on corporate impact on workers, consumers, suppliers, community and the environment.
“Natural Investments is a leader in the global movement to redefine success in business,” said Jay Coen Gilbert, co founder of B Lab, the organization that certifies B Corporations. “Natural Investments is among the best in the world at being the best for the world.”
“We are proud to have earned this distinction,” said Natural Investments’ Managing Partner Michael Kramer. “Our clients walk their talk with their investments, so it makes sense for us to operate our company with attention to high social and environmental standards.”
The ‘Best for the World’ list appears in the 2012 B Corp Annual Report published in early March by B Lab. Learn more about how Natural Investments creates positive social and environmental impact at bcorporation.net/naturalinvestments
In this in-depth interview from The Browser, Francis Fukuyama, author of The End of History, discusses five recent books that he feels offer a comprehensive look at the roots of the global financial crisis of 2008 and beyond, as well as the ways we’ve responded since then. At the same time, this dialogue itself offers a solid ten minute overview that’s well worth the time it takes to read.
The five books which serve as jumping off points for the conversation are This Time it’s Different, The Big Short, Fault Lines, 13 Bankers, and the report of the Financial Crisis Inquiry Commission. Some of the many themes explored here include the American proclivity to address income disparity through expanding access to credit, the enduring focus on social responsibility in Japanese business, and the ways that the smaller Asian and South American financial meltdowns of the past twenty years have more in common with the recent American and European experience than is generally recognized.
A recent segment on the CBS evening news highlighted the emergence of the Benefit Corporation, which provides a legal structure for companies that wish to pursue a social mission, rather than being legally constrained to always maximize shareholder value. As you may know, Natural Investments was one of the sixty or so founding members of B-Lab, which certifies B-Corporations, and was an early recipient of the B-Coporation certification.
The two-minute CBS segment is not available for embedding online, but can be viewed here on the CBS News site and here on YouTube (the clip starts with 20 seconds on Muhammed Ali, then moves into the B-Corp segment).