The Oceti Sakowin Camp in Cannon Ball, North Dakota, where the Standing Rock Sioux and other water protectors lived
as they fought to stop the Energy Transfer Company from routing the Dakota Access Pipeline through sovereign Sioux land.
How Socially Responsible Investors Supported the Dakota Access Pipeline Protests
The Dakota Access pipeline (DAPL) starts in the Bakken oil fields of North Dakota and runs nearly 1,200 miles to its terminus in Illinois, where it connects to additional pipeline infrastructure that carries the oil to refineries as far south as Texas. Along the way it crosses hundreds of streams, rivers, and other waterways, including the Missouri River less than a half-mile upstream from the Standing Rock Sioux Tribe reservation.
The project was completed and oil started flowing in June of 2017, after a prolonged protest by the Standing Rock Sioux Tribe, who were joined by water protectors from more than 100 indigenous tribal nations from across the Americas, as well as non-native allies from around the world. As the water protectors decried the violation of tribal sovereignty, the desecration of sacred sites, and the imminent threat to their only source of clean drinking water, they faced attack dogs, tear gas, rubber bullets, and water cannons in sub-freezing temperatures. These protests and concurrent lawsuits were documented by citizen journalists and eventually picked up by major news outlets.
One aspect of the stand-off that did not receive much media coverage was the role that socially responsible investors played in supporting the Standing Rock Sioux in their fight against the pipeline. At the November 2017 SRI conference, remarks by Rebecca Adamson, founder of First Peoples Worldwide (an indigenous-led grant-making organization that focuses on funding local development projects in indigenous communities while creating bridges between their communities and corporations, governments, academics, NGOs and investors in their regions) were presented by Susan White, co-chair of the Investors and Indigenous Peoples Working Group (a coalition of socially-responsible investors and others dedicated to supporting indigenous peoples rights) and Sydney Morris, chair of the Calvert Advisory Council. They provided a compelling account of the behind-the-scenes support socially responsible investors lent to the cause and the results of subsequent advocacy efforts undertaken by SRI groups:
In August 2016, the tribe asked First Peoples Worldwide and the Investors and Indigenous Peoples Working Group to lead an investor strategy aimed at diverting financing from DAPL. Investors worth more than $1.7 trillion signed a statement supporting the tribe’s request for a reroute.
Shareholder resolutions requesting better disclosure of environmental and social risks (from companies invested in the pipeline project) received record-breaking vote counts: Marathon Petroleum (38%), Enbridge (30%), and Wells Fargo (19%).
Energy Transfer Partners (the lead developer of the Dakota Access Pipeline project) stock is down more than 60% since its 2014 highs.
More than 500 NGOs and over 700,000 signatures catalyzed consumer bank account closures worth over $4 billion. Three banks divested from DAPL (BNP Paribas, DNB and ING), twelve of seventeen banks met with the tribe, and ten banks signed a statement requesting changes to the Equator Principle, (an ESG risk management framework used by ninety banks worldwide) in response to investor and civil society pressure. The fight against the DAPL has placed the costs of social risk front and center on the financial industry’s radar.
In response, First Peoples Worldwide created a seminal research effort now underway with the University of Colorado’s Leeds Business School and the American Indian Law Clinic. The first case study will be titled DAPL: Social Costs and Material Loss. Leeds Business School and the American Indian Law Clinic have formed a collaborative: First Peoples Investor Engagement Program. FPIEP has dedicated faculty and graduate students who will continue the work on quantifying social risk, designing market-based strategies for upholding Indigenous rights, harnessing the activist infrastructure that emerged from DAPL for future campaigns, and offering the Shareholder Advocacy Leadership Training to tribal leaders.
Although the Standing Rock protest did not stop the construction of the pipeline, it did catalyze these and other significant advances—not least a greatly increased awareness about the continuing impacts of colonialism on First Nations people. In 2018, the Investors and Indigenous Peoples’ Working Group (of which Natural Investments is a participant) will continue to advocate for the rights of indigenous peoples. The working group will push for companies to adopt Indigenous Peoples’ Free, Prior and Informed Consent (FPIC) policies and to cease activities that harm Indigenous lands, communities, and cultures. It will also focus on building investor, corporate, and U.S. government support for the United Nations Declaration on the Rights of Indigenous Peoples. And the group is committed to identifying opportunities, including strategic partnerships and investor support, to advance Indigenous community economic development initiatives.
“The SRI community made our voices heard, and we thank you,” said White and Morris, as they concluded their talk at the SRI Conference. Their eloquent presentation affirmed and deepened the commitment of Natural Investments to advance the rights of Indigenous peoples around the world through the powerful lever of impact investing.
The stock market continued its upward march during the third quarter. Large company stocks ended up 4.5%, while small companies rose 5.7%, and foreign stocks were up 5.4%. Bond returns for the quarter broadly measured— were also positive, up 0.8%.
These results arrived amid a backdrop of generally positive global economic news. IMF economists believe the pickup in global economic growth will remain on track and have expressed particular optimism for developed European economies. Though difficult to predict reliably, there is some analyst consensus that foreign stock markets may present better opportunities in 2018 than U.S. markets.
This is in part because the U.S. is now in an (unhurried) interest rate increase cycle. Rising interest rates are known to have a cooling effect on an economy. You might think of low rates as oiling-up the economic machine, while higher rates can slow the machine, to a degree. A recent Wall Street Journal poll of economists showed that the majority expects the Fed to raise rates once more this year, in December.
As the Natural Investments team prepares for our annual Conference on Sustainable, Responsible, Impact Investing, I find myself reflecting on how much has changed in just one year. Last year’s conference convened the day after the U.S. presidential election. Although we were all in utter shock at the outcome, the members of our SRI community quickly settled into the realization that our work as activists on issues of climate change and social justice would be critical, since it was clear that government policy would no longer be supporting our trajectory.
Sure enough, here we are today, with the Paris Climate Accord teetering on the orange ledge, with Obama’s Clean Power Plan gutted, the Standing Rock water keeper camp razed, and the fires, hurricanes, and floods of our worst nightmares. It’s depressing. But as Valarie Kaur, one of my favorite civil rights activists, suggests, “What if this darkness is not the darkness of the tomb, but the darkness of the womb? What if our America is not dead but a country that is waiting to be born?”
As Robert Muir-Wood says in The Cure for Catastrophe: “Natural disasters are in fact human ones: we build in the wrong places and in the wrong way, putting brick buildings in earthquake country, timber ones in fire zones, and coastal cities in the paths of hurricanes.” Global climate change is already amplifying freak weather events, adding tricky considerations to today’s real estate decisions: unprecedented droughts, raging wildfires, and superstorms with their disastrous floods.
How is the smart, responsible homebuyer/homeowner to reduce exposure to such risks? No one would disagree that protecting one’s life, family, and assets is a worthy goal, but planning and preparation don’t come easily to everyone.
Both stock and bond markets finished the quarter with solid gains. Large company stocks in the U.S. were up 3.1%, while smaller companies gained 2.5%. Foreign stocks were in the black as well, up 6.1%. Bonds advanced 1.4%, even as the Fed raised interest rates.
Federal Reserve officials forged ahead with another interest rate hike in June, the third in six months, and maintained their outlook for one more hike this year. The Fed announcement struck a careful balance between showing resolve to continue increasing interest rates toward more historically normal levels, and acknowledging concern over unexpectedly low inflation this year. While we may think of inflation as a bad thing, the Fed sees benefits in it—in the right measure.
What’s Up On Wall Street, 1st Quarter 2017
(written April 2017)
As the first quarter drew to a close, most stock markets had moved higher while bonds overall recovered from a poor prior quarter and nished up as well. Over the quarter the stocks of large U.S. companies rose by 6.1%, U.S. small companies nished This is a continuation of higher by 2.5%, foreign stocks were up 7.2% what was already happening and bonds, broadly measured, rose by 0.7%.
Both the financial and general press were dominated by news out of Washington D.C. as the new President’s term got underway. While action in the capitol does affect the broader economy, the economic and business earnings outlook will normally have more impact on stock market results. Presidents have long received too much credit—or blame for economic conditions on their watch. Still, it is understandable why the markets and media are xated on Washington. The news never seems to stop and it’s increasingly wacky. It feels like rubbernecking on the highway as we pass an accident; it’s hard to look away.
However, the long-term movement of stock prices tends to be more in uenced by interest rates and business earnings. As the stock market has continued to rise since the election, some economists now believe that the rally is more about positive economic data that supports the picture of a normalizing U.S. economy. This is a continuation of what was already happening during the second term of the Obama administration.
Speaking of interest rates,
On March 27, 2017, the Global Sustainable Investment Alliance (GSIA) released its biennial Global Sustainable Investment Review 2016, showing that global sustainable investment assets reached $22.89 trillion at the start of 2016, a 25% increase from 2014.
Socially responsible investment (SRI) continues to grow as a favored set of investment strategies:
- Europe accounts for 53% of these assets, the United States at 38%.
- In nearly every market represented in the report, sustainable investing has grown in both absolute and relative terms since the beginning of 2014.
- Environmental, social, and governance performance and/or criteria integration is being applied to $10.37 trillion in assets.
- Growing global concern over climate change has resulted in rising interest in green finance, including climate-aligned bonds.
- Fiduciary duty and client demand are key growth drivers for sustainable investing.
While institutional investors hold the largest percentage of SRI assets, with pension funds often comprising the largest percentage of institutional SRI assets, interest by individual and family investors is growing. The relative proportion of individual and family SRI investments in Canada, Europe, and the United States increased from 13% in 2014 to 26% at the start of 2016. Over a third of SRI assets in the United States were owned by individuals and families.
To download the full report click here.
About Global Sustainable Investment Review
Now in its third edition, the biennial Global Sustainable Investment Review is the only report presenting results from Europe, the United States, Canada, Asia, Japan, Australia, and New Zealand. The report draws on in-depth regional and national reports from GSIA members—Eurosif, Responsible Investment Association Australasia, RIA Canada, and US SIF—as well as data and insights from the Principles for Responsible Investment, JSIF (Japan), LatinSIF, and the African Investing for Impact Barometer. Together, these resources provide data points, insights, analysis, and examples of the shape of sustainable investing worldwide.
About Global Sustainable Investment Alliance
The Global Sustainable Investment Alliance (GSIA) is a collaboration of membership-based sustainable investment organizations around the world. It includes US SIF, UK SIF, Eurosif, RIA Canada, VBDO (Netherlands), and the Responsible Investment Association Australasia (RIAA). The GSIA’s mission is to deepen and expand the practice of sustainable, responsible, and impact investing through intentional international collaboration. Our vision is a world where sustainable investment is integrated into financial systems and the investment chain and where all regions of the world have coverage by vigorous membership based institutions that represent and advance the sustainable investment community. www.gsi-alliance.org
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.
Wall Street is expanding its reach. In the years since the financial crisis, recovering markets and a flood of easy money from the Federal Reserve have encouraged large institutional investors to move into whole new sectors such as rental homes and farmland. Unfortunately, small farmers and homeowners are losing control of their futures while the well-funded newcomers capitalize on their latest opportunity. By introducing profit-maximizing corporate management in these areas, we may see higher prices for food and rent before long. How is Big Money able to boldly expand so soon after what seemed to be a very humbling experience just a few years ago? And what role might sustainable and responsible investors have in responding to this situation?
By Susan Taylor
One of today’s interesting economic and political shifts is the growing momentum to raise the minimum wage. Roughly 2.5 million low-wage U.S. workers saw at least a small minimum wage hike go into effect Jan. 1 this year, bringing to 21 the number of states with a minimum wage above the federal level of $7.25 per hour. Though many of those minimums are only modestly above the federal wage floor, other areas are making bigger changes. Washington, DC, and two adjacent Maryland counties have already voted to raise their minimum wage to $11.50 per hour, effective in 2016. In his first week in office, Seattle’s new mayor began developing plans to pay all city workers at least $15 per hour.
Growing wage inequality has been the focus of recent speeches by people ranging from representatives of fast food workers’ groups to President Obama and Pope Francis. Sensing the swing in momentum, Congressional Democrats have floated a proposal to raise the federal minimum wage to $10.10 and index it to inflation going forward.
Many news sources outline the various data and economic arguments for or against a higher minimum wage. Social investors probably have a range of opinions on any particular piece of legislation, but it seems we have already expressed our support for a higher minimum wage in some quite tangible ways.