Despite the massive economic and social disruption wrought by the Covid-19 pandemic in 2020, governments and investors continued to buoy the capital markets. Conscientious investors saw the opportunity to channel their money into funds supporting families and small businesses in crisis. Last year, Natural Investments and our clients held $785M in responsibly managed assets, representing a 21% increase from the prior year.
We directed a significant proportion of our client investments (approximately $541M) toward responsibly managed mutual funds and separately managed accounts that use ESG integration strategies. Applying environmental, social, and governance (ESG) criteria helps us screen out firms with the worst corporate behavior, an approach that minimizes poor performance risk, as shown by numerous studies.
Natural Investments as a firm has been on its own path of social justice since it began. It’s the core of our mission. And yet in the area of racial equity, we know there is much more that we can and want to accomplish.
Our natural focus is external, in that we are always looking for ways to help clients invest in systems change. But for the past few years, our firm’s rapid growth and circumstances in the bigger world have called on us to look inward—particularly when it comes to racial and gender equity.
Natural Investments has regenerative investments with forty-nine companies and funds that create social and environmental benefits in response to some of our society’s most pressing challenges. Regenerative, in this context, refers to private equity and debt investment opportunities with an explicit mission for positive societal and environmental impact. As of 2020, Natural Investment clients devoted $110M to regenerative investing, a 19 percent increase from the prior year.
Kachuwa Impact Fund is an investment cooperative and public benefit corporation focused on owning and operating “impact real estate” and investing in privately held “impact companies.” As a cooperative, Kachuwa is democratically owned and controlled by its members. Brady Quirk- Garvan of Natural Investments recently met with Blake Jones, founder of Kachuwa Impact Fund, to talk about what makes Kachuwa unique.
Brady Quirk-Garvan: What exactly is Kachuwa Impact Fund’s approach to investing?
Blake Jones: By design, at least 60 percent of Kachuwa’s assets are real estate and no more than 40 percent of its assets are investments. Kachuwa is like a real estate investment trust (REIT) combined with a mutual fund. Our diversified holdings have a positive impact on society and the environment. Kachuwa’s goal is not to maximize financial return; instead, it is to create positive impact while earning reasonable returns for its members that may be considered “below-market.”
One of the primary challenges facing investors seeking to make market-rate, high impact investments outside public markets is that most private investment structures have high minimum-investment requirements, often above $1,000,000 per investment, that put this type of investing out of reach for many investors.
To address this barrier, New Summit pioneered a private high-impact “fund of funds” model that provides a typical New Summit investor with exposure to 10-12 underlying private fund investments.
RUNWAY was founded in 2017 by leaders in the women of color entrepreneurship ecosystem to help provide “friends and family”- style capital, expertise, and mentorship to Black businesses who are vitally important to the communities they serve yet continue to face many barriers to building their businesses.
Since launching its first pilot program in partnership with Self Help Federal Credit Union in Oakland, Calif., with a modest $500,000, RUNWAY has since expanded nationally and now directs several million dollars to support Black businesses on both coasts. As a 100% Black and Brown-women led financial innovation firm, RUNWAY is a great example of an innovative impact investment group
On December 14, as a year of staggering loss was coming to a close, Covid-19 vaccine distribution began in the United States. As of this writing, more than 124 million people have received the vaccine, while 46 million people (more than 14% of the total US population) are fully vaccinated. The accelerating pace of vaccination is good news from a public health perspective, a welcome harbinger for the many households that have suffered financially during the pandemic, and critical to the economic recovery of the nation.
For the first quarter, large company stocks in the US rose 6.2%, smaller company stocks were up 12.7%, foreign stocks were higher by 3.5%, and US bonds (broadly measured) were down -3.4%. As vaccination rates grew, business restrictions relaxed and employment forecasts brightened. Optimism about the US economy grew during the first quarter, helping to support the markets. Over the last year, market growth
Natural Investments has joined with other investors representing $6.7 Trillion in assets under management to request that Amazon, Inc. respect workers’ rights to freedom of association and collective bargaining. We believe that worker representation plays an important role in companies.
In light of the reported anti-union practices at Amazon’s Bessemer facility in Alabama, we have joined this engagement to call upon the company to take concrete steps to implement its commitments to well-established human rights standards. We call on Amazon to immediately take steps to ensure the workers in Bessemer, Alabama are free to exercise their rights without interference. We also seek to kickstart dialogue on the company’s policies and approach to respecting labor rights in Amazon’s global operations and supply chain.
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Jack Brill, a pioneer of the socially responsible investment (SRI) industry and co-founder of Natural Investments, passed away on January 21, 2021 at age 89. As one of the earliest SRI advisors in the ‘80s, Jack was a passionate advocate and known for his heartfulness and thought leadership. No one can attest to this better than his son and co-founder Hal Brill, who described their eventual realization of the power of socially responsible investing in Bringing Consciousness to Capitalism.
Investment advisors who have practiced socially responsible investing (SRI) going back decades as some on our team at Natural Investments have, remember well the doubters’ refrains of our means for social and environmental change: using investment capital does not advance social progress and environmental preservation. There is now evidence to refute them.
One way socially responsible investors create impact is by identifying which companies are exhibiting objectionable practices that undermine social progress or create environmental harm, and will decide to withhold financial backing from such companies. This is known as “avoidance” investing, one of several SRI leverage methods.