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.
Now that the 2016 presidential election is in the history books with a shocking outcome that few foresaw, the rough outlines of the next few years are starting to become a little clearer. We can reasonably expect a federal government with less interest in protecting voting rights, reproductive rights, and civil rights of historically disadvantaged and targeted communities such as immigrants, Muslims, LBGT people, disabled people, and people of color. We can also expect more interest in increasing fossil fuel production and distribution, stirring up international geopolitical conflicts over trade, territory, and resources, and lowering corporate taxes, among many other priorities. With our values and ideals—and for some, our lives—under what’s likely to feel like a constant siege, it’s natural to react emotionally with outrage or despair. And while it’s important to vent, we must not allow ourselves to be paralyzed into inaction or satisfied with mere talk! This is a moment that calls for us to activate our resources and engage our communities, not just to defend against potential losses, but to build on the gains of the last eight (and more) years. You, dear investor, are in the advantageous position of having resources that can be mobilized to help catalyze much-needed outcomes. With that in mind, here is your action guide for the next administration.
Step One: Lift up communities by investing in them. Lend your money to Community Development Financial Institutions (CDFIs) that specialize in redistributing access to wealth to vital projects in vulnerable communities. For example, investors nationwide can open a High Impact CD at Hope Credit Union, which serves formerly under-banked communities of color in the Mississippi Delta region. While the Standing Rock Sioux blockade of the Dakota Access Pipeline highlights the myriad of challenges that Native Americans face, First Nations Oweesta CDFI is actively redeploying investor capital to create jobs, grow businesses, and secure ancestral lands across Indian Country. The Calvert Foundation offers two initiatives that invest in specific constituencies targeted by the incoming president: Latinos (the Raíces Investment Initiative) and women (the Women Investing in Women Initiative: WIN-WIN). Self-Help Credit Union and Beneficial State Bank take federally insured deposits and reinvest them in affordable housing and small business loans in low-income neighborhoods that are otherwise unlikely to benefit from the new regime. Seek out CDFIs doing similar work in your city or region. And help build a thriving economy right where you live by buying local and investing in local small businesses and nonprofits that you know.
Step Two: Fight climate change by investing in the ongoing green revolution.
In mid-September, I travelled to San Francisco to participate in the annual Social Capital Markets conference known as SoCap. In its ninth year, SoCap describes itself as the place “where the global community using business as a force for social change gathers to listen to each other, and to learn, and to get things done.” I last attended SoCap three years ago, and was pleased to see how much the event has grown and evolved in that span of time. There were over 2500 people in attendance, from 60 different countries. They represented impact investment funds, international community development organizations, regenerative agriculture projects, and social enterprises, all focused on addressing critical issues like global poverty alleviation, social justice, and climate change, and the conversations were inspiring. Important questions were asked, and moving calls to action were made.
As we’ve seen Impact Investing begin to move dramatically into the mainstream, I was heartened to hear SoCap bring to the fore the priority of ensuring that the social and environmental goals at the heart of Impact Investing don’t become overshadowed by the drive of the extractive economic model currently dominating our financial system. With a huge focus on inclusive strategies for investing, there was deep attention given to addressing racial and gender inequities within our capital system, and how to transition from an Extractive Economy to a Regenerative one.
As Hawaii considers the ramifications of a contentious sale of its major utility companies to giant Florida-based utility company NextEra, Kaua’i Island Utility Cooperative (KIUC) stands out as an alternative model of utility ownership, and is leading the way in expanding renewable energy production. In early September, I visited with Jim Kelly of the KIUC to learn more about the cooperative and its approach.
As a cooperative, the utility provider is entirely owned by its members—its employees and customers—who actively participate in setting policies and making decisions. With a strong commitment to renewables, KIUC has utilized multiple strategies to increase its green energy capacity. From Power Purchase Agreements made with owners of large renewable energy facilities—including a solar array owned by Greenbacker Renewable Energy, a company in which many NI clients are investors—to directly investing in the construction of member-owned facilities, the cooperative is well on its way to achieving its goal of 50% renewables by 2023.
With the completion this year of its second 12 megawatt solar facility in Anahola,
As a financial advisor focusing on Sustainable, Responsible, and Impact (SRI) investing, over the years, I have spoken with countless people that have questioned the financial performance of SRI investments. These people either believe, or think there’s a good possibility, that investing in SRI means giving up some returns. In my experience, this idea is held by both those attracted to it and those who are not. Why is this? Over the years, many studies and even meta-studies (research analyzing the results of a number of studies on a topic) have shown that SRI is either positive or neutral for performance relative to conventional portfolios. Perhaps our industry has failed to get the good news out. It may also be the case that the mainstream investment industry is spreading mistruths about SRI performance in order to prevent assets from moving to SRI managers. Fortunately, a couple new reports were released earlier this year which shed some new light on this issue, and strongly support our long-held belief that SRI is actually a source of both financial and operational outperformance.
The new reports, Sustainable Signals and Sustainable Reality,
I recently made a visit to Oregon and took the opportunity to tour some of the farm properties held by Farmland LP, an organic farmland fund in which we have a number of clients invested. Farmland LP acquires conventional farmland and converts it to certified organic, sustainable farmland, and its partner, Vitality Farms, manages the farming and livestock operations on their properties. Recently named one of the World’s 50 Most Innovative Companies by Fast Company, Farmland LP owns about 7000 acres of farmland in Northern California and Oregon. Nearly 1500 of those acres are in Oregon just outside of Corvallis, an hour and a half from Portland. I drove out to spend the afternoon with Jason Bradford, Managing Partner at Farmland LP and Owner/Manager of Vitality Farms. It was the highlight of my trip! We toured multiple properties so I could see firsthand the wide variety of organic production currently underway after five years of infrastructure development and farming operations.
This is a local tale, but it is just such close-to-home decisions, multiplied across the country and around the world, that will shape the future resiliency of our societies; therein lies a lesson for us all.
A sign of evolutionary times, Hawaii County Mayor Billy Kenoi recently cancelled the $100 million waste-to-energy incinerator project that would have replaced the island’s nearing-capacity landfill in Hilo. While three bids had been accepted as finalists for the project, the Mayor indicated that the recent 50% drop in oil prices made the project financially untenable, given the price the utility was willing to pay for power and the cost of producing the electricity (yes, strangely, the power purchase contracts were tied to the price of oil).
But the problems with the idea run deeper than this. The financial formula for corporate-scale incinerators relies on a high volume of waste to burn; meanwhile, the stated goal of local and state sustainability plans is to reduce waste to zero through reduction, recycling, and reuse strategies.. While making energy from our waste is perhaps a half-step in the right direction, to many residents, the incineration facility, which would be the largest infrastructure facility in Hawaii County history, is clearly a remnant of old-style thinking about waste, one that presumes we’ll always have a huge pile of it to dispose of.
This article from NI’s Andy Loving was originally published in the February 2015 edition of the Green Money Journal. It offers some much-needed perspective on the recent surge of mainstream investment interest in ESG measures, which is often celebrated as being synonymous with SRI and its historic goals. Andy begs to differ.
I have spent my 20-year career as a financial advisor working with people who want their faith and their values to be reflected in their use and investment of their money. From the beginning, I have been a socially responsible investing advisor to organize money for social change, while serving the needs and commitments of my clients.
But today’s social investing marketplace is increasingly driven by ESG (Environmental, Social, Governance) investments. The social investing “tent” has indeed gotten much bigger and, in the process, many strongly held values that my clients and I have seen as so important now seem unimportant, or at least less important, to many in the industry. Growth often results in increasing diversity, which can be a good thing. But in the changes in the social investing industry, certain values and priorities have been de-emphasized to the point that the character of the industry is significantly changed.
Information in the recently published 10th edition of the US SIF Trends Report on SRI documents concerns. The headline news of the Trends Report is, of course, the 76 percent increase over two years of U.S.-domiciled assets under management using SRI strategies. The jump from $3.74 trillion in 2012 to $6.57 trillion in 2014 was startling, encouraging and almost unbelievable. But of that more recent number, $6.2 trillion were assets where ESG factors only were being incorporated into investment decisions. There was no involvement in shareholder activism and community/impact investing.
These numbers indicate that many mainline money managers now believe ESG factors can and do influence the financial bottom line, making ESG material to profit maximization. The mainline Wall Street firms are finally believing what the SRI industry has been saying for decades.
The report also contains information about two other important areas of activity – shareholder advocacy and community investing/impact investing – where the news is not quite so encouraging.
“Utility Death Spiral?” This provocative title jumped off the agenda page at the recent SRI Conference. What could that mean? Well, with a title like that, I knew I had to attend, though the session description’s litany of tech terms—gigawatts, levelized cost of energy, photovoltaic grid parity, net metering time of use—had my eyes going a little blurry. Spending an hour with a bunch of energy nerds turned out to be the standout presentation of the year for me.
A year ago, Amory Lovins and the team at Rocky Mountain Institute (RMI) released a report called “The Economics of Grid Defection” that highlighted the forces and timing that will drive commercial and residential electricity users to unplug from the grid. Lo and behold, the time is almost here that solar photovoltaic (PV) in combination with new battery technology is/will be cheaper than staying plugged in to the grid. Wow, that changes things! Ever since the initial boom in the 1970’s, PV systems with batteries have been only appropriate for far-off-grid folks, people who lived a mile or more from an electric line. But now, with the cost of PV panels dropping dramatically, coupled with the slow but accelerating reduction in the price of batteries, even someone living in a city house that’s already connected to the grid might choose to unplug. In some parts of Hawaii, the time has already passed—folks there are unplugging, not just to “go green” but to “save green.” In California and New York the report’s most optimistic scenarios suggest it could make economic sense to “defect from the grid” in as little as two years! In places with lower electric rates, including Kentucky and Texas, the time frame is much longer, though well within the thirty-year planning scope of electric utility infrastructure development.
A key factor that will drive “grid defection” is the ongoing monthly cost to stay connected to the utility and the grid. In our current net-metering model, once businesses and homeowners are generating sufficient electricity to cover their own use, then they are using the grid as a giant battery. When the sun is shining the PV system is pumping energy into the grid, and when it’s dark the user is pulling energy out. As the cost of using the grid as a battery increases and the prices for an actual, at-home battery system decreases, users start to look at using their own batteries to perform the same function. If it costs $10 a month to have the convenience of the grid, for example, but it only costs $5 a month to finance a battery pack at your house, well, you can see the appeal—especially if utility fees rise as their customer base shrinks.
What does all this mean for investors?
For years people have saved and invested for important life goals such as education, retirement or simply to growth their financial wealth. At the same time, many have been in a position to make charitable donations to organizations with which they share particular goals and values. Maybe it’s the environment, social justice or women’s issues – good causes abound.
We have always known that we can do good with our money by providing funding to important causes – and thereby we can direct our money to positive uses. But we’ve long been spoon-fed the idea by the financial services industry that we cannot successfully invest our money in ways that are positive as well. Is it really a necessity to sink investment dollars into companies which pollute our environment, stoke global warming, and avoid diversity in their boardrooms and women in executive positions?
To talk with most financial advisors, you would think so. 2014 may be the year in which investing fundamentally evolves. Women and Millennials are the disrupters. The opportunity to express one’s values – be they social, environmental or political – and to amplify one’s impact by expressing those values through investment dollars is becoming the vibrant new investment landscape.
Economists estimate that by 2030, women will control two-thirds of wealth in the United States. About half of affluent women report an interested in environmentally or socially responsible investments, as compared to just one-third of men.
At the same time Millennials are realizing their earning potential in many existing and emerging industries. Ninety percent of today’s MBAs are willing to exchange some financial benefits for a strong commitment to social good, according to Ourtime.org. And 79 percent of Millennials seek to work at a company that is socially responsible, according to CatchAFire.
Treading lightly on the earth and care for our fellow travelers are becoming meaningful, more widely-held views. Daily buying patterns have been favoring organics, fair-trade products, recycled materials and the like in recent years. People are logically extending their values into their economic behavior.
In the canyons of Wall Street, investing for impact has been eschewed as a niche market, not a pursuit for serious investors. But, there has been no conclusive or even suggestive research to show that investing in companies with positive practices can be expected to diminish returns. In fact, companies can avoid many potential risks by adhering to sound environmental practices and opening their doors to diversity in their ranks and boardrooms.
The next wave of investors is here.
This article was first published in the February 2014 edition of Information Press, San Luis Obispo, CA