2020 will go down in history as a year of profound disruption. One crisis after another exposed the mortal consequences of racial inequities––beginning with a pandemic in which people of color were far more likely to die than white Americans and a series of brutal police killings of unarmed Black civilians. These painful events spurred a national uprising, led by the Movement for Black Lives and supported by thousands of allied groups across the country, that has since been characterized by scholars as the largest mass movement in US history.
The Biennial Report on US Sustainable and Impact Investing Trends, which measures the state of the industry at the end of 2019, shows that sustainable, socially responsible, and impact investing (SRI) is on its way to becoming the new normal. Since the previous report two years ago, the amount of assets under professional management in the US that integrates some form of environmental, social, and governance (ESG) criteria jumped 43% to over $17 trillion. Not only is this the largest two-year increase in 25 years of reporting, but the total suggests that one of every three dollars of professionally managed investments is invested using SRI criteria.
There are now about 400 money managers practicing SRI and more than 500 institutional investors (such as pension plans, government treasuries, and university and foundation endowments) applying various ESG criteria as a matter of investment policy. More than 1200 community development financial institutions provide capital to people and communities in need of basic banking services, loans, and access to credit.
To assert that the global COVID-19 pandemic has affected almost every part of our daily lives in 2020 would be an understatement. As the one-year anniversary of the virus’s outbreak approaches, it is becoming clear that some adaptations and trends necessitated by the pandemic are likely to have lasting impacts. For instance, the rise in flexible and home-based working arrangements has forced the commercial real estate market to pivot. And the expansion of voting methods, which resulted in a record turnout in the 2020 US presidential election, has fundamentally changed electoral politics.
The three major events of the year—the coronavirus pandemic, racial unrest, and a contentious presidential election— combined to present an environment that we could scarcely have imagined twelve months ago. There has been plenty of fallout from these events, including the heartbreak over lives lost, economic hardship, a painful confrontation with systemic racism, and the thorough disruption of communities and local economies.
As of this writing, more than 78 million cases of COVID-19 have been confirmed worldwide, and more than 1.7 million deaths have been attributed to the pandemic—numbers that continue to rage out of control. These are losses that overwhelm the mind. The enduring legacy of the pandemic will be the massive void left by those who have died.
1: SUSTAINABLE INVESTING ASSETS REACH $17. 1 TRILLION (US SIF Foundation)
Total US-domiciled assets under management using sustainable investing strategies grew
from $12.0 trillion at the start of 2018 to $17.1 trillion at the start of 2020––an increase of 42 percent––according to a biennial “Trends Report” by the Forum for Sustainable and Responsible Investment (US SIF). The top three issues for money managers and their institutional investor clients: climate
change/carbon emissions, sustainable natural resources/agriculture, and board governance.
2: THE BIDEN ERA COULD BE A BOON TO SUSTAINABLE INVESTING (Barron’s)
Biden has promised ambitious plans for combating climate change and other environmental prerogatives. Experts outline their top seven priorities to strengthen the industry’s ability to move capital into sustainable and socially responsible investments.
Natural Investments is making a long-term commitment to the principles of Justice, Equity, Diversity, Inclusion (JEDI).
Justice: We actively seek to dismantle supremacy in all its forms, remove barriers to justice, and use our institutional privilege to address longstanding inequities. We work collaboratively to uphold human dignity and foster systemic change both within our firm and in society.
Equity: While we believe that people of all genders, races, and other identities can succeed, build wealth, and become leaders in our industry, not everyone comes to us with the same background. We seek to proactively level the playing field through sharing power, resources, and opportunities, and embracing our diverse stories and perspectives.
Diversity: We value our differences because collectively, they make us better. Our goal is to achieve meaningful diversity on our team across race, gender, class, and other factors. At the firm level, Natural Investments is currently only adding people of color as new advisors, and we encourage all our advisors to prioritize this in their hiring as well.
Inclusion: We accept people for who they are, without creating pressure to conform or assimilate into the norms of a dominant culture. We encourage everyone to express themselves authentically and respectfully. We commit to examining the impact of our words and actions, and to deepening our awareness of patterns of harm in order to facilitate accountability, understanding, behavioral change, and healing. We engage in training and learning opportunities that build our capacity to embody a welcoming, appreciative, celebratory, and culturally rich environment for all.
by Deborah Nason, CNBC
Another option is YieldCos, according to Michael Kramer, managing partner and director of research with Natural Investments in Kona, Hawaii.
″[These] are essentially renewable energy utilities, often tied to the grid,” Kramer said. “They are lower risk than, say, companies that manufacture equipment.
by Debora Nason, CNBC
Growing rapidly within the socially responsible investing landscape is the world of so-called impact investing, which deploys your money more directly toward solving societal problems.
Largely executed through direct investing platforms, this approach addresses specific problems, such as alleviating poverty in certain communities or reducing pollution.
These investments are designed to generate specific, positive and measurable environmental, social, and/or good governance outcomes, oftentimes with market-rate financial returns, said Michael Kramer, managing partner of Natural Investments in Kona, Hawaii. Furthermore, outcomes can have a local or a societal focus.
What’s at Stake: A Livable Climate Future by Joel Koerner
Even Worse “Worst-Case Scenario” Planning by Christopher Peck
SRI in Focus: Lunatics in the Asylum by Michael Kramer
Market Report – Fall 2020 by Scott Secrest
Download a full PDF copy here: Investing with Intent: Fall 2020
In spite of heightened volatility in stocks as the quarter drew to a close, the markets generally moved higher over the period. For the quarter, US large company stocks rose 8.9%, smaller company US stocks were up 4.9%, foreign stocks were higher by 4.8%, and US bonds, broadly measured, were up 0.6%. While stock indexes were higher for the quarter, the markets were mixed, with small company and foreign stocks having lost value, while large company stocks have moved higher.