Download a full copy of our 2020 Social Impact Report
A Year of Transformation by Michael Kramer
One from the Heart: A Tribute to Jack Brill by Hal Brill
2020 Sustainable & Responsible Impact
2020 Shareholder Advocacy Review
2020 Regenerative Investments
Putting Equity at the Center of our Organizational Culture by Carrie VanWinkle
Spotlight: Kachuwa Impact Fund by Brady Quirk-Garvan
Spotlight: New Summit Investments by Ryan Jones-Casey
Spotlight: RUNWAY by Nicole Middleton Holloway
JACK BRILL, the founder of Natural Investments and a pioneering thought leader of the socially responsible investment (SRI) industry, passed away recently at the age of 89. As one of the earliest SRI advisors in the 1980s, Jack was a passionate advocate known for his generous heart and tireless work to advance an approach to investing that was radical in his early career. He wrote one of the first books on the field, Investing from the Heart (Crown, 1992), which was the basis for the Heart Rating, the first and most rigorous rating system of SRI mutual funds. From 1993 to 2000, Jack helped SRI achieve mainstream recognition through his competitive investment exercise in a quarterly NY Times series.
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.
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
The Long View Provides a Better Outlook
There is no question that the political world is wildly turbulent these days. If you are like me, you may often fall prey to the depressing news coming out of Washington, D.C. Every day it seems like some environmental regulation is being rolled back, the government is oppressing a new group, or that we are on the brink of a budgetary crisis. All of this is before we even talk about global warming. So what is a progressive investor to do?
I was recently reminded of a line that President Bill Clinton likes to use, which is to look at “trendline not headlines.” In today’s world, there couldn’t be better advice. In the age of clickbait headlines, social media frenzy, and scary sound bite news, this can be hard to keep in mind—but the trendline does tell a more accurate story.
So let’s take a dive into some trend lines and see what is actually happening.
In June I participated in the inaugural Conscious Company Global Leaders Forum, a gathering of about 200 business executives who are interested in evolving themselves as a conscious leaders. They share a goal of bringing deeper awareness to bear inside companies to change how business is done, and to create positive, meaningful ripple effects in the bigger world.
As you might guess, some of the attendees were from recognizable companies like Google, Patagonia, Clif Bar, GoPro, and Seventh Generation. Economic innovators like Kat Taylor from Beneficial State Bank, and mission-oriented CEO Vincent Siciliano with New Resource Bank were there. Game changing leaders from BALLE, Bioneers, Social Ventures Network, Oxfam, B Lab, and American Sustainable Business Council attended as well, along with many chapter heads and members of the Conscious Capitalism national network, NEXUS, and Village Capital.
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
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.
One of the most in-depth articles we’ve seen on Impact Investing was recently published in Hawai’i Business, and not surprisingly, it features the work of our own Michael Kramer. Impact Investing has emerged in recent years as one of the highest-profile evolutions of the SRI principle of doing well financially while doing good for people and planet. At the same time, there has been some friction, as some who embrace this new model suggest that SRI is, by contrast, low impact; this article gets at these questions in a more complete way than many.
Much of the piece profiles the Ulupono Initiative, an impact investing project of Pierre Omidyar (the funder behind First Look Media, the independent journalism venture featuring Greg Greenwald, Jeremy Scahill, and Matt Taibbi). Ulupono is actively investing in many initiatives across the Hawai’ian islands; this excerpt captures the essence of the impact investing mindset:
“Pierre has this nomenclature he likes to use,” says Murray Clay, a managing partner at the Ulupono Initiative. “He starts with the idea of ‘charitable giving,’ which he defines as ‘meeting people’s immediate needs.’ So, Meals on Wheels, Habitat for Humanity – people providing food, shelter, cloths, medical care – that’s charitable giving. The next step is ‘philanthropic giving,’ which, unlike charitable giving, is not about meeting immediate physical needs; it’s about solving long-term problems. If you think people aren’t getting good jobs, for example, it might be that better education will help solve that problem over the long term. So, philanthropic giving is about solving those kinds of long-term problems. The next step is either ‘philanthropic investing’ or ‘impact investing.’ Those terms are used interchangeably. The idea is that you’re bringing the for-profit model into play. But, instead of just making money, you’re making money and having impact at the same time to try to solve some of those problems. So, you’re not just measuring returns; you’re measuring returns and impact.”
The article goes on to look at the work of RSF Social Finance (the investing arm of the Rudolph Steiner Foundation) and Natural Investments. Michael fields questions about the relative impact of the Ulupono model and traditional SRI, noting, “The term ‘socially responsible investment’ has been around for more than 30 years; impact investing has only been around for a few years. The folks who champion that term are generally equity people (ed. note: wealthy, or “qualified,” investors) who invest in startups. That certainly creates impact. The issue is: What kind of impact do you want to make?”
SRI’s impact often takes place within the companies held by SRI mutual funds, owned by “regular” investors. The kinds of impact SRI investors have been creating for decades is now expanding rapidly. Michael shares some good news about Bloomberg, the industry-leading financial data provider, which has added sustainability information to their offerings, thus moving some SRI considerations into mainstream investment analysis. In addition:
“The other thing Bloomberg recently released was something called the Carbon Risk Valuation Tool, which is specifically related to climate change and carbon cap and trade.” This service, Kramer explains, helps financial institutions analyze the risk associated with so-called ‘stranded assets,’ enormous investments in fossil-fuel reserves that, because of climate change, may never be extracted. Bloomberg calls this $6 trillion concentration of assets a “carbon bubble” that may trigger another worldwide economic crisis.
“There’s serious business risk to investing in those sectors,” Kramer says, “because those assets will likely become ‘stranded.’ And the fact that this is already being tracked by Bloomberg is a sign that the issues of sustainable investing have become mainstreamed.”
We heartily recommend the full article, which fleshes out the full range of impact investing activities with unusual depth and thoroughness.
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