1: The Securities and Exchange Commission will look at climate, as well as other ESG-related issues, in determining misconduct or mislabeling of information at fund companies. The federal agency’s move is meant to address possible greenwashing. Investment News: SEC establishes task force on ESG issues
2: The oil giant Exxon lost a historic proxy battle after a small hedge fund won three board seats, with the goal of pushing the company to address climate change. Shareholder support for environmental and social resolutions is on the rise, with significant implications for companies around the world. Barron’s: Exxon’s Shareholder Revolt is a Warning for Boards Everywhere
3: A record-setting 81% of shareholders voted for DuPont chemical company to report on plastic pellets (also known as “nurdles”), chemical spills in the ocean, and general supply chain issues. As You Sow: DuPont Shareholders Approve Proposal Calling for Plastic Pellet Pollution Reporting
4: Natural Investments advisor, Malaika Maphalala, shares her journey as a woman of color leading change in the finance world. Green Money Journal: On the Road to Gender and Racial Equity in Finance
5: The gap between workers and CEOs widened during the pandemic as public companies granted top executives some of the richest pay packages ever. NYT: Meager Rewards for Workers, Exceptionally Rich Pay for C.E.O.s
Fifty years is a long time to be active in any field. For Tim Smith, his five decade career has been defined by leadership in the socially responsible investment industry. Smith co-founded the Interfaith Center on Corporate Responsibility (ICCR), which is celebrating its 50th anniversary this year, in 1971 and served as Executive Director from 1976 to 2000. The Episcopal Church, one of its members, was the first organization to file a shareholder resolution with a corporation; the resolution to General Motors in 1971 addressed its investment in South Africa’s apartheid regime.
Federal monetary and fiscal policies buoyed the stock market during the pandemic, but they did not keep millions of American families from sliding below the poverty line. Yet daily news commentaries tracking quarterly earnings and shareholder profits have painted a rosy picture of the 2021 economic recovery. The latest plan by the Biden Administration to help economically struggling families is a step in the right direction, but the proposed measures are not enough to address the threats posed by the extreme wealth disparity in the US that began to take hold decades ago.
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.
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.
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.
Download a full PDF copy of our 2019 Social Impact Report
Intentional Growth, Deeper Commitment by Michael Kramer
2019 Overall SRI Impact
2019 Shareholder Advocacy Review
2019 Regenerative Investments
Progress on Private Prison Divestment by Kirbie Crowe
Divest, Then Reinvest by Scott Secrest
Spotlight: First Nations Oweesta by James Frazier
Spotlight: The Ujima Fund by Kate Poole
Spotlight: Ecotrust Forest Management by Malaika Maphalala
Mitigating Our Carbon Impact by Christopher Peck
Natural Investments enjoyed significant growth since the last report, with sustainable, responsible, impact (SRI) managed assets increasing by 24% to $650M. For the first time, we are using an impact data aggregation firm to delve deeper into our clients’ positive effects on the environmental, social, and governance (ESG) areas of the economy. The additional information allows us to see the bigger picture of our collective efforts, as well as understand trends in areas that are important to our clients. For example, one of the most frequent requests by clients is to avoid direct investments in extractive oil, coal, and natural gas companies, which are driving the climate crisis. In the last year, client demand for our fossil-fuel-free portfolios rose by 127%.
2019 Social Impact Report
When available, a portion of client assets are directed to so-called “regenerative investments” in the private market. Natural Investments seeks funds and companies with an elevated business model that takes into account the public good. The authenticity of the model is usually backed by language in the corporate charter or third-party certifications verifying moral conduct at all levels: people, planet, and prosperity. The objectives foster a regenerative business structure at the outset, that can then be maintained through any economic environment.
2019 Social Impact Report
$89M in regenerative investments are spread across several main categories of impact.
The Ujima Fund launched in Boston in 2017 as an outgrowth of years of organizing for racial and economic justice. Ujima, the first community-controlled loan fund in the US, has raised $1.7 million to date. Ujima is a Swahili word meaning “collective work and responsibility”. The membership of Ujima is comprised of more than 250 working-class people of color living in Boston. As members, they vote on community business standards, neighborhood investment plans, and top community needs. Each member, no matter their level of investment, has one vote. Together, members decide which black-owned cooperatives and social enterprises to invest in, as well as those owned by people of color.