We have arrived at a watershed moment in US history, when the principles and practices of sustainable, responsible, and impact investing are finally becoming mainstream. The biennial report on U.S. Sustainable, Responsible, and Impact Investing Trends 2018 (the Trends Report), published by US SIF Foundation, reveals a 38% increase over two years in the assets under professional management that integrate environmental and social corporate governance (ESG) criteria. This means that currently, one in every four dollars under professional management in this country, or $12 trillion, is invested using ethical or socially responsible criteria.
Twenty years ago, SRI assets tallied just over $600 billion. The new data shows that assets have increased 18-fold since 1995—an astounding annual growth rate of nearly 14%.
The community I call home, Duluth, MN, happens to be perched on a steep hillside that runs down to the shores of the largest freshwater lake in the world, Lake Superior. There’s hardly a place in town where you can’t turn around and see the lake stretching out across the horizon. With such an expansive geographical feature nearby, it’s not surprising that people who live here share a special affinity for the lake, borne out in the names of local businesses (Lake Superior Brewing Company, Lake Superior Garden Center), local colleges (Lake Superior College), and the plethora of Lake Superior tattoos that adorn the bodies of many young locals.
Because Duluth people love Lake Superior with such fervor, we were outraged when we read about a recent study published in the peer-reviewed journal Plos One that found eight of nine tap water samples taken from all five Great Lakes, including our beloved Lake Superior, contained plastics. It was especially alarming for the significant population of beer lovers in our community to learn that scientists also found micro-plastics in all of the 12 brands of beer brewed with water drawn from the Great Lakes.
FACTFULNESS: Ten Reasons We’re Wrong About the World – and Why Things Are Better Than You Think
By Hans Rosling
Hardcover: 352 pp. Flatiron Books
The conundrum about this book is that it really should be read by those folks who never read books. You know who I’m talking about. The late Hans Rosling, who died in 2017 after an impressive career in education and public health, urges us to let the data tell the story, rather than imposing a narrative based on our “dramatic instincts.” He highlights ten ways that our instinctual bias and craving for drama, similar to our craving for sugar and lethargy, undermine our wellbeing.
I was one of several Natural Investments advisers to travel to Washington, D.C., in May to participate in a day of advocacy organized by USSIF: The Forum for Sustainable and Responsible Investment.
You may be wondering why a group of financial advisors who are on a mission to transform the world into a more equitable place would venture into the political arena. It’s a good question, and it’s one with an important answer. Right now, strategies for using investing as a tool for social change are under attack. The Security and Exchange Commission is trying to scare pension funds away from socially responsible investments by rolling back rules put in place during the Obama era. In Congress, Republicans are trying to strip
As frontrunners of the socially responsible investing movement, we at Natural Investments are “resilient investors” who are working off a radical new map of the investing universe. We invite you to navigate your own path across this vast terrain. But before we start exploring the nooks and crannies, let’s take a moment to ask the fundamental question: why invest?
Some would say this is obvious—we invest to build wealth. And what’s the point of building wealth? To be secure? To then build even more security and more wealth? Isn’t that what we all want? Well, no, at least not in the way it’s usually presented. While we take it as a given that most people want to increase their financial assets (at least up to a point) and have some nice things, traditional measurements of personal wealth are inadequate, often ignoring that which gives us the most satisfaction. Economists measure our “standard of living,” but what we’re really after is a higher “quality of life”—and while there is overlap, those two are not the same thing! The point of investing, we’d like to suggest, isn’t just about having more, but about being happy in a full, classical sense.
Let’s look back—back as far as 2500 years—for help in answering these questions. Aristotle, writing in the Nicomachean Ethics, described the point of a well-lived life, the goal we should be aiming for, as “blessedness.” For Aristotle, blessedness meant enjoying family and friends, with a deep feeling of well-being and contentment. In our day, this ideal might suggest a mature experience of knowing one’s mission, succeeding at pursuing that mission, having a solid primary relationship and close friends and family, having sufficient financial resources to live well according to your own standards, to be making a contribution and leaving a legacy one can be proud of, and staying in right relationship to the natural world that sustains life. It’s not about more—it’s about better!
We don’t think of investing as simply a professional, numbers-crunching discipline; for us it’s something much more fundamental. We believe investing should support financial goals (buy a house, start a business) and it should support the bigger and deeper and more profound purpose of a life: Aristotle’s blessedness. Investing can help each of us live a better life, and it can help improve communities and build a better world for all.
To do this, we must first break out of the confines that limit our ideas about wealth. Financial choices are just one part of a continual process of giving and receiving, balancing risk and reward, and exchanging time, energy, and money with those around you. So let’s make room for values and communities, for society and the Earth. And let’s expand our vision to include the interior realms of emotional and spiritual well-being as well, which are enduring elements of healthy human development. By doing so, we are bound to get more relevant, and more life-nourishing results.
(This article is adapted from The Resilient Investor by Hall Brill, Michael Kramer, and Christopher Peck and is part of an ongoing series in our monthly e-newsletter. Subscribe here.)
As the Natural Investments team prepares for our annual Conference on Sustainable, Responsible, Impact Investing, I find myself reflecting on how much has changed in just one year. Last year’s conference convened the day after the U.S. presidential election. Although we were all in utter shock at the outcome, the members of our SRI community quickly settled into the realization that our work as activists on issues of climate change and social justice would be critical, since it was clear that government policy would no longer be supporting our trajectory.
Sure enough, here we are today, with the Paris Climate Accord teetering on the orange ledge, with Obama’s Clean Power Plan gutted, the Standing Rock water keeper camp razed, and the fires, hurricanes, and floods of our worst nightmares. It’s depressing. But as Valarie Kaur, one of my favorite civil rights activists, suggests, “What if this darkness is not the darkness of the tomb, but the darkness of the womb? What if our America is not dead but a country that is waiting to be born?”
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.
Last fall, NI Managing Partner Michael Kramer gave a 45-minute talk at a conference in his home state of Hawaii that offers an good introduction to socially responsible investing and our variation on the theme, resilient investing. It catches Michael in a relaxed setting, and it’s recently been posted at the conference website (or click through to see it embedded below). Their teaser includes some of their favorite quotes from Michael’s talk:
“We think investors have a right to know. We want to require the disclosure of political contributions. I won’t use Verizon because I know how much money they contribute to the conservative side of the political equation… Imagine if all companies were required to disclose that publicly then you would know that and could make a decision about whether you want to own that company.” (Timecode 21:40).
“We have not fixed hardly any of the problems that caused that financial meltdown eight years ago… It is still going on because the Republicans in congress want to treat the economy like the Wild West.” (Timecode 22:20).
Victory! After seven years of delicate but persistent advocacy to the U.S. Department of Labor, one of the key policy priorities for US SIF: The Forum for Sustainable and Responsible Investment has been accomplished.
In 2008, as President Bush was running for the hills, his Department of Labor issued guidance for pension plan fiduciaries that suggested that they should not consider non-financial factors in the investment selection and management process. The guidance had a chilling effect—mission-oriented fiduciaries managing assets for foundations, universities, and public pensions interpreted the guidance as a serious limitation on their discretion to consider the environmental, social, and governance analyses that are fundamental to an SRI approach.
Thankfully, Secretary of Labor Thomas E. Perez was amenable to our advocacy.
Climate change hysteria. Tar sands and fracking. Prices for oil and gasoline on a roller coaster. What in the world is going on with fossil fuels?
I’m no expert on energy, but as a fascinated observer, it’s been increasingly dawning on me that perhaps we are seeing the beginning of the end of an era. Of course, the end of fossil fuels will probably take decades to unfold—though change can also happen with surprising speed. (Think: the ubiquitous smartphone is not even ten years old yet!)
A permanent shift towards a low-carbon economy certainly appears to be underway. A number of key forces are working in concert to fundamentally change how energy is produced and consumed in our modern economies. These include new production technologies, evolving political realities around climate change, increasing energy efficiency, and the rise of renewable energy and electric vehicles. All of these are trends that look to be with us for a long time, inexorably pushing us towards a green energy future and away from polluting fossil fuels.