Taking Inventory

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?”

Kaur’s advice: Breathe. And then push, because our future depends on it. Today, almost one year later, it has become abundantly clear that the new administration’s regressive commitment to propping up the old extractive economy has galvanized people and communities across the country into action. We saw evidence of this immediately after the elections, when a flood of new investors came to us saying, “Well, I decided I’m gonna have to do something if this president won’t”.

Forward-thinking people are using their own dollars and personal commitments to drive change. And individuals aren’t alone in taking a stand. I’m proud to live in Hawaii, which in June became the first state in the U.S. to commit to meeting the goals of the Paris Climate Accord regardless of Trump’s stated intention to pull out. Fourteen other states have since followed suit, signing on as part of the newly formed U.S. Climate Alliance (www.usclimatealliance.org), and 238 cities and more than 1700 business across the United States—including Natural Investments—are doing the same by signing onto the “We Are Still in Declaration.” (www.wearestillin.com)

These cities and businesses are taking steps to ensure that they remain on target to meet or exceed the goals set in the Paris agreement, and they are sharing both best practices and the results of their efforts. One important shared discovery is that reducing emissions does not require sacrificing economic growth. In fact, the Climate Alliance signatory states have found the opposite to be true, reporting that over the ten year period ending in 2015, “on a per capita basis, economic output in Alliance states expanded twice as fast as in the rest of the country.”

For our longtime clients, and those newly joining the fold, our field has been reporting the same. As just one prime example, take Shelton Green Alpha, one of the funds used in many of our client portfolios. Green Alpha likes to talk about investing in the “next economy”—the one that could actually support millions of people trying to climb out of poverty around the world while reversing global warming and preserving or replenishing precious natural resources. This fund, which invests only in those companies that represent direct, sustainable solutions to the risks we face today, is shining right now. One of the top performing funds in our portfolios, it has returned 23.81% as of this writing since the start of 2017, a little more than double the S&P 500’s 11.52% over the same period. (Past performance is not a guarantee of future returns.)

Interestingly, the conventional finance world has suddenly opened its eyes to sustainability, thanks to the confluence of high demand from investors for responsible investment (millennials and women are leading the charge) and the analysis of long-term research that clearly shows financial benefit from investing in responsible companies. The concept of evaluating companies for Environmental, Social, and Governance (ESG) issues has become a hot topic in the mainstream finance world, with big investment banks rolling out new products or revamping old ones to reflect what’s called “ESG Integration.”

This core strategy, developed within the SRI industry, acknowledges that not only is sustainability critical to the wellbeing of the planet, workers, and communities— there are definite risks that can have significant negative financial impact when ignored. While it’s great to see such widespread adoption of these ideas, we are seeing mainstream ESG integration being applied to every sector: coal, big oil, weapons manufacturers, and nuclear power included. Natural Investments, however, advocates for avoiding entire industries that simply won’t take us in the direction we most need to go. This is where we’ll be continuing to push: encouraging fund managers and investors to simply say no to industries that don’t provide the sustainable solutions we urgently need.



Malaika Maphalala

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