Sustainable, Responsible, Impact Investing: Part 5

This is the fifth in a multi-part series on the main program of the 25th annual SRI Conference on Sustainable, Responsible, Impact Investing held November 9–11, 2014 at The Broadmoor in Colorado Springs. See also Video Friday: What is Sustainable, Responsible, Impact Investing?, Violating Indigenous Peoples’ Rights Increases Industry Risks, Surveys: Nonprofit Board Members & SRI 2014 Conference Attendees, 25th Annual Conference on Sustainable, Responsible, Impact Investing Part 1, Part 2, Part 3, and Part 4. The Agenda page of the Conference site now has links to video, audio and presentation slides. 

Michael Liebreich

Global Trends in Clean Energy Investment

Michael Liebreich, founder, Chairman of the Advisory Board, Bloomberg New Energy Finance

Three energy-related mega-trends are emerging which will define our energy future: cheap clean energy, unconventional oil and gas; acceleration of energy intensity reduction. We’re going through a phased state.

New investment in clean energy. Investment has dropped in the last two years. Volume of installations. Investment driven by financial and political cycles. Asia has become clean energy powerhouse, esp China and Japan. Europe has come down 50% from peak. It will take years to recover from retroactive withdrawal of support.

NEX Clean Energy Index (on Yahoo! Finance) Cleantech Crash on 60 Minutes is hopelessly out of date. NEXis  outperforming the indices. Solar PV has come down 99% since 1976. No resource constraints. Wind power costs have fallen 26% since 2009.  Price comes down 7% per year but output goes 7% as well. Clean energy costs will continue to come down. Wind under four cents per kilowatt – cheapest form of energy.

Reason for drop is price drop. Volume of investments and facilities is turning around again. Solar on rooftops is taking off. Much less expensive in Germany. We are paying 100% more than Germans. It is a transient phenomenon due to permitting difficulties and installation prices.

China is the leading country. World Health guideline 25 ppm Bejing had over 900ppm. 68% of building now is renewable. By 2030 they will begin dismantling coal power plants. 14% electric cars in Norway. Battery costs fallen 43% since 2010. By 2020 electric will be cheaper for overall operation. US surge of production of oil is up 44% since 2004. Fuel efficiency up 10% since 2004. People are also driving less. Those factors have 2x impact of cheaper oil. Huge subsidies for fossil fuels $83B defense just for the Persian Gulf and the US is now getting very little of it. 106 companies in NEX index $360B. Innovation in financing techniques in green energy. peer-to peer, solar bonds, prepaid solar, ESCO finance, etc. Green bonds raising a significant amount of money.

Distributed energy is to utilities is as social media is to newspapers.

Government and Impacting Investing

Elizabeth Littlefield

Shari Berenbach – moderating

Elizabeth Littlefield –  Overseas Private Investment Corporation, US gov to catalyze private investment. Renewable resources #1 sector priority. Grown 100 fold in 4 years. 42% is coming from public sector agencies. Addressing tools and gaps. Impact investing sector is largest part. In-between phiantrhropy and investment. Real boom in impact investment internationally. Lack of clarity of success. Lack of appreciation on expectations of return. B-corps on the agenda in Europe. Synergies. Impacting investing adopting more ESG strategies. Please do remember there is a US gov agency to help you. Supporting private investment by reducing risk and helping to create vehicles.

Annie Donovan

Anne Donavon – CoopMetrics, a social enterprise that provides Fortune 500-quality business intelligence tools to small businesses and nonprofits seeking to improve financial management, better measure social impact, and Increase their capacity for innovation. Anne was in the Obama White House on impact investing. Democratizing capital through crowdfunding. Online platform is important. Has potential.

Social impact bonds – instruments whereby private sector invests in an intervention but gov is sources of takeout if successful. Rikers Island. $10M If they hit targets the City of New York pays out money; if they don’t hit targets investors lose. Opposite of Fannie Mae. Next social impact bond in Utah. Early investors aren’t taking much of a risk. Credit enhancement bill to bring in more investors. Millennials want to work in B corps, knowing they will do some good. Encouraged with the momentum SRI name change. Our worlds are coming closer together. There is a place inside the White House thinking deeply with you about these issues.

Kathy Mulvey

Thinking Outside the Box: Innovations in Shareowner Advocacy

Kathy Mulvey – EIRIS Conflict Risk Network – grew out of Sudan divestment taskforce. Burma ongoing conflict in minority areas. ID conflict drivers – advocacy: sign-on letters of caution re lifting of sanctions, meetings with policymakers, public comment on reporting. Mobilized joint submissions to strengthen reporting requirements. State Dept didn’t take everything but did take some and appreciated. Calling on US companies to submit strongest possible reports.

Julie Goodridge – CEO of NorthStar Asset Management. First resolution was in 2000 to end predatory lending. They take a stick it to the man approach. Citizens United – What are the values companies espouse? Do their political contributions align with those espoused values? Home Depot had a brand image problem. Contributions didn’t align with company values.

Many companies have disclosed sometimes, when asked. NorthStar looked at federal election contributions, how candidates had voted. Found companies who claim to be green, pro-LGBT etc. were giving 30-60% to anti.  Companies hadn’t considered incorporating their values into their political giving. 1st approach was giving shareholders the right to weigh in on contributions (borrowing directly from the language of Citizens United). Filed at HD and other companies. Got a lot of push-back. Beginning with Intel (view proxy proposal), they asked for companies to create policies showing congruency. Intel success and put it on website. Explain annually if they made contributions incongruent.  Let’s have more proposals like this one. Make companies live up to their word or let it be known it is all hype.

I am co-filing at least one proxy NorthStar this year. I also have to giver a shout out to them for rallying several mutual funds earlier this year when my wife and I, as well as John Chevedden, were sued in court by several companies… simply for filing proxy proposals. See SRI Funds & Advisors Send Open Letters on Lawsuits Against Shareholders. We are forever grateful for your kindness and solidarity. She definitely has hero status with me. Here’s a shout out to the other fine people, funds and firms who also signed on, many of whom were at the conference..

Julie Goodridge, My Hero!

• Julie Goodridge, President and CEO, NorthStar Asset Management, Inc.
• Lauren Compere, Managing Director, Boston Common Asset Management
• Shelley Alpern, Director of Social Research & Advocacy, Clean Yield Asset Management
• Tim Smith, Director, ESG Engagement, Walden Asset Management
• Sr. Kathleen Coll, Administrator, Shareholder Advocacy, CHE/Trinity Health
• Mark A. Regier, Director of Stewardship Investing, Everence/The Praxis Mutual Funds
• Steven J. Schueth, President, First Affirmative Financial Network
• John Harrington, President and CEO, Harrington Investments, Inc.
• Michèle Solá, Director, Manhattan Country School
• Julie Fox Gorte, Senior Vice President for Sustainable Investing, Pax World Management LLC
• Laura Campos, Director of Shareholder Activities, The Nathan Cummings Foundation
• Judith Hill, Chief Financial Officer, Tides Foundation
• Benjamin Lovell, CFA President, Zevin Asset Management, LLC
• Leslie Samuelrich, President, Green Century Capital Management
• Laura Berry, Executive Director, Interfaith Center on Corporate Responsibility
• Cathy Rowan, Corporate Responsibility Coordinator, Maryknoll Sisters
• Nora M. Nash, OSF, Sisters of St. Francis of Philadelphia
• Frank Sanchez, Executive Director, The Needmor Fund
• Jonas Kron, Director of Shareholder Advocacy, Trillium Asset Management, LLC

Lisa Hayles

Lisa Hayles, Boston Common Asset Management – Financing Climate Change: Carbon Risk in the Banking Sector.

Coalition of 80 investors with $1/2T. Initially they were going to write to 50 largest banks but expanded it to 63. 34 have leads or co-leads for engagement. Sent three different letters to banks. 1st to banks that had some advance disclosure. 2. some 3. those with nothing about climate change.

No press release so far. Response has been good from quite a few banks. There has been discussion among US banks that got the letters. Look at our public disclosures. We’re interested in risk management and climate change. Risks are embedded in energy but also agriculture and other sectors.

Matt Prescott

Matt Prescott – Humane Society – Cooperative dialogue to align their customers values with the supply chain. Animal welfare important to fast food patrons. To not address could place in competitive disadvantage. Have filed lots of shareholder proposals. Last year Tyson Foods (see page 15) with Green Century re elimination of gestation crates. Also file governance proposals. Icahn advised Human Society during a bid for Tyson Board.

New kind of proposal Congratulatory proposal (or ‘laudatory resolution’ as it was termed in the proxy) – filing a proposal thanking them for their action – shareholders offering praise. Kraft Foods 2014 meeting for 2012 animal welfare actions.

Animal Welfar 3rd for Restaurant Goers

Two benefits. 1. Strengthens relationship with the company. 2. New talking point – when shareholders where asked, 76% voted approval of the latest Humane Society proxy proposal… huge support for improving animal conditions. Filed 15, mostly withdrawn upon request. Many don’t want it, say inappropriate use of proxy.

I’ve got to say, I just love this idea. I’m thinking of doing it myself. Of course, I’d be so tempted to congratulate a company for adopting majority voting requirements for directors but then castigating them for not having an independent board chair, o something undiplomatic I would guess I’d have a tougher time getting one of these, having to do with corporate governance, on the proxy… but I love the concept.

Matt also worked with Bill Gates Foundation on shifting resources to save be more efficient.  How do we get out proposals of the single digits? Investors don’t recognize community organizing model. Split opinions on disclosure issues. ISS and Glass Lewis – what will they support? Constant communications. Sometimes their recommendation to vote against is based on old proposal… they haven’t even read the one they are recommending against. Conflicts in the investment chain. (Fidelity deferred comp programs) Push-back by corporate interests influences what is perceived as a legitimate tool. Reaching out to major holders to add animal welfare to proxy voting guidelines.