The Responsible Investor Handbook; Mobilizing Workers’ Capital for a Sustainable World by Thomas Croft and Annie Malhotra provides a ‘how-to’ manual for workers and trustees who seek to ensure our money is working us, not against us. Buy the book from Greenlead Publishing or Amazon.
As I write this review, the US SIF Foundation released their 2016 Biennial Report on Sustainable, Responsible and Impact Investing (SRI) Trends. SRI assets now account for $8.72 trillion, or one in five dollars invested under professional management in the United States, according to the report.
Responsible Investor Handbook: Headwinds
Despite progress toward responsible investment, capital stewards still face strong headwinds, including:
- The ongoing agency separation between beneficiaries and pension managers.
- Excessive focus on short-term gains.
- A fear that responsible investing compromises financial returns.
- Lack of knowledge by consultants and trustees, and little in-house staff expertise.
- Limited worker representation on boards of trustees, unless where mandated.
Responsible Investor Handbook: Tailwinds
Croft and Malotra highlight seven drivers toward responsible investing as follows:
- The UN PRI, with 1,500 signatories, representing $60 trillion in worldwide assets.
- New guidance on ETIs and ESG from the U.S. Department of Labor.
- Hundreds of Academic reports finding responsible investment correlated with financial performance.
- Post-2008 market crash reforms, such as the Dodd-Frank Act, improving accountability to shareholders.
- Paris Agreement and similar climate change accords.
- Endorsement and leadership of labor movement through measures such as Resolution 11.
- Movements for fair, livable wages and reversing income inequality.
While it is good to know, 20% of assets are invested within at least some responsible investing framework, pension funds represent 40% of all institutional assets. The Handbook can help us ensure those who say they are investing responsibly are actually doing so AND can help double the assets so invested.
I’ve been to dozens of conferences aimed at labor leaders. Very few are really successful in providing anything more than an overview of why labor needs to get involved. The Handbook covers the “why,” but it also discusses asset classes, including alternative investments, selection and implementation of policy approaches, as well as evaluation.
The Responsible Investor Handbook is a ‘must’ read for every union official and for every union member who wants to ensure their retirement funds are building the world we and our children will want to live in.