CSR 5.0. I must have missed 2.0 through 4.9… focused on corporate governance and ESG. This was my first Skytop Strategies conference (agenda) or one specifically on the topic of CSR. It was billed as presenting “the evolution of corporate social responsibility from its initial shared value paradigm to its current form. The program will track the growth of CSR as a sector, examine the multi-dimensional ways that CSR programs are implemented in corporations today, and present cutting-edge ideas that will shape the future of CSR as an industry.” CSR 5.0 lived up to its billing. Continue Reading →
Tag Archives | SRI
US SIF study documents environmental, social, and governance — ESG assets — under management surging. ESG assets now account for one in every four investment dollars. Demand for ESG asset focus is coming from real people.
In contrast, the Main Street Investors Coalition [funded by the National Association of Manufacturing (NAM)], insists on “maximizing performance ahead of pursuing social and political objectives.” If NAM gets its way, ESG assets will be cut to a trickle.
In a letter to the SEC ahead of an upcoming Staff Roundtable on the Proxy Process NAM writes,
Investment advisers should have policies and procedures in place that require the identification of a clear link to shareholder value creation before voting in favor of any proxy proposal, including those focused on ESG topics.
However, as you will read below, the public wants to move in a different direction. The public wants to invest in ESG assets – those geared toward not only making money but creating a better world.
The US SIF Foundation’s 2018 biennial Report on US Sustainable, Responsible and Impact Investing Trends, found that sustainable, responsible and impact investing, SRI assets, now account for $12.0 trillion—or one in four dollars—of the $46.6 trillion in total assets under professional management in the United States. This represents a 38 percent increase over 2016.
The Trends Report—first compiled in 1995—is the most comprehensive study of sustainable and impact investing in the United States. From the first report when assets totaled just $639 billion to today, the sustainable and responsible investing industry has grown 18-fold and has matured and expanded across numerous asset classes.
The 2018 report identified $11.6 trillion in ESG incorporation assets under management at the outset of 2018 held by 496 institutional investors, 365 money managers and 1,145 community investing financial institutions. The largest percentage of money managers cited client demand as their top motivation for pursuing ESG incorporation, while the largest number of institutional investors cited fulfilling mission and pursuing social benefit as their top motivations.
In addition, 165 institutional investors and 54 investment managers collectively controlling nearly $1.8 trillion in assets filed or co-filed shareholder resolutions on ESG issues between 2016 and the first half of 2018.
Eliminating double counting for assets involved in both ESG incorporation and filing shareholder resolutions produces the net total of $12.0 trillion in SRI strategies at the start of 2018.
Money managers and institutions are utilizing ESG criteria and shareholder engagement to address a plethora of issues including climate change, diversity, human rights, weapons and political spending,
said Lisa Woll, US SIF Foundation CEO. Additionally, retail and high net worth individuals are increasingly utilizing this investment approach with $3 trillion in sustainable assets.
Ellen Dorsey, Executive Director of the Wallace Global Fund, a leading foundation endowment that has embraced sustainable investing and supported the Trends Report since 2010, noted,
We support this research as a critical tool to track crucial trends in the industry and benchmark our own goal of 100% mission alignment, as we promote an informed and engaged citizenry, help fight injustice and protect the diversity of nature.
According to Amy O’Brien, Global Head of Responsible Investing at Nuveen, the investment management division of TIAA:
What the US SIF Trends Report shows incontrovertibly, is that investors are truly beginning to understand the value of ESG considerations as an effective means of managing risk and improving investment performance. With an intensified focus on important issues such as climate change and corporate board gender diversity, we hope to see creative solutions that will help address these challenges, and in turn, drive shareholder value in the years ahead.
Top ESG Asset Criteria
The relative prominence of specific ESG criteria differed between money managers (firms that manage assets on behalf of others) and institutional asset owners (entities like pension funds, foundations and educational endowments that own and invest assets, often via money managers).
The report breaks out the top ESG issues by types of investment vehicles, including registered investment companies, such as mutual funds and exchange traded funds (ETFs), private equity and venture capital funds, community investing institutions and others.
The report also provides detail on the top ESG criteria by each of nine types of institutions: public funds, insurance companies, educational institutions, philanthropic foundations, labor funds, hospitals and healthcare plans, faith-based institutions, other nonprofits and family offices.
Asset managers: Climate change was the most important specific ESG issue considered by money managers in asset-weighted terms; the assets to which this criterion applies more than doubled from 2016 to 2018 to $3.0 trillion. Other top ESG categories included tobacco, conflict risk, human rights, and transparency/anti-corruption. Concern among money managers and their clients about civilian firearms was also on the rise.
Asset owners: For institutional asset owners, conflict risk was the top specific ESG criteria, up 8 percent from 2016 to $3.0 trillion followed by tobacco, carbon/climate change, board issues, and executive pay.
Investor Advocacy for ESG Issues
From 2016 through the first half of 2018, 165 institutional investors and 54 investment managers collectively controlling nearly $1.8 trillion in assets at the start of 2018 filed or co-filed shareholder resolutions on ESG issues. “Proxy access” was the leading issue raised in shareholder proposals, followed by disclosure and management of corporate political spending and lobbying.
The proportion of shareholder proposals on social and environmental issues that receive high levels of support has been trending upward. During the proxy seasons of 2012-2015, only three shareholder proposals on environmental and social issues that were opposed by management received majority support, while 18 such proposals received majority support in 2016 through 2018.
In addition, the number of survey respondents that reported engaging in dialogue with companies on ESG issues increased notably since 2016.
Both the number and assets under management of registered investment companies incorporating ESG continued to grow at a strong pace. Assets in mutual funds reached $2.6 trillion, up 34 percent over 2016, and the number of ETFs more than doubled from 25 to 69.
ESG assets under management in 780 alternative investment vehicles, including private equity and venture capital funds, hedge funds, and real estate investment trusts (REITs) or other property funds, totaled $588 billion at the start of 2018. This is nearly triple the assets identified in 2016, and an 89 percent increase in the number of funds.
With assets of $185.4 billion, the community investing sector, which includes community development banks, credit unions, loan and venture funds, has experienced rapid growth over the last decade, nearly doubling in assets between 2014 and 2016, and growing more than 50 percent from 2016 to 2018.
The National Association of Manufacturing claims to have formed the Main Street Investors Coalition to ensure the individual investor’s interests are considered. Yet, money is pouring into ESG assets because more and more individuals are investing their values.
That letter from NAM to the SEC also asks that proxy proposal resubmission levels be raised from 3% of the vote in year one, 6% after two years and 10% after three to new thresholds of 6%, 15% and 30% respectively. Additionally, “NAM supports increasing the existing $2,000 threshold to a level that more appropriately reflects true ‘skin in the game’ for a shareholder sponsoring a proposal.” At least one bill in Congress aims at setting that level at 1% of the total value of the company
In summary, at a time when the public is clamoring for ESG assets and shareholder proposals to address ESG issues, NAM is calling on the SEC to:
- double or triple resubmission thresholds on proxy proposals,
- eliminate most proposals through high thresholds required for initial submissions,
- prohibit investor advisors from voting for shareholder proposal unless they have identified the proposal is clearly linked to “shareholder value creation.”
Can NAM stem the flood of ESG assets? The SEC was created to protect investors. NAM seems to be asking the SEC to protect corporate managers from investors.
The deceptive title of a recent op-ed in the Wall Street Journal would not keep politics out of the boardroom. Instead, the recommendations would deny shareholders the right to request boards disclose those politics, in addition to denying many other long-standing rights. Read the op-ed and weep that such trash gets published in the Journal.
This is my response to the 7/18/2018 op-ed “Keep Politics Out of the Boardroom” by Phil Gramm and Mike Solon. I waited before publishing this, in case WSJ chose to publish my rebuttal. They did not. Continue Reading →
NorthStar Asset Management, Inc., a Boston-based wealth management firm, announced that it has published a white paper outlining its perspective on the issue of domestic (U.S) prison labor in company supply chains, and recommending best practices for companies and investors to uncover and respond to abusive labor practices.
Prison Labor in the United States: An Investor Perspective goes into detail about how prison labor has become a critical issue related to economic inequality, racial justice, and human rights. Explained CEO Julie Goodridge, Continue Reading →
Benefit corporation governance provides increased accountability. Most of our financial capital is allocated and stewarded through a system that has a primary goal of creating financial return. This goal directs the real economy, where shareholders treat corporations as accountable for financial results, but not for their economic, social or environmental impact. Continue Reading →
Part 4 28th Annual SRI Conference in San Diego. Search #AllinForImpact on Twitter to see more posts. See Parts 1, 2, and 3. Yes, I know, this conference was held months ago but I’m still digesting… maybe until the next one. I could spend a productive year just exploring links to the work of the speakers. Mark your calendar for November 1-3, 2018. The SRI Conference returns to the Broadmoor in Colorado Springs. Get on the mailing list. Continue Reading →
SRI engagement and monitoring was a major theme during my first day at the 28th Annual SRI Conference this year (#AllinForImpact), although my 1st impressions were interrupted by the issuance of SEC SLB 14I, as previously noted. SRI has grown more than 13% a year since 1995 (when I started this blog) and now total over $8.7 trillion in assets. No longer just focused on screening or even ESG, SRI has become a mainstream investment strategy AND it holds the power to address our most pressing societal challenges in a way the public sector simply cannot. Continue Reading →
Moskowitz Prize Winner Announced
Moskowitz prize winner for 2017 was announced today by the Center for Responsible Business at the Haas School of Business, University of California, Berkeley, in collaboration with The SRI Conference (#AllinForImpact). The prize is named after research pioneer Milt Moskowitz, one of the first researchers to look for the connection between good corporate citizenship and profitability. Sustainable and responsible investing remains the focus.
Continue Reading →
The Global Sustainable Investment Alliance (GSIA) released its biennial Global Sustainable Investment Review 2016, showing that global sustainable investment assets reached $22.89 trillion at the start of 2016, a 25% increase from 2014.
Sustainable investment encompasses the following activities and strategies:
- Negative/exclusionary screening,
- Positive/best-in-class screening,
- Norms-based screening,
- Integration of ESG factors,
- Sustainability themed investing,
- Impact/community investing, and
- Corporate engagement and shareholder action.
Yet, many in the mainstream press continue to disparage sustainable investing. This morning, Justin Baer of the Wall Street Journal reported that “interest in so-called environmental, social and governance investing is surging.” (State Street Offers New Tool to Gauge Environmental, Other Social Risks) There is nothing “so-called” about the movement to ESG investing. It is real.
After making the decision to apply the principles of SRI investing, many clients embark on the initial step of selecting a core stock fund. Traditional investors have literally hundreds of highly efficient core investment solutions. However, SRI investors aren’t so blessed—which is why I put together this core list of Best SRI Funds.
Best SRI funds need to start out by being financially sustainable. Some fund companies seem to believe that they can rake in higher fees on the backs of well meaning investors. The primary objective of a core fund is to match the market with as little cost drag as possible. Continue Reading →
The Department of Labor (DOL) rescinded Interpretive Bulletin 2008-2 relating to the Exercise of Shareholder Rights and replaced it with Interpretive Bulletin 2016-01 which reinstates the language of Interpretive Bulletin 94-2 with some modifications. US SIF supports this change as IB 2008-2 was not only inconsistent with prior guidance, but may have discouraged ERISA plan fiduciaries from exercising their shareholder rights.
The guidance appropriately notes the positive role fiduciaries play through the exercise of shareholder rights. Additionally, this guidance also reinforces the language of IB 2015-1 on economically targeted investments which clarified that environmental, social and governance (ESG) impacts can be intrinsic to the market value of an investment. Continue Reading →
A lack of affordable SRI investing solutions may incentivize some savvy investors to do their own research and purchase their own portfolio of individual stocks, but this is almost always a mistake. There is power in the SRI Movement.
If you’re joining the SRI movement, it’s likely because you have a vision for our world and the economy that’s bigger than your own portfolio. To leverage the full scope of impact, you should identify ways that you can coordinate your efforts with others whose values overlap with your own. The easiest way to do this is by purchasing a SRI fund, but there are other ways to maximize your impact. Continue Reading →
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. Continue Reading →
US SIF Foundation Releases 2016 Biennial Report on UA Sustainable, Responsible and Impact Investing Trends. Sustainable, responsible and impact investing (SRI) assets now account for $8.72 trillion, or one in five dollars invested under professional management in the United States according to the US SIF Foundation’s biennial Report on Responsible and Impact Investing Trends 2016, which was released today. Continue Reading →
On September 29, 2016 Tim Smith, Walden Asset Management’s director of ESG Shareowner Engagement, will be honored at the annual event of the Interfaith Center for Corporate Responsibility (ICCR) for his decades-long, indefatigable leadership shaping the landscape of shareholder advocacy for more just and environmentally sound business policies and practices.
Tim is the first secular recipient of the ICCR Legacy Award, a recognition of his nearly quarter-century history at the helm of ICCR as well as 16 years at Walden where he continues to demonstrate daily how shareholder leverage can be an effective vehicle for positive change.
ICCR describes Tim as having had a profound impact on the field of sustainable and responsible investing, noting:
Tim plays a valuable role in virtually every ICCR program area but has been an especially effective leader of investor engagements on climate change and on governance topics including lobbying and political spending, executive compensation and separate Chair/CEO, as well as board diversity.
Marrone Bio Settles Class Action: Announcement
Marrone Bio settles class action; time to move on. Marrone Bio Innovations, Inc. (the “Company”) (NASDAQ:MBII, $MBII), a leading provider of bio-based pest management and plant health products for the agriculture, turf and ornamental and water treatment markets, recently announced the Company and other defendants, including certain of the Company’s current and former officers and directors, have reached an agreement to settle the private securities class action litigation consolidated in the U.S. District Court for the Eastern District of California on February 13, 2015 as Special Situations Fund III QP, L.P. et al v. Marrone Bio Innovations, Inc. et al, Case No 2:14-cv-02571-MCE-KJN.
The agreement is subject to review and approval by the court after notice and an opportunity to object are provided to the plaintiff class. The settlement agreement contains no admission or concession of wrongdoing or liability by the Company or any other defendant and includes a full release of claims. The agreement provides for a settlement payment to the class of $12,000,000, which will be paid by insurance carriers. Accordingly, the settlement of these lawsuits will have no adverse impact on the Company’s financial position or operations. Continue Reading →
It’s been two months since the SRI Conference in Colorado Springs but I’m still digesting content, like the potential of Folio Investing, and following up with other attendees. #AllinForImpact continues in San Francisco, Portland, Chicago, New York City, Boston and then Denver. Get to at least one of these conferences this year so you too can get inspired. The people and idea are about as progressive as I have found in the investing community. Continue Reading →
WeConvene Extel and SRI‐CONNECT announced the results of the Independent Research in Responsible Investment Survey 2015; “the most authoritative global survey evaluating how asset managers rate the services of independent providers of sustainable and responsible investment (SRI) & corporate governance (CG) research.”
Award winner from the major categories were: Continue Reading →
At the recent #AllInForImpact SRI Conference – on Sustainable, Responsible, Impact Investing I presented a “Topic Table.” These are informal gatherings of up to 10 people during lunch. Topics are submitted prior to the conference by any registrant who wishes to lead a discussion on an issue related to sustainable, responsible, impact investing. Mine was on Proxy Access and Advocacy.
I started out with a Calvin and Hobbes cartoon depicting how many people see business today… run by narcissists, producing little of real value and looking to be subsidized. Continue Reading →
All In For Impact: The 26th Annual SRI Conference will take place November 3–5, 2015 at The Broadmoor, Colorado Springs, CO. I am pleased to announce conference scholarships for SRI/ESG investing are now being made available to students and young professionals.
The SRI Conference is an annual gathering of the responsible investment industry designed to stimulate, inspire, and serve the needs of investment professionals, as well as institutional and high net worth investors who seek to direct investment capital in positive, healthy, transformative ways—toward a truly sustainable future. Continue Reading →
I hope those concerned with good corporate governance are also concerned with stewardship. Investors shouldn’t be making money by investing in products that harm the environment. Their are plenty of alternatives to plastic microbeads.
This 2-minute video “explainer” shows how tiny plastic microbeads go down the drain and into our rivers, lakes, and oceans. We can do to stop this ridiculous assault on our public waters. TAKE ACTION!
CivicSpark, a partnership of California’s Local Government Commission and the Governor’s Office of Planning & Research is an AmeriCorps program dedicated to building capacity in local governments to address climate change. They are now recruiting team members for the 2015-16 service year. Follow on Facebook and Twitter @LGC_media.
CivicSpark: Climate Leaders
If you are interested in joining the next generation of climate leaders, building your already considerable skills and creating a meaningful and lasting impact, now is the time to start the application process.
CivicSpark members work on projects that provide local governments with the support they need in their climate and sustainability initiatives. (Local governments can also propose projects at this time and volunteer support is welcome.) Continue Reading →
Now in its 26th year, the SRI Conference will be November 3-5, 2015 at The Broadmoor Hotel in Colorado Springs, Colorado and will probably be the largest ever. Leaders in the philanthropy and foundation worlds are invited to participate in the largest, longest-running annual meeting of responsible investors and investment professionals. Early-bird registration is now open. Contact Krystala Kalil at 888-774-2663 to answer your questions. Continue Reading →
I see Senator Sheldon Whitehouse (D-R.I.) and Representative Jim Langevin (D-R.I.) are again pushing legislation to add a “Corporate Responsibility Index” option to the federal government’s Thrift Savings Plan (TSP). (Federal employees miss out on sustainable investment option, The Hill, 12/12/14)
I certainly agree, federal employees should be able to direct their retirement savings into companies with socially responsible businesses practices – also known as sustainable, responsible and impact investing (SRI). Continue Reading →
This is the third 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 and Part 2. The Agenda page of the Conference site now has links to video, audio and presentation slides. Continue Reading →
Mercer is a global consulting leader in talent, health, retirement and investments. Mercer helps clients around the world advance the health, wealth and performance of their most vital asset – their people. Mercer’s 20,000 employees are based in more than 40 countries. Continue Reading →
“Green Investing” is the phrase I use to describe the process of aligning your investments with your values, social as well as environmental. Many people don’t know that they own companies in their mutual funds and retirement plans that conflict with their beliefs.
Financial advisors who specialize in this area use different terms to describe what we do: socially responsible investing, ethical investing, sustainable investing and many more. Whatever term we use, most of us would agree there are three key components of green investing: social screening, shareholder activism and community loans.
Mike Tyrrell is Editor of SRI-Connect – an online research marketplace for professional institutional investors, analysts & companies interested in sustainable development. He is keen to open up the site to corporate governance analysts & corporate governance research. Mike kindly gave permission to reproduce the interview on CorpGov.net. Continue Reading →
The September issue of Corporate Governance: An International Review is devoted to papers on corporate governance systems and corporate social responsibility. The opening editorial (accessible without subscription) begins with a civics lesson:
One cannot understand the CSR strategy and politics of organizations without understanding the nature of the institutional environments in which they choose – or are forced – to operate. Continue Reading →
Join ICGN in Cape Town, following PRI in Person, on 3-4 October for the ICGN Debate and Responsible Investing Programme, hosted by IoD in Southern Africa and endorsed by the Johannesburg Stock Exchange. Continue Reading →