Category: In this Issue

…When day comes, we step out of the shade,
aflame and unafraid,
the new dawn blooms as we free it.
For there is always light,
if only we’re brave enough to see it.
If only we’re brave enough to be it.

– Amanda Gorman, National Youth Poet Laureate
Excerpt from “The Hill We Climb” (read at the 2021 Biden inauguration)

In this issue #9 of the Socially Inspired Investor Digest and companion Podcast, we look at how – in an unlikely bi-partisan way – Congress steps up to make an unequivocal stance supporting the fight against climate change, and significantly puts up billions to also make it a meaningful action for jobs and economic recovery. Funding for renewable energy and credits to consumers could make this legislation a critical turning point.

But wait, there could be more!  In addition to re-joining the Paris Accord, President Biden is proposing more clean energy enhancements in his $1.9 trillion COVID relief proposal.  We shall see what the final bill will include but we believe many of the provisions around environmental sustainability haves a decent chance of surviving.

In our SPOTLIGHT ON section, we asked our team of industry experts to weigh in on the key take-aways from the legislation – How it helps and what is still needed.  The tie-in to job creation seems to be a critical component in building support.

But here is the point for investors.  Criteria historically used to evaluate investment options are changing. Desmond Wheatley who is featured in this month’s Podcast points out that an additional factor to consider is companies meet the “inevitability” of change.  That sounds right as we seem to be in the golden age of companies of all types publicly announcing their commitments to achieving net zero carbon.

Many companies will need to adapt or unfortunately see their relative value diminish if they cannot keep up. Portfolios should be evaluated not only on previous results but also where in the changing landscape find these companies in 10, 20, 40 years. 

The environmental provisions in the December, $900 billion stimulus bill includes $35 billion funding for renewable technology and energy efficiency.

• $4 billion for solar, wind, hydropower and geothermal research and development.
• $1.7 billion to help low-income families install renewable energy sources in their homes.
• $2.6 billion for the Energy Department’s sustainable transportation program.
• and $500 million for research on reducing industrial emissions.

It also authorizes $2.9 billion for the Advanced Research Projects Agency-Energy, a program that funds high-risk, high-reward research.¹

Welcome to 2021.  Time to freshen up those portfolios.

---

¹ https://www.washingtonpost.com/climate-solutions/2020/12/21/congress-climate-spending/

The best way to predict the future is to create it.

– Abraham Lincoln

Under the radar for many, and most recently obscured by the ravages of Covid-19, the landscape for future jobs may be dramatically improving for the long term. 

Green and sustainably oriented companies are not only delivering on their ESG mandate, but other tangible dividends are providing a shot in the arm for the American worker and the communities that sorely need new purpose. We can see now how the promise of a new infrastructure for a new age goes way beyond merely saving the planet.

According to the U.S. Bureau of Labor Statistics (9/20) two of the three fastest growing occupations projected over the next 10 years are jobs that didn’t even exist not too long ago:

#1 – Wind Turbine Service Technicians; and

#3 – Solar Photovoltaic Installers

(Nurse practitioners was #2)

Jobs like these in sustainably oriented companies now represent a powerful new resource for the middle class, with both white and blue-collar standing to benefit, mostly with good pay and benefits. And just in time, as jobs are being lost in the traditional energy sector due to technology and mechanical advancements. And investors who are lining up are winning as well.

In this issue of the Socially Inspired Investor (SII) we continue to focus on how the nature of Work and Jobs is changing. In our Podcast his month our host Pat O’Neil talks with Yana Kravtsova, Executive Vice President, Communication, Public and Environmental Affairs at Enviva LP., a leader in alternative energy producing wood pellets. Enviva is an example of a company that is providing new jobs, retraining opportunities and even conversions of old coal-based power plants. 

The Spotlight on section poses the question to leaders in the ESG Investing community, “How is the nature of work changing as companies move toward a more socially and environmentally sustainable world? “, and our Basic Investing section continues to build your foundation.

We wish you a happy and healthy New Year. 

You may not control

all the events that

happen to you

but you can decide

not to be reduced

by them

– Maya Angelou

Essentially the debate over how far and how fast we should move toward achieving global sustainability – taking the steps needed to slow down and perhaps even reverse climate change – hinges for many and most passionately on the perception of the impact on JOBS, both current and future.

Although the discussion has been framed as a zero sum or win/lose proposition – expedient to politicians – most experts agree that this is simply a false choice. Progress on green initiatives does not necessarily need to mean a mass loss of current JOBS. We thought it would be important to explore this topic with those closer to the work in this our 7^th edition of the Socially Inspired Investor. We will continue the focus on JOBS as well in the upcoming 8^th edition since the topic is rich with content and purpose.

As ESG considerations become more widely adopted, what is the realistic impact on current JOBS and future JOB opportunities? Responses from our contributing experts found in the SPOTLIGHT ON section to this question seem to agree that technology and artificial intelligence as well as post-pandemic realities have already begun the transition. 

In the accompanying PODCAST hosted by Pat O’Neill, Peter Lupoff, CEO of Net Impact tells us about how companies are already working to provide a soft landing for many of their workers while redefining the future of work. No doubt you will be surprised at some of the companies in the forefront of taking on this challenge.

Please enjoy this issue and please also pass it along to others who may have an interest in socially responsible investing.

Before the breathing air is gone

Before the sun is just a bright spot in the night-time

Out where the rivers like to run

I stand alone and take back something’ worth rememberin

– Out in the country – Three Dog Night

By now you’re probably aware of considerable ads from companies that proudly boast they are well on their way to “net zero carbon” by 2030, or 2040, or 2050, or even now are already there, or maybe claim they have always been – and some of these proclaimers may surprise you.

Challenge accepted and victory within our grasp?  We’re going to be just fine, right?

We focus our 6^th issue of the Socially Inspired Investor digest/podcast on one of the most important aspects of the Paris Climate Agreement and a founding principle of the United Nation’s sustainable development goals, the Net Zero Carbon initiative.

Carbon neutrality, or having a net zero carbon footprint, refers to achieving net zero carbon dioxide emissions by balancing carbon dioxide emissions with carbon removal – not necessarily ceasing to produce carbon dioxide entirely, but offsetting its deleterious effect on the environment with actions that will help the environment 

Can we get there? Will it work? What does it mean if we do get there? What would have to change? What is the downside? Does it mean loss of jobs? Is it bad for business or good for business? Bad for investors or good for investors? We thought it was important to shine light on all these questions as we continue to coach you through the journey of becoming a socially inspired investor.

We are happy to include for this issue two podcasts.

Co-author of the new book, “Smart Cities, Smart Future: Showcasing Tomorrow” Cornelia Levy-Bencheton describes fascinating ways some localities around the world are taking on the challenges of both reducing carbon footprint while increasing live-ability.

We also hear from Mark Campanale Founder of Carbon Tracker, a London based think-tank researching the impact of climate change on financial markets. His assessment is that the net zero carbon revolution has already achieved an unstoppable momentum.  Winners and losers are becoming easier to define.  But of course the question is will it be fast enough? 

Our Spotlight On section poses this question to experts in the field:

What is the most practical business solution with the largest potential impact in the race to net zero carbon?

As you will see, the answers seem to depend more on will and commitment, rather than the need for more funding or expanding beyond existing technology, both encouraging and surely befuddling. Please enjoy this issue of the Socially Inspired Investor digest/podcast and pass it along. When it comes to investing for the future remember it’s your money and your choice. 

I’m starting with the man in the mirror

I’m asking him to change his ways

And no message could have been clearer

If you want to make the world a better place

Take a look at yourself then make a change

– Man in the Mirror – Michael Jackson

The Socially Inspired Investor in this issue focuses on the very inspiring ways the investment community has come together to make the world a better place.

Socially inspired investing has made a difference.

Why we are finally moving in the right direction.

We know because in this, our 5th issue, we are told by the pros why they are optimistic, inspired, and more empowered than ever before – and why we should be as well.

Our Spotlight On section poses the question to leaders in the investment community, “What progress in ESG investing inspires you today?”.

Surely there is a lot of agreement. They cite changing social attitudes passionately fueled by newer generations, the recognition from authoritative sources that companies that lean toward social and environmental awareness tend to do better. And then of course there is a myriad of technologoical advancements that now allow the world to operate on a lower carbon footprint.

In our SII podcast hosted by Pat O’Neill, we hear from Mr. Georg Kell himself, a pioneer in the ESG world and author of the upcoming book Sustainable Investing: A pathway to a new horizon definitely shares his inspiration. Georg, brings to life the maturation of the socially inspired investing movement.

No doubt daunting challenges still lie ahead. But we can face them, not with exasperation from what still needs to be done, but with satisfaction from what we have been able to accomplish so far. Let’s keep the faith together.

Thank you for spending time with us and feel free to share the Socially Inspired Investor with others you think may be interested.

Every generation leaves behind a legacy. What that legacy will be is determined by the people of that generation. What legacy do you want to leave behind?

― John Lewis, Across That Bridge: A Vision for Change and the Future of America

For this issue we set out to explore the performance of investments that have been filtered for social advocacy and gender diversity, both predictably complex issues. Many in this country are struggling to find ways to advance reforms in these areas and the Socially Inspired Investor^℠ supports efforts to level opportunities for everyone. 

When it comes to diversity, we are seeing more and more evidence moving from anecdotal to scientific that companies that embrace diversity in leadership are beginning to differentiate themselves.

Harvard Business Review cites at least two studies that show women score higher than men in most leadership skills ¹. So why then does this continue to be a challenge?  These days don’t we need more competent leadership more than ever.

In the SII podcast for this issue you will hear from Eric Glass of AlianceBernstein and Patrick Drum of Saturna Capital, on the topic of Investing for Social Advocacy and Gender Diversification, with some pretty convincing stats for us to consider.

“What inspires you that ESG investing can help us make progress on social justice and gender diversification?”

We posed this question to leaders in the ESG investing community. Their responses were fascinating and enlightening. Check out the responses in our Spotlight On article. Clearly reforms are needed across virtually every segment of our society, including the investing community. 

We learn that businesses are more willing these days to use their capital and governance to contribute to real change. All efforts need be applauded. And in real definable ways, we can see this commitment will pay dividends worthy the efforts. But buyer beware.

The fervor may also cause average investors to let their guard down.  In the zest to support the critically important Black Lives Matter and other diversity goals, we also see instances that perhaps investors may be too willing to overlook the fundamentals of sound investing. Remember all investments must adhere to basic investing principles. So, we have added some more reference material to keep you sharp in our Investing Basics section. Unfortunately, some emerging trends do indicate investors may be allowing their passions to overshadow these rules. Rules are rules regardless of the passion.

Our contributors this month speak to all these questions and begin to frame for us how complex the landscape has become.  Perhaps the timing is finally right for significant change. 

Thank you for being part of the Socially Inspired Investor^SM Digest/Podcast family.  Please share this digest with others who are interested in becoming a more informed Socially Inspired Investor.

¹ HBR June 23, 2019, Jack Zenger and Joseph Folkman article  

Americans long thought that nature could take care of itself — or that if it did not, the consequences were someone else’s problem. As we know now, that assumption was wrong; none of us is a stranger to environmental problems. Industrial workers, for example, are exposed to disproportionate risks from toxic substances in their surroundings. The urban poor, many of whom have never had the chance to canoe a river or hike a mountain trail, must nevertheless endure each day the hazardous effects of lead and other pollutants in the air.

– President Jimmy Carter in a May 3, 1977 message to Congress

Hello and welcome again to the latest edition of the Socially Inspired Investor^SM.  In this edition we turn our focus to an investment option that really hasn’t been around for a long time – Green Bonds. 

According to State Street Global Advisors, “ESG considerations are becoming increasingly relevant in fixed income investment portfolios. While ESG is [now] at the top of many institutional investor’s agendas, the focus has primarily been on the equity portion of their investments; but this is changing.  Investors are now putting more thought into how to successfully embed ESG into their fixed income investments.”

This is so true. Without a doubt articles written on the subject of ESG investing today – and we read a lot of them – mostly feature equity solutions, which tend to be broad and aspirational but are only part of the solution and opportunity. Bonds – green, social, sustainable – are more targeted to address specific problems that exist today. They are also a critical component of a balanced portfolio. We have chosen this critical area to explore in this issue because of their unique applications and the dearth of objective information available to the average investor.  

When it comes to exploring the ins and outs of socially responsible investing in bonds, SII has brought together content from experts in the field. We will hear from Heather Lang, executive director, sustainable finance at Sustainalytics, a Morningstar company.   We also feature insights from Greg Hasevlat, sustainability research analyst at IMPAX Asset Management. In addition, as always, we have curated for you relevant articles you can find in our ESG in the news section.

“None of us is a stranger to environmental problems” – Pres. Carter said that over 40 years ago!

But we do see today and continue to be inspired by, the coming together of vast intellectual resources on a global scale focused on making the future better for ourselves and future generations. We should allow ourselves to be encouraged.

As investment solutions expand and mature, we become more and more inspired that the world will become a better, far more values-focused place to live. Investors are realizing that they can vote their investment dollars without having to disadvantage their return targets.

Our overall message is that we continue to be inspired, and it will take inspiration, and an ever-increasing awareness and commitment of time and treasure. 

Enjoy this issue. We hope you’ll find within it new insights.

With the new day comes strength and new thoughts

— Eleanor Roosevelt

And so it is. 

The Socially Inspired Investor (SII) now focuses our new thoughts around post-pandemic investing. If the trend continues, as we see from the articles we have curated for you at the ESG In Focus section, then for the first time, investors may be liberated from the binary choice of deciding whether to do good, according to their values, or compromising their values for investment returns.

The current strong performance of ESG oriented investments has opened the eyes of many of the titans of the investment world including Morgan Stanley, Goldman Sachs, AllianceBernstein and others. CNBC is devoting significantly more segments to ESG investing and shareholders and consumers are demanding increased accountability on a myriad of social values. Of course, defining personal values is well…very personal. Racial injustice, diversity, preferences around energy sources, cannot be just lumped together and be relevant to everyone. In future SII issues we will look to create a framework on how to “customize” your ESG.

ESG investing seems to align very well with post-pandemic investing. Similarities include more focus on technology, inclusive corporate culture, health orientation and a platform to embrace the personal values that support social interaction.

But there most certainly must be tradeoffs to consider as well. It might be that to achieve size and scale, society may have to become more comfortable with centralism, allowing for very large organizations (Amazon, Tesla, Zoom, Beyond Meat, et al) to lead the way. Of course, that could lead to the possibility of free trade manipulation, data misallocation and even enhanced cyber security exposure. Regulatory efforts clearly have not yet evolved. Becoming aware of the new risks ahead is critical as we better understand the new normal. Just something to keep in mind as we go on this journey together. We will also look to dedicate future SII editions to these risks.

The SII SPOTLIGHT ON and the SII PODCAST in this issue focus on a deep dive into the UNCDF activities and their partnership with Impact Shares, an ETF from Brookmont Management. This partnership offers an easy, affordable and accessible way for investors to invest in the ESG space, and in turn donate part of the management fees that they charge to the UNCDF. Esther Pan-Sloane, head of partnerships, policy and communications at the UNCDF and Ethan Powell Principal and CIO from Brookmont discuss their partnership. We also take a deeper look at UNCDF and Esther’s background in the SPOTLIGHT ON section as well. 

You can find more information on Impact Shares at https://impactetfs.org/sdga-etf/.   

For socially inspired investors, where investment returns are simply not enough, we hope we continue to inspire you and invite you to bring others along. Thank you for joining us on this journey.  

Come gather round people wherever you roam

And admit that the waters around you have grown

And accept it that soon you’ll be drenched to the bone

If your time to you is worth savin’, then you better start swimmin’ or you’ll sink like a stone

For the times they are a changin’ …Bob Dylan

Welcome to the first issue of The Socially Inspired Investor Digest . We couldn’t be more excited. The editors, curators and contributors hope you will find in here each month a practical approach toward socially inspired investing. If we do our job correctly, we will demonstrate that personal investing today has evolved to a point where investors can “vote their dollars” in a more personal and socially responsible way, without having to necessarily compromise investment returns.

In fact as we will come to see, a strong argument is being built by well-respected authorities that given the business risk of certain “old school” industries such as tobacco, coal and others, steering clear of these may actually enhance long term returns in a quantitative way. It’s a trend that has already impacted the way many trusts, non-profits, governmental entities invest and more recently as well, many company retirement plans.

You may be very surprised how much this has already impacted professional money management. Consider that multiple studies show that over a quarter of all professionally managed money is now screened in one way or another for socially responsible factors. According to companies like McKinsey, RBC Global Asset Management, Market Watch and Morningstar.

But yet, to the average consumer this approach may seem to be indulging personal values at the expense of returns. Not true. Study after study shows that long term performance need not be diminished if the investment approach is done properly¹. And, as we develop the appetite for this new way of investing, the financial community is now providing many options to consider.

Also, in the inaugural issue, beyond our original content, you will also find ESGID respected curated content which we believe will help you understand how others are evaluating the challenge. It is truly empowering to see the extent worldwide communities are coming together in a massive effort to align smart investing with world sustainability.

Our work is not as journeyman as you may think. For decades now the concept of socially inspired investing has been evolving and perhaps we are now at a tipping point where we can both look backward quantitatively and forward qualitatively in deciding how to invest our money. In this inaugural issue we spend some time on a topic we have named, Socially Responsible Investing Grows Up, a discussion on the ways ESG oriented investing (Environment, Social and Governance) has been evolving. We try to help you to begin to build a working knowledge so you can responsibly build a responsible, socially inspired investment strategy.

To be sure targeting socially inspired investing still requires a proper and sound investment foundation. Fundamentals of good investments must be understood and applied. The Socially Inspired Investor digest dedicates its first ever, SPOTLIGHT on our very own, Stewardship Personal Values Portfolios^SM, an asset allocation approach that also filters for areas of concern that many investors have without compromising portfolio returns.

Our mission here at the Socially Inspired Investor digest is to present practical education and insights to help our readers develop their socially inspired investment portfolio and ultimately make ESG an important part of your investment strategy. The times truly are a changing and if you so choose to challenge your investments to be both effective and socially inspired, we hope THE SOCIALLY INSPIRED INVESTOR digest and the companion podcast The Socially Inspired Investor turn out to be a great way to start.

So, is socially inspired investing smart investing? We believe it certainly can but first must be fundamentally sound. To be sure now more than ever, It’s your money and your choice. Stay with us as we continue to shepherd you through the choices to consider. It’s by no means perfect but the framework for those that desire to be socially inspired investors is rapidly developing.