Category: December 2016 – GreenMoney’s 2017 Outlook

New Report: Investors Finding Innovative Paths to Address Systemic Environmental, Social, Financial Issues

“State of the Industry” Report Finds 50 Profiled Investors with $17.3 Trillion in Assets Moving Beyond Portfolio Diversification; Identifies Ten Investor Tools for Intentional, Systems-Related Investing

A new state-of-the-industry report finds that investors are deliberately incorporating new investment approaches to help address systems-level risks and opportunities. The study indicates that investors are intentionally attempting to influence systems-level risk factors previously ignored as beyond the impact-ability of institutional investors.

The report ( identifies ten tools through which 50 major institutional investors, with some $17.3 trillion in aggregate assets, are deploying “intentional, systems-level investing.” The report also offers specific examples of investors working to impact global challenges including financial system sustainability, climate change and human rights issues.

The new study, Tipping Points 2016: Summary of 50 Asset Owners’ and Managers’ Approaches to Investing in Global Systems, examines how 28 asset owners and 22 asset managers are beginning to think about the impact of their investments and, in turn, how those investments are affected by global environmental, social and financial systems. This new systems-level thinking is additive to traditional investment scrutiny at the security and portfolio levels. Supported by the Investor Responsibility Research Center Institute (IRRCi), ( the report is authored by William Burckart, Steve Lydenberg and Jessica Ziegler with The Investment Integration Project (

Download the full report at-

“It has been more than a half century since Harry Markowitz popularized diversification and portfolio level investing, for which he later won a Nobel Prize. Since then, capital markets around the world have changed dramatically, and the global financial crisis was a game changing wake-up call. Against this dynamic backdrop, investors are evolving and realizing that global financial, environmental and social systems have major ramifications on their investments and, simultaneously, their investments have deep impacts on those systems,” said Jon Lukomnik, IRRCi executive director.

“The report illustrates the new policies and practices that investors are embedding into their business culture and investment strategies. We now have concrete evidence that investors are intentionally confronting global environmental, social and financial systems challenges in a way that makes financial sense,” Lukomnik explained.

“A lot of work is left to be done to better understand the complex relationship between systems and portfolios. But, this study demonstrates that institutional investors, whether implicitly or explicitly, understand that the world is becoming increasingly interconnected,” said report co-author William Burckart.

“Previously, investors could find ways to insulate their portfolios from certain global events. Today, even seemingly ‘local’ events can immediately and adversely affect all portfolios. Because the largest and most influential investors are recognizing this trend and beginning to consider the connection between planetary systems under stress and adversely effected portfolio performance, we are looking at a potentially critical shift in the evolution of investment,” Burckart observed.

The report highlights several investor examples in the U.S. and abroad:

PGGM, the Dutch pension fund manager, has allocated a multi-billion dollar portion of its assets to what it describes as a “solutions” portfolio focused on four issues: climate change, food, healthcare and water.

The Ireland Strategic Investment Fund invests in enterprises “in a manner designed to support economic activity and employment in Ireland.

• To contribute to the vitality of Montreal, the regionally focused Caisse de dépôt de Québec has invested in a combination of public transportation and downtown office buildings and hotels.

• The largest investor in the world, BlackRock, has created an impact division to design bespoke investment programs and has made a name for itself through its investment stewardship program which has taken a long-term, sustainability approach for all its portfolio companies.

The New York State Common Retirement System has worked with Goldman Sachs to create a low-carbon equity index fund to which it has allocated $2 billion.

The California State Teachers Retirement System has allocated $2.5 billion to an MSCI low-carbon index fund, and also has worked with the NGO Ceres to query 45 fossil fuel companies about their strategic plans under various energy/climate scenarios.

One of the most important findings of the report is the identification of ten tools through which investors express this intentionality: Utility, Additonality, Locality, Solutions, Standard Setting, Policy, Diversity of Approach, Self-Organization, Interconnectedness, Evaluations. Download the full report at-


The Investor Responsibility Research Center Institute is a nonprofit research organization that funds academic and practitioner research enabling investors, policymakers, and other stakeholders to make data-driven decisions. IRRCi research covers a wide range of topics of interest to investors, is objective, unbiased, and disseminated widely. More information is available at

The Investment Integration Project helps institutional investors understand the feedback loops between their investments and the planet’s overarching systems – be they environmental, societal or financial – that make profitable investment opportunities possible. Once this relationship is understood, TIIP provides investors with the tools to help manage the impacts of their investment policies and practices on these systems. More information is available at

Kelly Kenneally, ICCR Institute
(202) 256-1445 or

William Burckart, The Investment Integration Project
(347) 871-3984 or


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Ray C. Anderson Foundation Commits $500,000 to Project Drawdown

Amplifying Existing, Commonly Available, Scientifically Proven Climate Change Solutions

The Ray C. Anderson Foundation has awarded a $500,000 challenge grant to Project Drawdown, a global initiative based on meticulous research and subsequent traditional and online publications that analyzes how and when we can reverse global warming. As Project Drawdown is proving, the key is to amplify existing, widely practiced, commonly available, and scientifically proven solutions.

The Foundation committed the funds in April, with a challenge to Project Drawdown to raise an additional $250,000 by the end of 2016. Project Drawdown accomplished this goal in September, triggering the first of two $250,000 grants. The remainder of the pledge will be satisfied in January 2017, just a few months before publication of the Drawdown book.

“At certain crucial moments, Foundations can be presented with the opportunity to help bring into existence something that our world desperately needs,” said John A. Lanier, Executive Director of the Ray C. Anderson Foundation and a member of the Project Drawdown Board of Directors. “Our grant to Project Drawdown is one such moment. Their work is a beacon of optimism that we can indeed bring our climate back into balance.”

Drawdown is that point in time when the concentration of greenhouse gases in the atmosphere begin to decline on a year-to-year basis.

Project Drawdown describes when and how humanity can reach climate drawdown, the point at which greenhouse gas concentrations in the atmosphere begin to decline on a year-to-year basis. By mapping and modeling one hundred substantive, scalable solutions, Project Drawdown shows that it is possible for us to reverse climate change.

“The success of the global climate change movement depends on having a rigorous, detailed, and compelling path forward,” said Paul Hawken, globally recognized environmentalist and Executive Director of Project Drawdown. “We are filling a void by doing the math on the atmospheric and financial impacts of state-of-the-shelf solutions. Our findings will be communicated through an internationally published book, an open-source database, and a growing global network of partner organizations. To date, humanity has been more adept at imagining the end of civilization than its transformation, and more inclined to throw up our hands in despair or to dream of silver-bullet technologies, however unlikely.”

It was Paul Hawken’s influence through his book, The Ecology of Commerce, that in 1994 ignited the fire within Ray Anderson to transform how Interface, his carpet tile company, did business. Sustainability became both the moral obligation and the competitive advantage for the company.

“I remember asking Ray in 2004 what one change humanity needed to make to gives us a chance at a sustainable future,” said Lanier. “He answered, ‘Solve climate change.’ I am confident that Ray would have seized upon Project Drawdown as the most important research ever conducted. If he were still with us, I doubt we could get him to stop talking about this brilliant work!”

“At its core, Drawdown is a clear and detailed case of what is possible,” said Hawken. “We are counting what counts. By collectively drawing down carbon, we lift up all of life.”

While the consummation of COP21 in Paris was extraordinary given that 195 countries came together to work on climate change, a detailed description of how to achieve their goals was missing. Project Drawdown can fill that void.

In 2015, the Ray C. Anderson Foundation awarded a $100,000 grant to Project Drawdown, allowing the Drawdown Coalition members to complete the first phase of research on 70 technological, ecological and social solutions to climate change. The Foundation’s $500,000 commitment is for Phase II and delivery, which includes conducting a three-stage peer review process, and compiling the research into two primary communication tools – an internationally published book and Drawdown Interactive, a dynamic digital platform and open source database.


About the Ray C. Anderson Foundation

The Ray C. Anderson Foundation is a 501(c)(3) not-for-profit organization that seeks to promote a sustainable society by supporting and funding educational and project-based initiatives that advance knowledge and innovation in sustainability.

About Project Drawdown

Project Drawdown is a 501(c)(3) not-for-profit coalition comprised of over 200 research fellows, scientists, NGOs and advisors that is mapping, measuring and modeling the 100 most subtantive solutions to global warming and disseminating that information through a book, to schools, and governments around the world.


Valerie Bennett, communications director, Ray C. Anderson Foundation

770.317.5858 or

Audrey Neuman, communications coordinator, Project Drawdown

Additional Articles

Private Equity Players Making the Business Case for Responsible Investment – New Report from PwC

As sustainability issues force their way higher up the corporate agenda, private equity houses (general partners) are now responding to demand from investors (limited partners) for a brighter focus on environmental, social and governance (ESG) factors.

Four in 10 (41%) of 111 PE general partners surveyed by PwC in its Global PE Responsible Investment Survey would be prepared to pay a premium for a target company with robust ESG metrics. Two-fifths (40%) said poor ESG performance has seen them demand a material discount or even walk away from a deal.

However, illustrating how much progress there is still to be made only 14% said they had ever received a premium for strong ESG performance at exit, perhaps because so few -38%- regularly include ESG issues in the program for exit.

PE houses also recognize other emerging risks are on the horizon, but the challenge remains to mitigate them. For example, 85% are concerned about cyber security but only 27% are taking action. 64% were concerned about gender imbalance within PE firms – but only almost half (46%) had taken action on this issue, the survey said.

Phil Case, Private equity director at PwC said: “Private equity is changing fast. Still only a relatively youthful industry, it’s reinventing itself from a perception of ‘ ruthless’ to ‘responsible’, and from opaque to transparent. This is the evidence manifesting itself from this year’s survey of 111 General Partners from 22 countries around the world. The majority of PE houses have now made a public commitment to invest responsibly (70%) and currently have a formal responsible investment policy or will do shortly (96%). With 83% also reporting to their investors on ESG activities, little is truly ‘private’. We are observing a fundamental belief in the value that effective management of environmental, social and governance issues can bring – this is the lens through which PE houses view responsible investment.”

The approach to ESG management has moved forward at pace since PwC last surveyed the general partner community industry in 2013. European firms are more advanced in their approach to responsible investment, although Asian firms have made the biggest improvement, the survey found. Slowly, but steadily, more PE houses, especially in France, are valuing the benefits of ESG initiatives. One in five now value the impact of their ESG initiatives, an increase of almost double over the last three years Private equity firms have embraced ESG management as a core part of the deal process, with 60% now saying they always screen target companies for ESG risks and opportunities.

Case added: “Few would expect the PE community to take action on a ‘nice to have’ business case and they’d be right. There is a strong financial business case for responsible investment that’s evident throughout the deal cycle. Our results this year show more emphasis on risk management as a driver, less on investor pressure. This is not due to investor interest waning -in fact we believe it continues to grow- especially in the US. There is a focus on the value gained by managing ESG issues effectively. Investors may have been the initial driving force, but it is the business reasons for adopting ESG management principles that are maintaining the momentum. Whether it’s screening targets for those potential red flag issues that might cause fines and additional costs to rectify, or reputational damage further down the line, or for those ESG opportunities to command a higher premium at exit, effective ESG management provides the right approach to reduce risk exposure and increase investment returns.”

With the ratification of the Sustainable Development Goals (SDGs) in 2015, there will be increasing pressure on business as governments introduce new regulation and policy to help them achieve these 17 global goals that tackle major world issues.

For the first time, PwC has sought to gauge PE houses’ views on the SDGs in this survey.

Malcolm Preston, global sustainability leader at PwC, said: “A surprising proportion of PE houses are engaged and taking action to align their ESG activities to the SDGs. 44% plan to assess their impact on the SDGs, PwC’s survey found. At heart, these goals tackle business risks that stem from sustainability issues – whether it’s excessive resource consumption or a reliance on carbon intensive energy and processes or poor working practices. Government will turn to business to help them deliver these goals with those aligning to the SDGs and supporting government ambitions perhaps affording more favorable treatment than those that don’t. This engagement with SDGs and the on-going relationship with government are likely to become increasingly important for investors more broadly, including private equity firms.”


About PwC
At PwC, our purpose is to build trust in society and solve important problems. We’re a network of firms in 157 countries with more than 223,000 people who are committed to delivering quality in assurance, advisory and tax services. Find out more and tell us what matters to you by visiting us at PwC refers to the PwC network and/or one or more of its member firms, each of which is a separate legal entity. Please see structure for further details.

Source: PwC website


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Morgan Stanley and Bloomberg Survey Finds Sustainable Investing Has Entered the Mainstream

Two-thirds of asset managers polled pursue sustainable investing, with 64% believing its adoption will continue to grow.

Two-thirds of asset management professionals surveyed (65%) say that they are using sustainable investing strategies to achieve competitive market-rate financial return alongside positive social and/or environmental impact. Sixty-four percent believe its adoption will continue to grow, according to a new survey published in mid-November 2016 by the Morgan Stanley Institute for Sustainable Investing and Bloomberg L.P. The new Sustainable Signals: The Asset Manager Perspective report ( examines the practices and perspectives of asset managers on sustainable investing and offers insights and action steps for asset managers and asset owners interested in pursuing sustainable investing strategies. The survey results indicate that this surge in sustainable investing activity has been spurred by rising investor demand and media coverage, resulting in a proliferation of new products from both specialist and mainstream asset management firms.

“Sustainable investing continues to make significant inroads in the broader investment community, led by individual and institutional investor demand for products that effectively and credibly deliver both financial and social returns,” said Audrey Choi, CEO of the Morgan Stanley Institute for Sustainable Investing. “However, as the market grows, it’s imperative we empower asset owners and asset managers with information and insights that enable them to combine the best of traditional investing practices with rigorous and material environmental, social and governance considerations.”

Sustainable Investing Trends at a Glance

Among 402 individuals surveyed at U.S. asset management firms:

89% are familiar with sustainable investing

65% practice sustainable investing

64% surveyed believe its adoption will continue to grow


62% say proof of financial performance by sustainable investing products would increase firm’s commitment

55% say the field lacks credible data to inform decision making

51% are confident they can explain the non-financial impacts of sustainable investing to clients

“At Bloomberg, we see broader interest in sustainable investing approaches among asset managers, who are adopting new analytical approaches and differentiating their investment products. This shift is driven by both client demand and potential benefits for manager performance, both to manage ESG risk and identify sustainability-driven opportunities,” said Curtis Ravenel, Global Head of Sustainable Business and Finance at Bloomberg LP. “As a result, managers and analysts are definitely starting to demand more transparent and actionable information to enable better investment decision-making.”

For more information, please see Sustainable Signals: The Asset Manager Perspective here-


The Morgan Stanley Institute for Sustainable Investing
The Morgan Stanley Institute for Sustainable Investing builds scalable finance solutions that seek to deliver competitive financial returns while driving positive environmental and social impact. The Institute creates innovative financial products, thoughtful insights and capacity building programs that help maximize capital to create a more sustainable future. For more information about the Morgan Stanley Institute for Sustainable Investing, visit

Morgan Stanley
Morgan Stanley is a leading global financial services firm providing investment banking, securities, wealth management and investment management services. With offices in more than 43 countries, the Firm’s employees serve clients worldwide including corporations, governments, institutions and individuals. For further information about Morgan Stanley, please visit

Bloomberg, the global business and financial information and news leader, gives influential decision makers a critical edge by connecting them to a dynamic network of information, people and ideas. The company’s strength – delivering data, news and analytics through innovative technology, quickly and accurately – is at the core of the Bloomberg Professional service, which provides real time financial information to more than 325,000 subscribers globally. For more information, visit or request a demo.

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The Shareholder Action Guide – new book by Andrew Behar, CEO of nonprofit shareholder advocacy group As You Sow

ShareholderBookIn mid-November 2016 Andrew Behar, CEO of nonprofit shareholder advocacy group As You Sow, releases his first book, entitled “The Shareholder Action Guide.” Described by Robert Reich as “A valuable call to action for small shareholders to change the way big corporations do business,” the guide outlines how people can utilize their investments to shift corporate behavior.

More than 91 million Americans own shares of stock or are invested in mutual funds, and the vast majority of them abdicate their power to hold corporations accountable. The fact is, every public corporation holds an annual meeting and every shareholder has the right to vote on a slew of resolutions on issues that directly impact their lives and the futures of their families: a living wage, deforestation, climate change, animal rights, plastics polluting our oceans, CEO Pay, toxic chemicals in our products and foods, GMOs, fracking, human trafficking and slavery, and the list goes on. If you own even one share, you get a vote. If you own $2,000 worth of shares, you can file a resolution to directly address the board of directors.

Do you know about the priest who got Joe Camel to stop selling cigarettes to kids? What about why Steve Jobs created “A Greener Apple?” It was shareholders – like you – who used their power to make change.

Want to make misbehaving corporations mend their ways? You can! If you own even one share of their stock, corporations have to listen to you. If you have a workplace 401(k) you can have an impact.

This new book tells the story of shareholder advocacy and shows you how to use your power to hold corporations accountable.


“The Shareholder Action Guide” illustrates just how investments can translate into influence and can inform and empower shareholders to fight for a better world. Learn more at


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Eaton Vance Corp. Announces Agreement to Acquire Assets of Calvert Investment Management


Eaton Vance Corp. (NYSE:EV) announced in late October 2016 the execution of a definitive agreement to acquire the business assets of Calvert Investment Management, Inc. (Calvert), an indirect subsidiary of Ameritas Holding Company. In conjunction with the proposed acquisition, the Boards of Trustees of the Calvert mutual funds (Calvert Funds) have voted to recommend to Fund shareholders the approval of investment advisory contracts with a newly formed Eaton Vance affiliate, to operate as Calvert Research and Management, if the transaction is consummated.

Calvert is a recognized leader in responsible investing, with approximately $12.3 billion of fund and separate account assets under management as of September 30, 2016. The Calvert Funds are one of the largest and most diversified families of responsibly invested mutual funds, encompassing actively and passively managed U.S. and international equity strategies, fixed income strategies and asset allocation funds managed in accordance with the Calvert Principles for Responsible Investment. As a responsible investor, Calvert seeks to invest in companies that provide positive leadership in their business operations and overall activities that are material to improving societal outcomes.

Founded in 1976, Calvert ( has a long history in responsible investing. In 1982, the Calvert Social Investment Fund (now Calvert Balanced Portfolio) was launched as the first mutual fund to oppose investing in South Africa s apartheid system. Other Calvert innovations include the first responsibly managed fixed income and international equity funds, and pioneering programs in shareholder advocacy, corporate engagement and impact investing.

“I am extremely pleased that Eaton Vance has chosen to make Calvert the centerpiece of its expansion in responsible investing,” said John Streur, President and Chief Executive Officer of Calvert. “By combining Calvert’s expertise in sustainability research with Eaton Vance s investment capabilities and distribution strengths, we believe we can deliver best-in-class integrated management of responsible investment portfolios to investors across the U.S. and internationally. Eaton Vance is the ideal partner to help Calvert fulfill its mission to deliver superior long-term performance to clients and achieve positive impact.”

“As part of Eaton Vance, we see tremendous potential for Calvert to extend its leadership position among responsible investment managers,” said Thomas E. Faust Jr., Chairman and Chief Executive Officer of Eaton Vance. “By applying our management and distribution resources and oversight, we believe Eaton Vance can help Calvert become a meaningfully larger, better and more impactful company.”

Completion of the transaction is subject to Calvert Fund shareholder approvals of new investment advisory agreements and other closing conditions, and is expected on or about December 31, 2016. Because the transaction is structured as an asset purchase, liabilities in connection with Calvert s previously disclosed compliance matters and other pre-closing obligations will remain with the seller. Terms of the transaction are not being disclosed.

“The acquisition of Calvert provides significant potential benefits to Eaton Vance shareholders, both long-term and near-term,” said Laurie G. Hylton, Vice President and Chief Financial Officer of Eaton Vance. “Calvert is a leading brand in one of the most promising categories of investing, and we expect to help them achieve substantial growth over time. Reflecting the current profitability of acquired operations and anticipated cost savings, we also expect the transaction to be immediately accretive.”


Eaton Vance is a leading global asset manager whose history dates to 1924. With offices in North America, Europe, Asia and Australia, Eaton Vance and its affiliates managed $343.0 billion in assets as of September 30, 2016, offering individuals and institutions a broad array of investment strategies and wealth management solutions. The Company s long record of providing exemplary service, timely innovation and attractive returns through a variety of market conditions has made Eaton Vance the investment manager of choice for many of today s most discerning investors. For more information, visit

Statements in this press release that are not historical facts are forward-looking statements as defined by the United States securities laws. You should exercise caution in interpreting and relying on forward-looking statements because they are subject to uncertainties and other factors that may be beyond the Company s control and could cause actual results to differ materially from those set forth in the forward-looking statements.

Article Source: Calvert website

Additional Articles

Green Alpha Advisors Adds New Stocks to Next Economy Index

Index growth signals evolving Next Economy as companies embrace sustainable business strategies


Green Alpha ® Advisors, an asset management firm specializing in innovation-driven, fossil fuel free equity portfolios, announced in mid-November 2016 that it has added 26 new stocks to its Green Alpha Next Economy Index (GANEX).

The GANEX, established December 30, 2008, is the longest-running broad-based, fossil fuel free market index in the U.S., providing investors with a time-tested benchmark of investment performance through different market cycles. It is rebalanced annually using a modified market cap weighting system, and currently holds 104 public equity securities.

“In the past 12-18 months, we have seen an acceleration of innovation by businesses around the globe and across several sectors that have enabled us to expand the Next Economy (TM) universe,” said Green Alpha Co-Portfolio Manager Jeremy Deems. “These investments offer smart solutions that simultaneously address core systemic risks and improve economic productivity. We believe companies like these will be the greatest growth drivers of the twenty-first century.”

New stocks in GANEX include:

Codexis, Inc. (NASDAQ: CDXS): Codexis engineers enzymes for pharmaceutical and chemical production. Codexis’ technologies enable scale-up and implementation of biocatalytic solutions to optimize process development, from research to manufacturing. In Next Economy terms, Codexis provides the possibility of moving beyond petrochemicals for many crucial industrial applications.

Ormat Technologies, Inc. (NYSE: ORA): Ormat is a provider of alternative and renewable energy technology. To date the company has built over 150 power plants and installed over 2,000 MW worldwide. The firm owns and operates 697 MW of geothermal and recovered energy based power plants. While geothermal isn’t as widely distributable as wind or solar, it does have the advantage of capably supplying non-intermittent baseload power, and makes a great addition to solar and/or wind as cogen where available.

Fortinet Inc. (NASDAQ: FTNT): Fortinet is a leading provider of cyber security solutions for enterprise, service provider, and government organizations around the world. Fortinet is one of four new GANEX components that focus on cyber security. In Next Economy terms, a cyber-connected economy will improve efficiency and cyber security will be critical to ensuring the successful long-term growth of a sustainable economy.

Ameresco Inc. (NYSE: AMRC): Ameresco is an energy services business that provides energy efficiency and renewable energy solutions to businesses and institutions throughout North America and the United Kingdom. The firm’s sustainability services include upgrades to a facility’s energy infrastructure and the development, construction and operation of renewable energy plants.


About the Green Alpha Next Economy Index (GANEX)
GANEX was developed using traditional, bottom-up research paired with a compelling, macroeconomic growth thesis based on scientific, demographic and climate trends. Green Alpha begins the investment process by asking, “Does this company, in aggregate, contribute to or mitigate the systemic risks of climate change, resource scarcity or income inequality?” The resulting list of Next Economy candidates are then vetted using time-tested growth and valuation methodologies.

The GANEX is an indexed product, designed to reflect and benchmark the Next Economy. It exists to:

• Define all aspects of the Next Economy: green, self-sustaining, eco-efficient, fossil fuel free
• Demonstrate the diversity, growth, breadth and depth of the Next Economy
• Provide a universe of Next Economy companies from which to draw for actively managed portfolios
• Serve as a performance benchmark for sustainable active, public equity investment strategies

About Green Alpha Advisors, LLC

Green Alpha follows science and innovation, not the crowd. We have been redefining asset management since 2007 by investing for the Next Economy, one in which solutions to our greatest systemic risks drive economic growth and allow the economy to thrive indefinitely. We believe companies that create or enable innovative solutions to the risks of climate change, resource scarcity and widening inequality are the greatest growth drivers of the twenty-first century. Green Alpha is proud to be a certified B Corp.

Important Disclosures
This document is for informational purposes only and should not be construed as legal, tax, investment or other advice. It does not constitute an offer to sell or the solicitation of any offer to buy any security. Green Alpha is a registered trademark of Green Alpha Advisors, LLC. Please refer to for more information. We included four example securities purchased in Green Alpha Next Economy Index client accounts during October 2016. The holdings identified do not represent all of the securities purchased, sold or recommended for advisory clients. You may request a list of all recommendations made by Green Alpha Advisors in the past year by emailing a request to . It should not be assumed that the recommendations made in the past or future were or will be profitable, or will equal the performance of the securities cited as examples in this document. B Corps are for-profit companies certified by the nonprofit B Lab to meet rigorous standards of social and environmental performance, accountability, transparency and aspire to use the power of markets to solve social and environmental problems. This certification does not represent a statement of any Green Alpha client and does not describe any experience with or endorsement of Green Alpha as an investment advisor by any such client.

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Parnassus Mid Cap Fund Surpasses $1 Billion and Interview with Parnassus Investments founder Jerome Dodson


Parnassus Investments ( announced recently that the Parnassus Mid Cap Fund has surpassed $1 billion in assets, a marker of investor interest in the fund’s high-quality responsible investment strategy. The Mid Cap Fund is the third Parnassus fund to reach this important asset level.

Parnassus President and Founder Jerome L. Dodson, who served as the first portfolio manager of the Mid Cap Fund, commented on this milestone, saying, “I’m really proud of the work that [portfolio managers] Matt and Lori have done in steering the Parnassus Mid Cap Fund to $1 billion in assets. They have provided our shareholders with excellent returns.” (See an Interview with Mr. Dodson below).

The portfolio management team, Matthew D. Gershuny and Lori A. Keith, began managing the fund during the depths of the financial crisis in 2008. Over the past eight years, Mr. Gershuny and Ms. Keith have guided the portfolio using Parnassus’s long-term, high-conviction approach. The team invests in well-managed, relevant companies with compelling competitive advantages at attractive valuations. The environmental, social and governance (ESG) characteristics of each company are also scrutinized prior to investing.

Mr. Gershuny remarked, “Lori and I are thrilled that we have been entrusted with additional investor assets this year. Our goal is to compound our investors’ capital while maintaining a responsible investment profile for the Fund. We look forward to continuing to diligently work to earn the confidence of our investors.”

Both portfolio managers joined Parnassus as research interns, as is typical of other portfolio managers at Parnassus. Mr. Gershuny currently serves as the firm’s Director of Research, overseeing the research process for all investment strategies offered by the firm. Mr. Gershuny, who is the lead portfolio manager, has an undergraduate degree from Cornell University and an MBA from the University of Michigan. Ms. Keith earned her undergraduate degree from UCLA and her MBA from Harvard University. The two portfolio managers have 41 years of combined investment experience.

The Parnassus Mid Cap Fund (PARMX/PFPMX) was launched on April 29, 2005.


Why Principles and Performance? An Interview with Parnassus Investments Founder and President Jerome Dodson

When Jerome Dodson established Parnassus Investments in 1984, his mission was to create an investment company that would both express his values through responsible investing and provide good returns to shareholders. Thirty years later, ESG (environmental, social and governance) investing is widely accepted, and Parnassus is both an industry leader and the largest ESG mutual fund company in America. Jerome Dodson traces the roots of the firm and explains how Parnassus implements Principles and Performance®.


In 1984, ESG was not something that many people were talking about, but you had the foresight to see its importance. What led to your founding of Parnassus?

In the beginning, I wanted to start a fund that would be values-based. I looked at my own values and wondered if it would be possible to get enough people to invest in such a fund to make it a viable enterprise. As far as I know, there were only two socially responsible funds at that time-Calvert and PAX World-but I had experience with two other financial entities that took social factors into account.

When I was president of a small bank in San Francisco called Continental Savings, we started a program called the Solar T-Bill account that used deposits to finance solar energy. And, much to my surprise, it was a very successful program. This convinced me that if safety, liquidity and yield were comparable, people would prefer to make a positive impact. Next, I was involved in starting Working Assets Money Fund, which invested in debt securities that financed student loans, housing and solar energy. This experience further convinced me that there was a market for values-based investing.

These two personal experiences-Continental Savings and Working Assets—were my sources of inspiration for the Parnassus Funds. However, at that time, many people argued that taking social issues into account was not compatible with successful investing. In the beginning, I wasn’t even sure myself, but I was willing to give it a try.


You’ve described how Parnassus’ ESG approach was a key reason for starting the firm. Are there other aspects of the Parnassus investment process that have underpinned the firm’s success?

Our process for buying undervalued stocks has helped make Parnassus successful. From the outset, we took into account the financial screens that were first introduced by Benjamin Graham and later enhanced by Warren Buffett.

Our standards are quite rigorous; we put all our energies into finding the best 30 or 40 companies for each portfolio-those with the strongest competitive advantages. We also build models of a company to understand the range of outcomes for the business. We have to have a much higher conviction in each company in the portfolio than we would if we held more stocks. If we held 150 companies in the portfolio, it would be hard to have as much knowledge and conviction about each of the companies.

Our collaboration, which has been built over a long period of time, is an important part-but not the only part-of our success. The Graham and Dodd approach of investing in undervalued stocks is very easy to understand, but it’s very difficult to implement, for both intellectual and emotional reasons. People don’t want to buy a stock after it’s fallen down. You need to have the right temperament to buy a stock when it’s down and also have the intellectual capability to determine which stocks have gone down due to short-term factors and should be able to bounce back.


The entire research team participates in qualitative ESG evaluations of companies in five broad areas: environment, community, customers, workplace and governance. In addition, the firm screens out certain potential holdings. How were these ESG screens chosen?

Originally, the screens reflected my values, which became the firm’s values. For instance, there are industries we don’t invest in, because we think they have a negative effect on society. Alcohol, tobacco, weapons and gambling are among them. Alcohol used in moderation is not a negative, but in general alcohol has been a problem for society, which is why we chose to screen alcohol manufacturers out of our investment universe.


Do screens limit the opportunity set?

In the beginning, some people said that, ipso facto, excluding certain companies would mean we would underperform. I was a little concerned early on about whether they were right. But of course, Parnassus has had good returns. The fact that we exclude part of the universe doesn’t hurt us because there are still plenty of good companies to invest in. In fact, I think it’s helped us rather than hurt us. The track record of the Parnassus Funds, especially the Endeavor Fund, shows that.

I believe the environmental screen and the workplace screen have helped us the most over time. Companies that treat their employees well do better as businesses. Companies that reduce their waste and carefully use resources save money and are less likely to be sued or fined.


Have there been any changes in the countries that are included in the ESG screens?

Parnassus has participated in two industry-wide initiatives to avoid investing in specific countries. South Africa was initially included in the ESG screens due to racial discrimination. When the racial exclusion laws were overturned, we eliminated that screen. We later added Sudan to our screens (with the exception of humanitarian investments) because the ethnic violence in Sudan is so egregious. If this situation improves, I would love to remove the Sudan screen, but it hasn’t happened yet.

There are other countries that could be put on the exclusion list, but we would prefer to have the positive influence of business coming into these countries and improving things. So we have excluded countries in just a couple of situations.


Can you explain why Parnassus does not invest in the nuclear power industry?

If the safety issue were resolved, I would be very happy to invest in nuclear power. It is a good source of clean energy. Right now, however, there are serious safety issues with nuclear power, and it’s also very expensive, which many people don’t realize. But if the problems with safety and cost were successfully addressed, I think we would probably change our viewpoint.


Why do we have allowances for modest exposures of certain prohibited products in our portfolios?

Initially, we didn’t have any allowance for companies that produce a small amount of a prohibited product, but this prevented us from investing in good companies that were basically positive because they had an insignificant subsidiary or a small portion of their business in a prohibited area. So we decided to make allowances for very small amounts of business in these prohibited areas.


Other firms screen out industries such as animal testing, adult entertainment and family planning. Why doesn’t Parnassus?

We consider many issues that could negatively impact a company’s brand, risk and performance that are not included in our formal screens. For example, if animal testing is not used to save lives and not done in a humane way, we will avoid that company. However, we generally avoid laundry lists of excluded areas because they complicate investment decisions. We don’t explicitly prohibit adult entertainment, but I don’t think it will ever appear in our portfolios. If people want to use it, that’s an individual choice, but our company isn’t in the business of investing in adult entertainment.

With regard to family planning issues, we think it’s up to the woman to make that choice. For example, I don’t think we have invested in a contraceptive business, but I certainly have no objection to that, because it should really be up to the woman to choose.

Are you considering any new exclusionary screens? Maybe marijuana where it’s legal?

In a recent interview, I was asked about marijuana, and I said we certainly have no plans to invest in marijuana. It’s still illegal at the federal level, and I personally don’t think it’s a good idea to smoke marijuana. If it becomes a legal product and people want to smoke it, that’s fine for them. I doubt we would get into that industry, though.


How did ESG investing become so popular?

When we started the Parnassus Fund at the end of 1984, the idea was not popular at all, and our growth initially was very, very slow. At that time, many people argued that taking social issues into account was not compatible with successful investing. Then in the late nineties, people who had come of age in the sixties were starting to get some money. These baby boomers had been sensitized by the political movements of the sixties and seventies, and investor attitudes changed. ESG’s popularity became even more pronounced during the past 10 years. Now, there are literally hundreds of funds that take ESG factors into account.


What would happen if everyone started investing like Parnassus? Could our advantage be arbitraged away?

Yes, it could be. It won’t, but it could be. If everybody invested like Parnassus, there would be no premium for investing this way. But it’s unlikely that everyone’s going to invest like Parnassus, with human nature being what it is. So I don’t think that’s a danger anytime soon.

And it’s not just the ESG factors that give our funds an edge in performance. It’s also the financial factors. It’s buying undervalued stocks. It’s looking at the balance sheet. It’s looking at the income statement. It’s looking at companies that have competitive advantages. All these things are very important. So I think even if the ESG factors we use were arbitraged away, the Parnassus Funds would still have an edge.


Source – Parnassus Investments website


Featured Articles

Impact Investing in the Age of Fintech and Big Data

New impact investing platform harnesses technology, social networks, and scale to help investors, institutions and their advisors invest with purpose.

by Reggie Stanley, president and CEO of ImpactUs Reggie+Impact Logo


The term “impact investing” as it relates to private debt and equity is nearly 10 years old, it has been a rarified concept for rank-and-file investors and even many institutions and advisors. Even those committed to integrating environmental, social and governance (“ESG” or sometimes “SRI”) factors into their portfolios have been finding it easier among publicly traded offerings, yet nearly unmanageable when seeking unique thematic, place-based private alternatives. The new impact investing brokerage platform, ImpactUs Marketplace, seeks to make impact investing more accessible by navigating the cutting edge of parallel trends and movements.

There are larger movements at play right now that have many investors, both new and experienced, seeking purpose-driven investments to help create a social or environmental benefit along with a financial return. Investors are looking at environmental solutions, sustainable agriculture, microfinance, healthcare, affordable housing, and specific domestic and international communities as places where their money can make a difference. This is partly motivated by growing populist interests, emerging business solutions, and increasing numbers of young people among the ranks of the investor class who can find and make such investments due to the growing trends in financial technology and social networks to find and make such investments at scale.

The emerging network of investors building community around and through the ImpactUs Marketplace is greatly empowered by these trends. It’s our mission to use financial technology to bring more people into the impact investing world. We do so by capitalizing on concurrent and related movements that indicate increasing demand and transformative influence over our financial systems.

The Rise of Fintech

Financial technology will play a critical role in attracting more investors to the impact investing sector going forward, particularly when it comes to millennials, institutional investors and those that advise them. These important constituencies expect investment solutions that let them identify, evaluate and transact in one place, at lower costs. Women are also becoming a larger share of the investing population, and women are more likely to seek investments that align with values and make a positive impact.

And as disruptive as Fintech is proving to be to the traditional capital markets, it holds even more promise in this space because of the power of personalization and the ability to look at more details faster. A new generation of investors expects to have decision-driving data at its fingertips. ImpactUs has an important role to play in this new landscape. Our investment platform, ImpactUs Marketplace, ( provides the advanced infrastructure, connectivity, and cost-efficiencies that will allow the widest range of advisors, investors, and mission-driven institutions to connect at scale, ultimately driving more capital to mission-driven institutions.

Information, Please

I had the pleasure of appearing on a panel a few months ago at SOCAP16 discussing collaborative data. What I took away from that experience is that the community sees open data and collaboration as a clear way to enable better risk assessment, better impact measurement, and expanded market opportunity. This will empower investors, professionals, and entrepreneurs to make informed and impactful investment decisions.

Personalized investment platforms that allow users to access, select and seek purpose-driven, or values-based opportunities, are going to be what is expected by succeeding generations of users. ImpactUs has been working to grow such a platform organically. We are up and running with a group of early-adopter mission driven institutions. These are, and will increasingly be, institutions whose missions cross a range of critically important impact areas and networks of interest including affordable housing, sustainable agriculture, microfinance, education, women, and minority communities.

2017 and Beyond

We will continue to see the influence of financial technology, social networks and data-driven investment grow in scale and influence. Impact investing is increasing its share of investment capital and its bandwidth to bring additional issuers, investors and advisors to capital markets opportunities previously available to far too few.

ImpactUs is proud to be part of the vast movement that is bringing together these trends to help make impact investing accessible to all and a permanent part of people’s financial lives. As we move into 2017, we are charting a course characterized by continuous innovation that will include bringing a wide range of investors to the impact investor table, expanding product offerings and the range of impact sectors we cover, and allowing for greater searchability by impact sector and geographic location.

We are excited to be part of the impact investing community at such a challenging yet hopeful time. There is a lot of work to be done to improve our world and we are eager to harness the power of investment capital to make positive change.


Article by Reggie Stanley, president and CEO of ImpactUs . Reggie has been a key figure in impact investing for nearly two decades as a managing partner at Sustainable Growth Strategies (SGS), chief marketing officer for Calvert Investments, and a director of Calvert Foundation before joining ImpactUs. In 2009, he received the First Affirmative Financial Network SRI Service Award.

Featured Articles

Sustainable Agriculture Outlook Rooted with Millennials

by Claire Mesesan, communications manager at Iroquois Valley Farms


Claire+ Iroquois LogoFew issues capture the complex space millennials occupy better than food and farming. At a time when commodity agriculture is pervasive – regenerative, organic agriculture is experiencing a renaissance spurred on by millennials. Much has been written about millennials, a generation that occupies a peculiar place in history: the systems previous generations created and grew up with are faltering. Climate change is a reality we must address. No matter what else is said about millennials – a generation this author belongs to – one truth is that we face deep existential turmoil. In spite of current and future turbulence, millennials remain optimistic in believing that people have the power to effect change. This is abundantly clear in organic agriculture.

Organic agriculture was just agriculture in the pre-World War II period, signified by a lack of chemicals – industrialized agriculture became the way of the future in the post-war period. Our experiments in industrial agriculture led to increased corporate control of the food industry, a decline in the number of farms and farmers, and much less diversity in agriculture. By contrast, organic agriculture operates on a smaller scale, relies on crop diversity and soil management practices for pest control, therefore prioritizing environmental health.

The move to regenerative organic agriculture is a conscious choice that views growing food as values-based work. It is no surprise that organic agriculture speaks to millennials who see climate change as a reality, exacerbated by industrial agriculture that causes environmental degradation through soil erosion, water contamination and aquifer depletion. It is up to millennials to respond to the existential threat of climate change. Here is a look at how millennials are responding through food.

Farmer Age Pie
Iroquois Valley Farms works with multigenerational farmers, 72% of whom are millennials.

Millennials are leading the change toward a more organic agricultural system, with over 50 percent actively incorporating organic foods in their diet. More broadly, millennials identify sustainability as a priority in what they purchase; in fact, millennials are the most willing of any generation to spend more on items and causes that align with their values. Millennials are using their purchasing power to buy from companies they perceive as environmentally friendly, or committed to social values, or on organic products. Essentially, personal values are increasingly reflected in spending patterns. In 2014, millennials represented 36 percent of the workforce; it will be 46 percent by 2020. The millennial influence on food is evident in the increase in organic, specialty products and local, farm-to-table restaurants. With such interest in more healthy agriculture from millennials, it follows that this generation is turning to sustainable, organic, regenerative farming as a career path.

According to the USDA, the average age of a farmer is 57; additionally, estimates suggest that a quarter of American farmers will retire by 2030. There is great need for young farmers. It is encouraging that young farmers are responding, motivated by environmental awareness, interest in local and specialty foods, and market opportunities. However, young farmers face barriers to entering organic farming. In a survey of more than 1,300 farmers, the National Young Farmers Coalition identified lack of capital and land access as the top two challenges for young farmers entering the field. Iroquois Valley Farms has uniquely positioned itself as an investment vehicle to support organic farmers, especially young farmers to access land and capital, which will enable the next generation to grow food sustainably.

To understand what makes Iroquois Valley Farms unique, it is important to understand the nature of the challenges faced by organic farmers of any generation. Land access is the base of any farm operation, but secure and supportive access to land is difficult to find. Most beginning farmers must rent land, as they cannot afford to purchase land. In fact, 70 percent of farmers 30 and under will rent land while only 37 percent of farmers over 30 years old, rent land. Long-term leases are rare and landowners willing to support an organic transition (the cost of already organic land can be prohibitive) are even more rare. The typical land lease to farmers is one year, which makes the prospect of transitioning land (a three year process) to organic discouraging. Furthermore, with the aging farming population, it is estimated that 400 million acres (70 percent) of farmland will change hands by 2030. Iroquois Valley Farms saw this challenging situation as an opportunity to provide long-term land access (with the option to eventually own the land) to organic farmers. Currently, the Company owns 32 farms (over 4,400 acres), financed four farms, and operates in eleven states. Iroquois Valley Farms leases 72 percent of its farm properties to millennial farmers.

In order to support more young farmers, Iroquois Valley Farms ( developed its successful Young Farmer Land Access program, which is specifically designed to buy/mortgage land for young farmers. Organic farming skews younger than the broader farming demographic. In working with family farms, Iroquois Valley sees that often, the next generation is most likely to transition to organic. To further support farmers in such transitions, Iroquois Valley will launch their Soil Restoration Notes (coming in 2017). This new fixed income product will funnel investment capital toward supporting farmers during the three transition years. The transition period represents an especially difficult time – farmers use organic practices, but they are unable to market their crops organically. Iroquois Valley’s Soil Restoration Notes will help offset the strain of these years by providing much needed agronomic and financial support. For young organic farmers beginning their careers, access to supportive capital can make a critical difference.

Socially responsible investors should recognize organic agriculture as an important space for many reasons: the opportunity to enliven rural communities; increase access to fresh, local foods; and to support farmers regenerating soil and protecting the environment. To enable broader participation in the socially responsible investing community, Iroquois Valley Farms will transition from a Limited Liability Company (LLC) to a Real Estate Investment Trust (REIT) – this new structure is the first step for the Company’s plan to open its investment offerings beyond the world of accredited investors. In 2017, Iroquois Valley wants to create more investment opportunities for millennials to support their organic farmer peers.

Millennial investors belong to a demographic familiar with the divest/invest movement – they belong to a generation skeptical of finance, after having grown up in the Great Recession. Millennial investors are effectively leading the alternative investment movement and believe in the power of putting money, or conversely withholding money, into causes. It is evident by the focus on money in politics, called into question largely by millennial voters, that this generation believes that where money goes or comes from matters. Growing up in economic and environmental uncertainty clearly shaped the investment mindset of millennials. Iroquois Valley’s transition to a REIT structure is a strategic decision to enable millennial investors to participate in creating a more healthy and diverse agricultural system. The Company’s inclusive model allows the next generation of both organic farmers and investors to impact American agriculture in its capacity to combat climate change.


Article by Claire Mesesan, Communications Manager at Iroquois Valley Farms

Claire completed her bachelor’s degrees in Philosophy and French from Loyola University Chicago in 2014. Within philosophy, Claire gravitated toward the field of environmental ethics; this culminated in writing an independently designed thesis analyzing the socio-political and economic effects of alternative organic agriculture practices in Cuba. After graduation, Claire spent a year in Madison, WI working as an AmeriCorps Farm-to-School educator. There, she taught elementary school children about food – how it grows, who grows it, and how it gets from the farm to our table.

She is thrilled to serve as Communications Manager at Iroquois Valley Farms, where her work contributes to creating a more sustainable, just, and empowering food system. Claire resides in the Rogers Park neighborhood of Chicago where she spends her free time creating urban garden spaces and art.

Top photo: The Ambriole Family is from a multi-generational farming family, now operating their own 1,000+ acre organic farm in Indiana. Working with Iroquois Valley Farms has allowed the Ambriole family to scale up their business. – courtesy of Kim Hitzfield

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