Category: Spring 2012 Sustainable Business & Investing

Historic signing finalizes organic equivalence arrangement between EU and U.S.

The world’s two largest markets for organic food expand organic market access

NUREMBERG, Germany, and WASHINGTON, D.C. (Feb.15, 2012) At a press event in mid-February at BioFach Germany, European Commissioner Dacian Ciolos for the European Union’s (EU) Agriculture and Rural Development and Deputy Secretary Kathleen Merrigan of the U.S. Department of Agriculture announced the signing of an organic equivalence arrangement between the world’s two largest markets for organic food. Under the arrangement, the EU and United States will work together to promote strong organic programs, protect organic standards, enhance cooperation, and facilitate trade in organic products.

Officials noted the EU – U.S. organic equivalence cooperation arrangement will expand market access for organic producers and companies by reducing duplicative requirements and certification costs on both sides of the ocean while continuing to protect organic integrity.

“This monumental agreement will further create jobs in the already growing and healthy U.S. organic sector, spark additional market growth, and be mutually beneficial to farmers both in the United States and European Union as well as to consumers who choose organic products,” said Christine Bushway, Executive Director and CEO of the U.S.-based Organic Trade Association (OTA). She added, “Equivalence with the EU will be an historic game changer.”

As a result, certified organic products as of June 1 can move freely between the United States and EU borders provided they meet the terms of the new arrangement. Under the agreement, the EU will recognize the USDA National Organic Program (NOP) as equivalent to the EU Organic Program and allow products produced and certified as meeting USDA NOP standards to be marketed as organic in the EU. Likewise, the United States will allow European products produced and certified under the EU Organic Program to be marketed as organic in the United States.

The agreement will allow access to each other s markets provided (1) antibiotics were not administered to animals for products entering the United States, and (2) antibiotics were not used to control fire blight in apples and pears for products entering the European Union. To facilitate trade, the EU and United States have agreed to work together to promote electronic certification of import transaction certificates.

The arrangement is limited to organic products of U.S. or EU origin produced, processed or packaged within these jurisdictions. Additionally, both programs have agreed to exchange information on animal welfare issues, and on methods to avoid contamination of organic products from genetically modified organisms. General country labeling requirements must still be met.

“On behalf of the U.S. organic industry, OTA extends its sincere appreciation to the U.S. Foreign Agricultural Service (FAS), National Organic Program, the Office of the U.S. Trade Representative (USTR), and OTA’s U.S.-EU Equivalency Task Force for all their efforts in maintaining and expanding foreign export markets for USDA certified organic products globally. The results are mutually beneficial arrangements with our major trading partners that uphold the integrity of food grown and labeled as organic,” Bushway said.

OTA convened its U.S.-EU Equivalency Task Force in May 2010 to monitor, analyze and discuss emerging issues from organic equivalency discussions between the United States and EU, and directly advised FAS and USTR on the industry’s perspective on these negotiations and market potential. This task force is made up of 34 industry volunteers from across the supply chain, from produce and grain companies to dairy producers and certification agencies. It is led by OTA s Executive Vice President Laura Batcha and Jake Lewin of California Certified Organic Farmers (CCOF) as co-chairs, with Bob Anderson (Sustainable Strategies – Advisors in Food & Agriculture) serving as ex officio.

For more information, see OTA’s US EU Equivalency page [1].

The Organic Trade Association (OTA) is the membership-based business association for organic agriculture and products in North America. OTA is the leading voice for the organic trade in the United States, representing over 6,500 organic businesses across 49 states. Its members include growers, shippers, processors, certifiers, farmers’ associations, distributors, importers, exporters, consultants, retailers and others. OTA’s Board of Directors is democratically elected by its members. OTA’s mission is to promote and protect the growth of organic trade to benefit the environment, farmers, the public and the economy. Contact: Barbara Haumann ( / 802-275-3820)



Source: OTA website

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The 2012 Investor Summit on Climate Risk & Energy Solutions

AFL-CIO President Richard Trumka spoke to more than 400 leading investors at the Investor Summit on Climate Risk & Energy Solutions at the UN on January 12, 2012 and proposed hosting a dialogue on the risks of climate change and the need to move forward in a way that ensures broadly-shared prosperity and a sustainable future.

The Investor Summit on Climate Risk & Energy Solutions is co-sponsored by Ceres, the United Nations Foundation, and the United Nations Office for Partnerships.

Remarks by AFL-CIO President Richard Trumka at the UN Investor Summit on Climate Risk

Good afternoon. I am honored to be here with all of you. And thank you, Denise (Napier), for that kind introduction and all your work to protect the pensions of public employees of the state of Connecticut. I also want to express the thanks of the labor movement to Tim Wirth and the United Nations Foundation, and to Mindy Lubber and her team at CERES, not just for organizing this event, but for all you’ve done to focus investors on the opportunities for investment in addressing climate change as well as the risks of failing to address climate change.

Today, as we meet together, scientists tell us we are headed ever more swiftly toward irreversible climate change—with catastrophic consequences for human civilization. We must have a stable climate to feed the planet, to ensure there is drinking water for our cities but not floodwaters at our doors. A stable climate is the foundation of our global civilization, of our global economy—the prerequisite for a profitable investment environment.

And to those who say climate risk is a far off problem, I can tell you that I have hunted the same woods in Western Pennsylvania my entire life and climate change is happening now—I see it in the summer droughts that kill the trees, the warm winter nights when flowers bloom in January, the snows that fall less frequently and melt more quickly.

Even so, some will ask, why should investors or working people focus on climate risk when we have so many economic problems across the world? The labor movement has a clear answer: Addressing climate risk is not a distraction from solving our economic problems. My friends, addressing climate risk means retooling our world—it means that every factory and power plant, every home and office, every rail line and highway, every vehicle, locomotive and plane, every school and hospital, must be modernized, upgraded, renovated or replaced with something cleaner, more efficient, less wasteful.

Taking on the threat of climate change means putting investment capital to work creating jobs. It means building a road to a healthier world and a healthier world economy–one less dependent on volatile energy prices, one where many more of us have the things that modern energy makes possible.

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Not since World War II – 70 years ago – have we in America faced an equivalent national challenge. And working people are ready to rise to that challenge—to invest our pension capital, to put on our hard hats, to get the job done. Because this is the kind of challenge that America has always ridden toward greatness.

But today we have to face the reality that at least in the United States, we are not acting fast enough. And why is that? Why is that, when tens of millions need work, when investors have trillions in cash parked making almost nothing and the risks of doing nothing are mounting?

Here’s an important part of the answer. Too often, we have failed to consider who bears the cost of change and ensure that change is managed fairly and respectfully. And when we do that, no matter how important the reasons might seem, we sacrifice the chance to build the power to move forward. The only way for our democracy to act is for those who care about climate change to engage with the people whose livelihoods are tied up with carbon emissions. All of us—investors, companies, workers, environmental activists, governments—need to be part of this dialogue. Any other approach to addressing climate risk is not just fundamentally unfair, it simply won’t work in our democracy.

Now, this dialogue should be connected with responsible, comprehensive public policy making. It was through just such a process of dialogue that the AFL-CIO came to endorse the House Climate Bill in 2009. But it is clear that as long as Congress is effectively controlled by climate change deniers, all of us—investors, companies, workers and the broader public, must take action ourselves. So a year ago, as the climate bill failed in Congress, as the jobs crisis deepened, and as workers’ pension funds continued to suffer from microscopic fixed income yields, the American labor movement decided we couldn’t wait—we had to act to help advance profitable, risk weighted investments that would create jobs and address climate change.

We started with investment areas we knew well—the AFL-CIO’s Housing Investment Trust started investing in energy efficient retrofits of multifamily housing. And then, with the help of CERES, and then the Clinton Global Initiative, we laid out an ambitious program for investing in building retrofits, transportation, energy and educational infrastructure.

The AFL-CIO, our Building Trades Department and our affiliate the American Federation of Teachers went public with a plan at the Clinton group’s first American meeting last June. That commitment involved a labor movement pledge to work together with pension funds, money managers, experts and public officials to see that $10 billion of new capital was allocated to job creating infrastructure investment over the next five years, together with $20 million in immediate investment in energy efficient retrofits. We also pledged to retrofit our own headquarters building in Washington as an example of what could be done relatively quickly and easily.

Six months later, more than $200 million in workers’ capital has been invested in energy efficient retrofits, including a brand new partnership between the labor movement and the state of Oregon’s Cool Schools program to retrofit Oregon schools. More than $1.2 billion in workers’ pension assets have been committed to job creating infrastructure investing—with new efforts underway in New York, Oregon, and other states. I know that Jack Ehnes is here today from CALSTERS, and I want to acknowledge the leadership of CALSTERS and CALPERS, together with California Treasurer Bill Lockyer, in launching these key infrastructure initiatives. And this spring the AFL-CIO will launch our own building retrofit, complete with solar paneling.

So I’m pleased to be able to say that today, the American labor movement is in the problem solving business — looking for profitable investment opportunities that address climate risk and create jobs. We’re looking for partners, and we’re already working with many of you here today directly and indirectly to move capital to profitable and productive purposes, to step forward in addressing climate risk.

But we have learned something else important through our work this past year. By themselves, capital markets will not properly incorporate climate risk and reward into pricing investment opportunities. Climate risk in the short run is an externality—but in the long run diversified investors will bear the costs of climate change.

That’s why investors need, for our own economic reasons, government policies to make sure that critical investments get made—investments in building retrofits, in high speed rail and the smart grid, in carbon capture and sequestration. That’s what comprehensive climate legislation is about—and that’s why we as nation must return to the work of passing a climate bill.

That’s why labor and environmental organizations jointly created the Apollo Alliance and the Blue Green Alliance to focus on creating good jobs and a cleaner planet. That’s what the UN sponsored COP process, which met most recently in Durban, South Africa, is all about—and it’s another effort strongly supported by the global labor movement. That’s what efforts led by CERES at least to require disclosure by companies of the impact of climate risk is designed to address—to give the capital markets better information on a company by company basis and get prices to better reflect the realities of risk.

And so these political realities bring us back to the point about fairness and dialogue. I want to take a few minutes to give you a deeper sense of how serious a challenge the problems of fairness and dialogue are to the agenda of addressing climate risk—and then lay out a proposal to you.

First, what do I mean by unfairness? Half of the electrical power in the United States comes from coal. This has been true for years. People I grew up with dig the coal that lights the lights and heats the buildings all across this country today. The world we know exists because coal miners go down to the mines. But the carbon emissions from that coal, and from oil and natural gas, and agriculture and so much other human activity– causes global warming, and we have to act to cut those emissions, and act now.

Now, some people’s response is to demand that we end all coal production now—they say “End Coal.” Never mind that such a thing is simply not going to happen—there is no substitute now for metallurgical coal and if we stopped burning coal this afternoon and cut the power in the U.S. grid by 50 percent, as Mayor Bloomberg advocates, he’d be reading handwritten memos by candlelight this evening. Given that reality, it’s important to think about how that slogan is heard in places like my hometown of Nemacolin, Pennsylvania.

Nemacolin lives on coal—the coal mine my grandfather and my father went down to every day of their working lives, the power plant the mine feeds, the rail lines that carry coal to other plants. When these folks hear “End Coal,” it sounds like a threat to destroy the value of our homes, to shut our schools and churches, to drive us away from the place our parents and grandparents are buried, to take away the work that for more than a hundred years has made us who we are.

So why, in an economy without an effective safety net, would the good men and women of my hometown and a thousand places like it surrender their whole lives and sit by while others try to force them to bear the cost of change.

The truth is that in many places – and not just places where coal is mined – there is fear that the “green economy” will turn into another version of the radical inequality that now haunts our society—another economy that works for the 1% and not for the 99%.

So if we are going to build an innovative, sustainable, climate friendly American economy, if we are going to rebuild, restore, modernize or replace everything we inherited in just 30 years, we are going to need the energies, talents, passion and hard work of more than some regions or some Americans. No, the job we have to do is too big. We need the skill and effort of all of us. Our enemy in this great challenge, as always, is fear. Sometimes it seems like fear, and the power of money, has paralyzed our government. But the antidote to fear is trust.

So how can all Americans sit down together and develop trust? I think it begins with a commitment—a challenging and difficult commitment—that we are going to measure our approach not by how well it fits the needs of the well-positioned. We must ask ourselves, “How well does this pathway serve the least, the hardest to reach, the most likely to be left behind?” Places like West Virginia and the Ohio Valley must come first, not last.

How can this happen? Let’s think about the new EPA emissions rules for power plants. All of the unions of the AFL-CIO want to see coal fired power plants retrofitted immediately to cut back on mercury and sulfur emissions—those retrofits create good jobs, save lives. We oppose anyone who would take away the Environmental Protection Agency’s authority to keep our air and water clean. But power plant and mine workers want to know that if their employers commit to doing the retrofits, they will get the time to complete them. Surely through dialogue common ground can be found between workers who want the retrofit jobs and clean air and public health advocates.

But we need to be honest that mass unemployment makes everything harder and feeds fear. The AFL-CIO has not taken a position on the Keystone pipeline—unions don’t agree among ourselves. But we cannot have a trust building conversation about it unless opponents of the Pipeline recognize that construction jobs are real jobs, good jobs, and supporters of the Pipeline recognize that tar sands oil raises real issues in terms of climate change.

For our part, the AFL-CIO believes that honest, constructive dialogue between workers and their communities and environmental advocates, between investors and companies can forge pathways to fair and politically sustainable change—and that without it, we will not move forward. And we are ready to help lead that dialogue—to work together with others to shape a process for how we are going to address climate risk by putting America back to work, how we are going to build a smart grid and retool our vehicle fleet, catch up with our foreign competitors on high speed rail and wind and solar, retrofit coal plants and commercial buildings and modernize industry, how we are going to help communities prosper when coal plants and mines are closed, how we are going to create jobs for out of work construction workers—jobs that build America’s competitiveness, while we turn our nation’s economic future in a low carbon emissions direction.

And so I am closing with a proposal that all of us sit down together on the basis that we live on one planet, and that we share a common humanity that requires respect for each others’ families and communities.

In particular we need dialogue between environmentalists and workers and communities about the future of coal. About what the global labor movement calls a Just Transition to a low carbon emissions economy. And the AFL-CIO is ready to host that dialogue.

Addressing climate risk is the path to a competitive, profitable future for investors, but the path is only open if it is a path to an economy that works for the 99% who seek good jobs, economic security and healthy communities—not just in New York, but in Nemacolin, and in countries around the world, from Australia to Poland to South Africa to China, countries that face the same issues and share the same climate with you and me.

Thank you.

Source: AFL-CIO

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Mutual Fund Designed to Help Banks Meet Their Community Reinvestment Act Investment Exam Reaches $1 Billion in Assets

Investments have met banks’ credit and community development needs.

Community Capital Management, Inc. announced in December 2011 that its flagship fund, the Community Reinvestment Act (CRA) Qualified Investment Fund CRA Shares (Ticker: CRAIX), surpassed $1 billion in assets. This milestone demonstrates banks increasing interest in utilizing the Fund to fulfill CRA investment test requirements. The CRA was created in 1977 and mandates that banks make credit and capital available to low- and moderate-income communities.

Launched in 1999, the Fund’s CRA Shares are designed specifically for banks looking to receive positive consideration on the investment test portion of their CRA exam. Once a bank makes an investment in the CRA Shares, the Advisor confirms its targeted assessment area(s) and begins seeking CRA-qualified investments in those counties. From a financial standpoint, each bank owns a pro-rata share of the Fund whereby the risks and returns are diversified among all the shareholders. The Fund invests primarily in government-related subsectors of the bond market that support community development such as agency-backed securities and taxable municipal bonds.

The Fund currently has over 300 bank shareholders ranging from smaller community banks to larger financial institutions. As of 9/30/11, the Fund has invested approximately $3.6 billion in community development initiatives nationwide on behalf of its shareholders.

The CRA Qualified Investment Fund CRA Shares has provided solid performance throughout its history. Its 30-day SEC Yield as of November 30, 2011 is 2.81%. Over the past ten years, the SEC yield has averaged 0.68% (68 basis points) higher than the yield on the 5-year Treasury note. Its annualized total returns for the one-year, five-year, and ten-year periods were 5.28%, 5.01%, and 4.73%, respectively, as of November 30, 2011.

“The Fund allows banks the opportunity to invest in a vehicle that targets community development capital to their local markets,” said Barbara VanScoy, senior portfolio manager at Community Capital Management. “Many of these markets may be areas that banks have difficulty in reaching. We also work closely with bank examiners and our bank shareholders to ensure that the Fund’s investments are compliant with the regulations and respond to changing community development needs.”

“When we initially created the Fund, we kept the conservative nature of banks in mind,” said Todd Cohen, president and chief investment officer at Community Capital Management. “The Fund is an open-end mutual fund that provides daily liquidity, monthly dividends, and the diversification of high credit quality fixed income securities.”

About Community Capital Management, Inc. and the CRA Qualified Investment Fund

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Community Capital Management, Inc. is a Fort Lauderdale-based SEC-registered investment adviser. The firm was founded in 1998 to provide fixed income investment services to institutional investors. Its clients include public funds, foundations, financial institutions, faith-based investors, and mission-related investors. The CRA Qualified Investment Fund was launched in 1999 and has grown to include investments from more than 300 banks/thrifts and other types of investors interested in its impact investing strategy. Community Capital Management manages over $1 billion in assets and offers institutional investors its investment strategy via a separate account or a mutual fund. For more information, please visit

As of September 30, 2011, the average annual total returns of the CRA Qualified Investment Fund CRA Share Class for 1-year, 5 year, 10-year and since inception (August 30, 1999) are, respectively, 4.49%, 5.30%, 4.72% and 5.34%. Total annual operating expenses are 0.96%. The performance data quoted represents past performance. Past performance does not guarantee future results. The investment return and principal value of an investment will fluctuate so that an investor’s shares, when redeemed, may be worth more or less than their original cost and current performance may be lower or higher than the performance quoted. For performance current to the most recent month-end, please visit Investment performance reflects voluntary fee waivers that had been in effect. In the absence of such fee waivers, total return would be reduced.

Investing involves risk including the loss of principal. Bonds and bond funds are subject to interest rate risk and will decline in value as interest rates rise. The Fund is non-diversified. Carefully consider the risks, investment objectives, charges and expenses of the Fund before investing. The prospectus contains this and other important information. Call 866-202-3573 for a prospectus. Please read the prospectus carefully before investing. The CRA Qualified Investment Fund is distributed by SEI Investments Distribution Co. (SIDCO) which is not affiliated with Community Capital Management.

Source: Jamie Horwitz, Community Capital Management, Inc. phone (954) 217-7999

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Green Transition Scoreboard® to Top $3 Trillion!

Hazel Henderson, president of Ethical Markets Media, LLC, has shared Green Money Journal’s interest in the emerging green economy since she wrote The Politics of the Solar Age in 1981.

We in the USA are still mired in this “politics” with 75 members of Congress denying the realities of climate change. After the disappointing stalemate in Copenhagen in 2009, Henderson created the Green Transition Scoreboard® to counter all the mainstream and media dis-information still dominated by the incumbent fossil fuel and nuclear industries. In the Copenhagen UN Climate Summit, delegates wrangled about capping and trading carbon emissions and who was to blame. So, it seemed that the win-win strategy left on the table was simply to accelerate the shift to renewable resources.

Researchers at Climate Risk Pty in Australia have created their “Climate Solutions 2” computer model with WWF, showing that ramping up investments to $1 trillion per year until 2020 will speed the transition to the Solar Age. So, Henderson created the “barometer” icon we at Ethical Markets Media, LLC, use, and we have tracked all the private investments worldwide in green sectors since 2007 (not including nukes, coal, CCS or food and ag-based biofuels). Our 2011 total was $2.4 trillion, and we expect our update, to be released shortly, will top $3 trillion. We have recommended institutional investors shift at least 10% of their portfolios from risky hedge funds, private equity and commodity ETFs to direct green investments. Our new Green Transition Scoreboard® ( ) shows they are making those shifts!

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For more information go to– and see our latest TV Series on Transforming Finance at-

Source: Ethical Markets Media

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Evolutions of Sustainable Investing: Strategies, Funds and Thought Leadership

Edited by Cary Krosinsky, Nick Robins and Stephen Viederman

Most people would agree that we are entering a world of peak oil and rising energy prices. There are pending fresh water and food shortages in many parts of the world coupled with theoretically unsustainable yet inevitable increases in population.

We further see soaring unsustainable debt as well as the ravages of climate change anticipated by science compounded by the pending effects of warming seas and a loss of vital coral reefs. There is a similarly critical loss of biodiversity, a shortage of arable land, increasing inequity between the rich few and the many without. This is expected to lead to unrest from the many who don’t have enough for themselves and their families, or any prospects of success, happiness, enrichment, and well-being, and may well continue to struggle from a lack of the classic definition of work, in a world of increasing automation.

Yet the majority of investors do not take such things into consideration in their traditional mainstream fund management strategies.

There can be danger as well within the so-called socially responsible investment (SRI) world, whose participants can get stuck focusing on narrow issues, at times equally if not less mindful of the trends now unfolding, regardless of a general intention to invest to a set of values. These sets of values sets vary widely. As the SIF Trends report of 2010 showed,1 while trillions of dollars are invested in a “socially responsible” manner, upward of 90% of that sum has been deployed over time using unsophisticated screens that arguably miss many of these risks and perhaps are especially not well positioned to harness the radical, transformational changes in technology and society that are developing to solve these problems of sustainability.

With sustainability risks and opportunities having become a global imperative and megatrend for business (see Chapter 1), it is now critically important that asset owners, their advisors, and fund managers build a connection to this reality within their investment strategies. In the United States alone, a majority of Americans have some portion of their retirement assets tied up in mainstream strategies that do not factor in the new realities before us.

Here and throughout text, unless otherwise specified, $ are stated in U.S. dollars.


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It is critical to point out that we are talking about a positive investment strategy that we see as the way forward—one that seeks the right opportunities while being equally mindful of macro trends and emerging risks from rapidly changing planetary conditions and the soaring wave of innovation and technology unfolding in university laboratories and elsewhere that will leave traditional business models behind.

A flat investment in the S&P 500 simply won’t protect the average investor from the shifting seas. Taking a positive angle to investment and sustainability is critical—and equally critical is that this approach be adapted by the mainstream investment community to the point where this simply becomes an additional lens on top of existing practices, while the unsuccessful, negative approaches of the past are left behind.

The very good news is that large-capitalization companies aim to herald the way forward in a number of ways; such companies have clear risks now to their supply chains, and so they are already driving critical change — protecting their resources and business flows while innovating to ensure profitability. These companies are increasingly among the most efficient as well, and the correlation between the best-run companies and those being strategically mindful of their sustainability risks and opportunities is now becoming clear.

Perhaps most important, these companies are often flush with cash, well positioned with branding, and in a position to acquire innovation and bring it most efficiently and quickly to scale. These companies include those in the social media and technology spaces. A revolution is also under way to ensure that food, water, energy and other basic needs are met in a world of shrinking resources and increasing mouths to feed. Every sector is affected by these trends. The clearest risk of all is to do nothing and be left behind.
The best news of all perhaps is that markets need winners and losers in this regard as well.

The last two generations of fund managers have succeeded using strategies that have brought them great personal wealth. These strategies don’t need to change at all. What is required is an additional lens of sustainability risks and opportunities to catch the predictable surprises of the future. In fact, the trends before us are now so clear that at some point in the not too distant future, advisors and fund managers could well be considered in breach of their fiduciary duty for not considering sustainability realities, as most today do not. Thus a sea change in practice is pending, which alone would guarantee further positive change.

The last decade saw a myriad of risks that were not black swans but rather inevitabilities that could have been prevented. From Enron to WorldCom, Adelphia to Tyco International, the tech bubble to the credit crunch and its abusers, rogue traders to Bernie Madoff and Allen Stanford:

All of these variations of creative accounting, overvaluation and looking the other way could have been foretold or easily avoided. The new predictable surprises before us are clearly emerging from environmental trends that may well be unstoppable, with related affects to the human condition.

Investors can readily observe and consider the quality of management and operations, including the growing correlation between employee motivation and share price success. Innovation is harder to measure but critical to consider.

In this book we walk through the investment practices of those who believe that this sustainability megatrend has emerged already. We review practices regarding global fund managers who have factored sustainability risks and opportunities successfully into their considerations, or are in the process of converting fully in this direction.

Perhaps the most important thing we can stress is that politics needs to be fully removed from this equation. Too often, the mainstream investment community is biased toward the right, while the left is biased towards the SRI realm. There are few exceptions to this either way, with both camps potentially ignoring practical matters regarding unstoppable trends of sustainability.

Investing to one’s values is fine, if that’s what one wants to do with one’s money. Through our definition of sustainable investing, we separate the value we see in sustainability from the primarily negative screening values-based approach that tends to dominate SRI, especially in the United States.

Sustainable investing, then, sits neatly between the mainstream on the right, providing value opportunities that are sensible for any investor to pursue, and for investors on the left, who want to participate in an evolved, practical, positive perspective, that if taken to scale, can lead to the sustainable world they seek to aspire to.

Sustainable investing represents the practical center—where most investors and investment belongs. It is no different from how most political elections unwind, favoring the center, where the majority wants decisions to be taken. The same must be true for the aggregate goals of investment in general, aspiring to and protecting values of fairness, equity, and well-being while providing full incentives and opportunity, avoiding societal crash and burn in a rush to an unsustainable top.

Take a blinkered mainstream approach, without a sustainability lens, and you risk missing out on the crises that continue to affect markets globally, the clear trends toward innovation, and the companies that figure to deliver solutions going forward. Take a purely values-based approach, and you risk missing the very same practical opportunities in eco-efficiency and innovation, where the sustainability we require will come from.

The world and all of its various stakeholders need a sustainable investing dynamic to take hold, unless we are self-destructive as a species. I strongly suspect that we are not—and that the majority of the global population desires a world that is not unsustainable. As investors, then, the question arises: are we best positioned for this inevitability, much as large global corporates, governments, cities, and countries also see themselves in an active, ongoing race to be the most sustainable, productive, educated, healthy and prosperous possible?

And so let us now embark on a journey through the investors who fully integrate sustainability into their DNA, or intend to, and the metrics, data and regional considerations that are most relevant to get this right. This book in effect charts the history of SRI, while also observing the concurrent trends towards increased use of sustainability factors within investment decision making. It is exciting to witness the more positive, sustainability-minded, value-based investment philosophies, using values, coming out of the purely values-based approaches that have long predominated.

We observe the approaches of those who have been taking a more positive, opportunities-based approach successfully, and the longest, including the Jupiter Ecology Fund (Chapter 2), through others who attempt to embed these opportunities fully, including the Highwater Global Fund (Chapter 4) and Sustainable Asset Management (Chapter 6). We also observe how some of the longest U.S.-based SRI fund managers are now moving more in this direction, including Calvert (Chapter 8), and take an in-depth look at how Domini avoided BP (Chapter 7). Other long-standing fund managers who embed sustainability in North America in different ways are also discussed, including Winslow (Chapter 9), Portfolio 21 (Chapter 10), NEI Investments in Canada (Chapter 11), and Green Century (Chapter 12). European perspectives are also observed closely with looks at Pictet (Chapter 13), Aviva (Chapter 22), and Generation (Chapter 23), as well as Rory Sullivan’s attempts to fully integrate sustainability at Insight (Chapter 24). Further regional perspectives are provided with three chapters on Asia (Chapters 25–27) as well as glimpses at Canada, Australia, Africa, and India (Chapters 28–31). Macro issues are also addressed, with analysis and use of environmental metrics (Chapters 15, 16, and 37), the lack of use of sustainability criteria and why (Chapters 17 –20), and Bloomberg’s efforts in this area that attempt to bridge this gap (Chapter 21). Other macro issues include the potential for indexes (Chapter 32), private equity (Chapters 35–36), and performance (Chapter 34). Terminology is addressed at the end (Chapter 38) by Lloyd Kurtz, one of the longest-standing SRI researchers in the field.

You will also hear from many thought leaders in this book. They include those in the just-mentioned chapters as well as Roger Urwin on asset allocation considerations (Chapter 33) and noted author and entrepreneur Paul Hawken (Chapter 3). Let’s start then with Dan Esty, author of the seminal work Green to Gold, and his partner David Lubin. The consistent message is that all organizations must seek sustainability as a strategic imperative to have the best chance of future success. The same is very much now true for global investors as well.

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Riding The Wave: Impact Investing for Blended Value

By Antony Bugg-Levine and Jed Emerson

We believe today various parts of what has to date been segments of an investment spectrum are discovering a new realm of possibility.

These investors are maximizing the total value of their investments and organizations, creating a high-octane blend of economic performance and sustained environmental and social impact. Their discoveries are upending long-held and jealously guarded beliefs that profit-making and charitable activities must be kept separate in isolated silos of thinking and practice.

These are the early signs of a long-forming undercurrent that is poised to reshape how society deploys its resources and solves its problems. As Robert Kennedy famously noted, even tiny ripples can become a powerful current that sweeps aside the established order when they are multiplied and brought together. Powerful in its simplicity, the idea of impact investing for blended value—investment strategies that generate financial return while intentionally improving social and environmental conditions—is disrupting a world organized around the competing principle that for-profit investments should seek only to pursue financial return, while people who care about social problems should give away their money or wait for the government to step in. But one person’s disruption is another’s opportunity. Impact investing pioneers are jumping into these fast-flowing waters, creating new enterprises, ideas, and approaches to match the aspirations of investors and entrepreneurs eager to harness the full power of capital.

Impact Investing for Blended Value: A Definition

Impact investing recognizes investments can pursue financial returns while also intentionally addressing social and environmental challenges. Despite, or perhaps because of, this simplicity, it can seem threatening to some people. Many mainstream investors reject the idea that they should pay attention to the social impact of their investing, insisting instead that these considerations be left to governments and charities. And for their part, most traditional philanthropists and policymakers reject the idea that they should use their investments to advance their mission or businesses generating profits have a right to stand alongside philanthropy and civil society in the noble work of promoting equality and justice.

What is new is that impact investors are profoundly optimistic about the role business can play in directly advancing the common good and the leverage that social enterprises can achieve by applying financial tools. We see business practices as a powerful force that can be harnessed for good rather than a necessary evil that must be curtailed. This optimism is not ideological: we are not capitalist triumphalists, eager to spread the gospel of free market greatness to the far corners of the world. Moreover, we are not ignorant of the limits of market-based strategies for social change. But we have observed what is going on in diverse corners of an increasingly connected planet. And we cannot help but marvel at how many people in both rich and poor countries enjoy a better life because of successful profit-seeking investment.

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What’s in a Name?

The term impact investing came out of a set of discussions among a group of investors and industry pioneers in 2007. They were early investors in green technology and the first institutional investors who placed equity into microfinance funds. They had launched creative loan structures for low-income housing developers in U.S. cities and were managing public equity investments on a sustainable basis. What unified all of them was an interest in assessing the potential and real performance of their capital through more than a passive financial lens. They wanted to use their capital to do something positive.

And the terms in use did not capture fully these investors’ interest in defining investing as an active verb. Socially responsible investing and ethical investing seemed burdened with moral obligation or personal, normative judgment and—despite current practices—a history of negative screening that focused on what type of firms to avoid. Sustainable finance seemed narrowly focused on environmental concerns rather than the full array of social justice and development issues and seemed also to muffle the excitement these investors felt regarding their possibilities. And although community development finance resonated with some Americans, it did not capture the breadth of global investing in which these actors engaged, did not connect with locally focused investors outside the United States, and did not reflect the premium many place on environmental issues or investment opportunities.

Impact investing, however, evoked the optimism and action orientation of this group. The term provided a broad, rhetorical umbrella under which a wide range of investors could huddle. The microfinance investor, the green-tech venture capitalist, the low-income housing lender: all could see their affinity in a broader movement and begin to collaborate to address the similar challenges they faced. With an intentional double meaning, the term has also cast a wide net. Some impact investors are content just to make investments that directly create social and environmental impact. Others want their investments ultimately to have an impact on how all investment is conducted. The term has resonated with those investors who seek to integrate investment and philanthropy but have lacked the language to articulate it.

What is an Impact Investment?

Defining exactly what is (and what is not) an impact investment has become increasingly important as the term has taken off. And, unfortunately, many people approaching this task are still locked in old language and mind-sets. They are used to orienting themselves around financial return and therefore define impact investments as below-market-rate investments that trade off financial return for social impact. Although these investments certainly form part of the impact-investing universe, the heart of the movement is the reorientation around blended value as the organizing principle of our work: using capital to maximize total, combined value with multiple aspects of performance.

For now, the industry is coalescing around a definition that focuses on intention and the attention an investor pays to blended value returns: impact investors intend to create positive impact alongside financial return, managing and measuring the blended value they create.

What does this mean in practice?

All investments are capable of generating positive social impact, but some are closer to the action than others. Public equity investors can generate impact, for example, through a shareholder advocacy campaign and investors pursuing this approach have had meaningful impact upon some corporate practices. Indeed, virtually all the impact investors we know place a portion of their portfolio in impact-oriented public equity SRI funds. In this way, impact investing is a strategy across all asset classes. But the shortest line we can draw between our investment choices and their social impact is to place capital directly into companies and projects and make loans and private equity investments as the vehicles to do so. Therefore, the impact investing movement tends to focus on private equity and direct lending because of the unmatched power of these investments to generate social impact.
Of course, not all venture or private equity investments are impact investments, even when they seem to focus on high-potential sectors or geographies. Simply putting capital to work in a poor country does not qualify an investor as an impact investor. Funds and firms earning a seat at the impact investment table focus on strategies that intentionally seek to uplift rather than exploit poor customers and treat impact measurement as a central business management practice—not an afterthought for external reporting and marketing. Similarly, a clean energy investment that inadvertently destroys critical habitat could destroy rather than create value. These distinctions matter to impact investors who are developing strategies to allocate capital where it can generate integrated, blended value.

What is Blended Value?

If impact investing is what we do, blended value is what we produce. Value is what gets created when investors invest and organizations act to pursue their mission. All organizations, for-profit and nonprofit alike, create value that consists of economic, social, and environmental components. All investors, whether market rate, charitable, or some mix of the two, generate all three forms of value. But somehow this fundamental truth has been lost to a world that sees value as being only economic (created by for-profit companies) or social (created by nonprofit organizations or government). And most business managers, as well as investors, miss out on the opportunity to capture their total value potential by not managing for blended value on an intentional strategic basis.

The concept of blended value reintegrates our understanding of value as a non-divisible combination of these three elements. Blended value is its own distinct force to be understood, measured, and sought. It is not something we can achieve by adding up its component parts because it is more than the sum of the parts of a triple-bottom-line analysis. At the same time, blended value does not mean one loses the distinct taste and flavors of the component ingredients of value creation. It is not a blurring of these components, and the components do not lose their unique attributes and characteristics. It is not a weaving together of separate parts, but rather a recombining of core elements that, through their natural integration, transform into a new, stronger, and more nuanced organizational and capital structure. Blended value is the recognition that capital, community, and commerce can create more than their sum and is less a math exercise of zero-sum pluses and minuses than a physics equation of an expanding universe of investments in organizations, people and planet.

Devastation or Renewal? 

First taking shape out of the sustainable investing and divestment campaigns of the 1970s and 1980s, the waves of socially responsible investing have begun to alter how executives in many industries engage with customers, regulators, and society. Impact investing grew out of the conditions these waves created and has the potential to be even more disruptive. Currents can create devastation when they wash ashore, but they can also be forces for renewal. The annual flooding of the Nile Delta has brought sustenance to millions of people for centuries. And the pioneers of wave energy are turning ocean currents into a sustainable source of renewable power.

What will result from the current of impact investing? Will it undermine support for philanthropy and draw resources away from more productive investment? Will it bring the renewal and energy that enable us to tackle the seemingly impossible challenges we face? Or will it just fade as so many other currents have in the past before making much difference at all?

The answer will come from how we direct the current and prepare to harness its power. We will need to see the ripples for the mighty current they can become. Actors on both sides of the checkbook—investors and those receiving investment—need to recognize we are all part of something potentially more powerful than we can be alone. This is easy to affirm but difficult to put into practice. Many individual participants are only beginning to understand the full extent to which they share a basic set of approaches and values that unite them in this newly emerging capital market. We will be called on to take the leap of faith that supporting this new industry will serve us and the rest of the world better than preserving our small niches. We must also collectively resist the danger that impact investing will become merely a marketing tool. The resonance of the term is its greatest threat. Tempted by the good intentions of clients, institutional asset managers may co-opt the spirit of impact investing by structuring investment product that appears to create value but avoids the hard work required to generate more than just nice stories with pictures.

Ultimately, impact investing for blended value offers an integrated system of thinking and practice, springing forth in a world where a different system dominates. When systems clash, opportunities and frustrations abound. But once we realize that impact investing is a systems-building task, we can draw on the lessons from history and theory about what it has taken to secure similar change in the past. These lessons tell us that great change is possible when people unused to working together collaborate to combine existing ideas into new possibilities. They teach us we cannot change a system with persuasive analysis alone but must apply the full range of our emotional and spiritual intelligence. These lessons remind us to recognize the power systems have to mold all of us—as well as the power we each have to participate in changing them.
Impact Investing is not about bumper sticker solutions to feeding the billions or saving the planet. But you are not a passive observer of this new system. By choosing to jump in or stand back, you influence the system in which we all live. The question is not, “How can I influence the system?” The question is, “What direction will my influence take?” We all have a role to play.

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Additional Articles

The Big SRI Umbrella: Many Shades of Green

By Michael Kramer, Managing Partner & Director of Social Research at Natural Investments LLC

2012 marks the 20th anniversary of the NI Social Rating (the Rating), the nation’s first sustainable and responsible (SRI) mutual fund rating system that made its initial appearance in Investing from the Heart, the 1992 book by Natural Investments’ founder Jack Brill.

The GreenMoney Journal has featured the NI Social Rating in every issue over the last decade as an important feature of their Mutual Fund Performance Chart.

With the mainstreaming of green consumerism in American society and the growing frustration over the ethical and bottom-line failures of corporations, particularly within the financial services industry, the popularity of values-based investing continues to increase. As such, it has also spawned products from well-known global conventional fund families that own the most responsible companies in an industry or that seek out sustainability pioneers rather than entirely avoiding companies involved in objectionable industries or practices. This approach is known as Best-in-Class.

The Rise of Best-in-Class

Traditionally, SRI has been practiced by managers that exclude companies in certain target industries or companies that engage in undesirable practices. In recent years, however, more funds are taking a best-in-class approach to holdings selections or are investing in companies that commit to the path of responsibility in the environmental, social, and governance (ESG) arena. Rather than excluding entire sectors, these managers select companies within such industries that show the best track record of ESG performance. This can sometimes include companies that excel at disclosure of their practices, even if such practices are offensive. Rewarding companies for their transparency, as well as for how they compare to their industry peers, caters to the large number of investors who wish to own the whole market, and who may still believe that optimal financial return might otherwise be compromised through avoidance screens. While some funds conduct ESG analysis internally, data is widely available from social research firms such as IW Financial that ranks major companies in each sector according to both common and customizable criteria. In addition, some funds (e.g., Calvert Large Cap Value) intentionally hold oft-excluded companies for the explicit purpose of engaging them in dialogue and filing shareholder resolutions in the hopes of shifting their policies and practices towards justice and sustainability.

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Revised Ratings

The NI Social Rating is ideally based on manager self-reported information via a questionnaire which covers 55 distinct criteria in the areas of research methodology, ESG screening, shareholder advocacy, and community investing for cash positions. In some cases, fund personnel choose to not complete the questionnaire as requested, in which case prospectus information is used to determine the Rating. However, such written policies tend to lack specificity, and in many cases efforts in the areas of advocacy and community investing are excluded from the documents, so the Rating is conducted on a best-efforts basis. In the past year, several funds completed the questionnaire, which resulted in modifications to their Ratings. It is also important to note that financial performance is not part of a funds’ Rating.

New Alternatives Fund, 30 years old and one of the first green economy funds in the country, has been upgraded to a five-heart fund (the Highest Rating) given the breadth and depth of its industry-leading comprehensive screening practices. New Alternatives received 94 percent of all possible points available for ESG avoidance and affirmative screening.

Other funds saw their Ratings reduced after their practices were confirmed. Ariel Investments’ four SRI funds were reduced from three hearts to two. While this manager actively engages in corporate dialogue and shareholder resolutions, its exclusionary screens are minimal – tobacco and firearms – though it does consider some environmental, community, and diversity issues in its stock selection. The company does not engage in community investing.

Parnassus Funds saw its Rating lowered from five to four hearts, primarily because of its limited exclusionary screens. Parnassus primarily uses a best-of-class approach rather than exclusion, and includes companies in sectors such as fossil fuels and military contracting that are typically excluded from most SRI funds.

Portfolio 21, though an industry leader in its integration of ecological criteria in selecting investments, saw its Rating reduced from five to four hearts because it does not examine many factors in the areas of labor, corporate governance, community relations, or human rights issues. In addition, the company does not introduce or support shareholder resolutions.

Newer Ratings

Boston Common, a leading SRI separate account manager since 2002 which launched its International Fund in late 2010, received four hearts due to its leadership and level of activity in shareholder advocacy along with a high number of ESG criteria used in holdings selection.

Dimensional Fund Advisors is a conventional global manager that initiated its U.S. Sustainability Core, U.S. Social Core, and International Sustainability Core funds a few years ago. Though the firm declined to complete the questionnaire, they did verbally reveal their approach, which includes the exclusion of the traditional sin stock categories along with some additional exclusionary and best-in-class environmental criteria. This, combined with a lack of involvement in shareholder advocacy or community investing, resulted in a Rating of two hearts.

Schroders is another conventional global manager that has indicated that it is using ESG criteria for its five-year-old Schroder Emerging Market Equity Fund, making it the first-ever SRI emerging market fund. Historically, it has been challenging to find suitable companies or obtain verifiable ESG data in emerging market countries. Schroders, while not committing to any specific ESG criteria via prospectus or marketing material, indicates that it has a dedicated ESG team that has been integrating social research data into its analysis since 2009. The fund has no formal exclusionary screens and does not engage in community investing, though it will engage corporate management on ESG issues. The fund has been awarded one heart (the Lowest Rating).

Sustainable Asset Management (SAM), a global manager known more for its role in establishing criteria for the Dow Jones Sustainability Indexes, also runs a Sustainable Climate and Sustainable Water fund. SAM uses a best-in-class approach and no exclusionary ESG screens, and it does engage management in dialogue on ESG issues. The funds have been awarded two hearts.

Best Funds Overall

There are 55 distinct criteria in the NI Social Rating. Mutual Funds scoring in the top quintile receive five hearts and include: Calvert, Domini, Green Century, New Alternatives, Pax World, and Walden. Four-heart fund companies include Appleseed, Boston Common, Neuberger Berman, Parnassus, Portfolio 21, and Winslow.

Best Funds for ESG Criteria

Top quintile performers in the integration of environmental, social, and governance factors into holdings selection include: Calvert, Domini, Green Century, New Alternatives, Pax World, and Walden

Also Boston Common and Neuberger Berman scored well in this category.

Best Funds for Shareholder Advocacy

The shareholder advocacy score is based on level of dialogue with management and the introduction and support of others’ shareholder resolutions and public policy activity. Leaders in advocacy and public policy include: Boston Common; Calvert, Domini, Green Century, Pax World and Walden.

Other funds active in this realm are: New Alternatives, Parnassus, and Sentinel.

Best Funds for Community Investing

Broad-sector mutual funds earn points in this category based on how they allocate cash positions. Some opt to directly support community development banks, credit unions, and loan funds and others purchase bonds in low-income communities, while some own agency securities or loans.

Two premier dedicated community investment funds are CRA Qualified Investment Fund and Access Capital Community Investment Fund. Though by design they do not hold equities, these funds focus on maximizing social and environmental impact in their debt portfolios. CRA even allows major shareholders to geographically target loans. These two firms do integrate a ESG criteria in their holdings selection, but while their unique niche doesn’t warrant a high overall score, they are among the leaders in the Community Investing category, which includes: Access Capital Strategies, CRA Qualified, Domini, Pax World, and Walden.

Methodology and Laggards

There are many approaches to integrating values into financial decisions, and there are many “shades of green” in the sustainable and responsible investment industry. One reason the NI Social Rating was developed in 1992 was to help the general public distinguish those funds that do minimal avoidance screening from those that conduct comprehensive ESG integration and are involved in advocacy and community investing. While certainly any company that bases holdings selection in part on any non-financial factor should be applauded, investors should read fund literature closely to examine the specific nuances of each approach.

Though there is disagreement on the use of the best-in-class approach within the SRI industry, the Rating weights the best-in-class approach lower than the “purer” approach of avoiding problematic companies and sectors or championing sustainability leaders because companies that cause social or environmental harm should not be rewarded simply for doing less harm than their peers. Being a force for “less bad” in the world is a poor standard that has less impact than being a force for positive change. While some SRI firms intentionally hold certain objectionable companies in order to engage them in dialogue, many hold them without initiating such conversations but still want to be known as SRI funds. Funds with the lowest NI Social Rating include: Ariel, Dimensional Fund Advisors, Gabelli SRI Green Fund, Schroders Emerging Market Equity, Sustainable Asset Management.

Though numerous, the NI Social Rating does not rate funds that use religious values to determine holdings selection. Such funds use very specific criteria, so the Rating does not compare such values to the more common secular approach, even though the portfolios of such funds use some similar criteria as managers that don’t base their decisions on religious tenets.

A complete listing of the NI Social Rating of domestic SRI funds and more information on our methodology can be found at

Article by Michael Kramer, M.Ed., AIF® is Managing Partner and Director of Social Research at Natural Investments LLC, an investment advisor registered with the SEC that has been exclusively devoted to sustainable and responsible investing since 1985. Specific funds and fund companies mentioned in this article are provided for informational purposes only andtheir inclusion is not to be construed as investment advice.

Featured Articles

Investing Deposits for a Sustainable Economy

By Vincent Siciliano, President and CEO, New Resource Bank

Do you know where your money spends the night?

We’ve been asking that question in a variety of venues, and it typically produces a strong (often visible) response of intrigued uneasiness. Many people are familiar with the concept of socially responsible investing applied to stocks and mutual funds. While far fewer think of it in terms of their bank deposit accounts, these accounts also are funding business activities that they may—or may not—support. My focus is not on the customer service issues and acceptance of bailout funds that have largely driven the “move your money”campaign, but on the fact that financial institutions lend out deposited funds to advance all kinds of activities and operations. At the nation’s largest banks that means savings, checking, money market and CD accounts support not only businesses that sustainability-minded depositors might like, but also dirty energy, environmentally unfriendly development, toxic industrial operations and other unsustainable business ventures. Money is a store of value—and values

Money represents our stake in the economic system. It represents who we are as economic beings. If you think about it like that, is your money something that’s divorced from the rest of your being, or is it one expression of who you are, along with being a citizen, having a family and other aspects of your identity? Can you split off one aspect of yourself to operate in valueless isolation? Our society often asks us to do just this with our money. The economic world follows a set of rules that are sterile and without values. But why would we have values at home or at our business and not have values when we go out to buy products or choose a bank or order a meal? We don’t have to acquiesce to this notion of valueless money; it’s a specific cultural perspective, not a law of nature. We can retake control of our money. We can look at the system and say “I want to use my money in a way that promotes a better place to live.”

How New Resource Bank invests for a better world

Greening streetlights

New Resource provided the capital that San Francisco–based streetlight retrofitter Tanko Streetlighting needed to expand to more than 200 cities in eight states. Instead of replacing aging streetlights with newer models, Tanko Streetlighting retrofits existing fixtures to provide energy-efficient lighting. Municipalities save money two ways: the retrofits cost much less than replacements, and ongoing utility bills are lower. Contributing to a sustainable food culture

New Resource Bank has substantial expertise in financing for organic food businesses, with clients that include Straus Family Creamery, 18 Rabbits, Cowgirl Creamery, and Veritable Vegetable. Also here are a few additional clients and how we’ve work with them: We provided financing for Oakland, California-based Blue Bottle Coffee’s expansion to New York, where four new venues will add up to 45 new jobs. Buying from organic farms is a priority for Blue Bottle: 85 percent of Blue Bottle’s coffee suppliers are certified organic; the rest are small farmers who can’t afford the certification process. Blue Bottle coffee beans are stored in bags lined with eco-friendly polylactic acid (PLA) instead of plastic. And the company makes good use of its space: six beehives thrive on the roof of its headquarters.

A line of credit and banking services from New Resource helped Andean Naturals capture 33 percent of the U.S. market for quinoa with a product that’s 100 percent organic and moving toward 100 percent fair trade. The company, with offices in Foster City, California, and La Paz, Bolivia, buys directly from local farm cooperatives and processors in South America, paying them an 8 percent premium for meeting its Royal Quinoa cultivation guidelines. Hog Island Oyster Co. started out with a sustainable farming operation on California’s Tomales Bay producing oysters, Manila clams and mussels. New Resource helped the company open oyster bars and broaden its sustainability approach by greening its 401(k) program and switching to a green credit card processor. Supporting local manufacturing and nonprofits

New Resource Bank is working with SFMade to help the nonprofit achieve its mission of building and supporting a vibrant manufacturing sector in San Francisco, CA. Most recently, New Resource committed to financing a new Heath Ceramics factory and retail showroom in the city’s northeast Mission District, which will create 34 jobs. SFMade is just one of many excellent nonprofits that bank at New Resource, and we believe that supporting them with discounted financial packages and tailored accounts is another step toward a more sustainable economy. Nonprofits don’t help grow the economy in the traditional sense, but they play an important role in advancing change. I believe that we, as a country, should be moving toward a more holistic view of the financial system. Instead of focusing just on capital, we should be balancing financial returns with social and environmental returns. Nonprofits facilitate those things in ways that businesses can’t. Moving your money matters

Are you proud of what’s being done with your money? Many people think it doesn’t matter where they bank, or they believe that they don’t have real choices. The truth is there are plenty of choices, but we don’t exercise our ability to choose—because we don’t think about it; we’re blind to the choice or the press tells us it doesn’t matter. Our system glorifies choice, but tries to narrow our options to ones that promote more of the same as opposed to new vision for change. Move your money to a financial institution whose mission is to support positive action in the world—it does make a difference, to the economy and to you personally.

For more information on New Resource Bank go to

Article by Vincent Siciliano, president and CEO, New Resource Bank

Featured Articles

CFNE and the Cooperative Response to the Economic Crisis

By Rebecca Dunn

We’re all aware of the confluence of crises facing our communities, our nation and the world, including climate change, economic stagnation, and corporate control of government, to name a few.

Many of you probably read GreenMoney Journal to learn how your daily actions, as investors, consumers and business people, can address these problems. Since 1975, the Cooperative Fund of New England (CFNE) has been helping people do that. By providing a mechanism for investors to finance cooperatives, and providing cooperatives with access to valuable technical assistance, CFNE helps grow the green, community-controlled, democratic economy.

What is a Cooperative?

Cooperatives (co-ops) are businesses unified by Cooperative Principles in the pursuit of self-help, self-responsibility, democracy, equality, equity and solidarity. The principles are: Voluntary and Open Membership; Democratic Member Control; Member Economic Participation; Autonomy and Independence; Education, Training and Information; Cooperation among Cooperatives; and Concern for Community. The defining characteristic of co-ops is that they are owned by, controlled by and beneficial to their users. These owners are generally the business’ consumers, workers, and/or producers.

The co-op principles avoid many failings of our current economy by ensuring that the business users are its owners, not absentee investors. These principles also avoid the failings of state-controlled economies, by ensuring that cooperatives are autonomous from government control and that co-op members join voluntarily. In this way, cooperatives are called the Third Way of economic organization.

Co-ops are not a utopian dream. One billion people worldwide including one-quarter of Americans own cooperatives. Nearly 30,000 US cooperatives control over $3 trillion in assets, and generate over $500 billion in revenues and $25 billion in wages from two million jobs. Some co-ops are household names, such as Cabot Cheese, Ocean Spray, and REI. US rural electric cooperatives operate 42 percent of US electric distribution lines, covering 75 percent of the country’s area. The largest cooperative sector, financial cooperatives, including credit unions, benefited from last fall’s Move Your Money campaign, which inspired 650,000 people to shift $4.5 billion from big banks to community financial institutions in just over a month!

Cooperatives have major impacts across the world. For example, cooperatives generate 45 percent of Kenya’s GDP and 37 percent of Brazil’s agricultural GDP. Globally, cooperatives provide over 100 million jobs, 20 percent more than multinational corporations.

In recognition of these impacts and more, the United Nations has declared 2012 to be The International Year of Cooperatives (IYC). As UN Secretary General Ban Ki-moon stated, “Co-operatives are a reminder to the international community that it is possible to pursue both economic viability and social responsibility.” IYC has three goals: increase public awareness about co-ops, promote their formation and growth, and encourage governments to establish laws, policies, and regulations conducive to co-op formation and growth. The UN has not only brought the co-op model to the global stage, but it has aligned the education, development and advocacy efforts of co-op movements across the planet.

As you can see, cooperatives are largely a subset of the green economy: they are locally owned and accountable to the community, operate democratically, and, as a result, strive for environmental sustainability.

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New England’s Cooperatives

New England is witnessing cooperative development growth in a number of sectors. Communities are forming food co-ops in record numbers to address growing concern with food security. As conventional employment opportunities shrink, growing numbers of recent college graduates in New England are forming worker-owned cooperatives, particularly food-related co-ops. Manufactured-housing park tenants are buying their land from absentee landlords to eliminate land speculation. Finally, and not exclusive of the previous examples, green business entrepreneurs are using co-op models of community and worker ownership to increase options for sustainable energy, food systems and housing.

One exciting trend is the development of networks for public education about co-ops, new product development, and technical assistance provision to start-ups. In New England, the Neighboring Food Co-op Association, the Valley Alliance of Worker Cooperatives ( ), and Cooperative Maine are leading the way.

The Cooperative Fund of New England

This is only the latest cooperative development boom. In the 1970’s, growing concerns with synthetic fertilizer and pesticide usage led to a previous wave of food co-op development. While a growing number of farmers were reverting to organic production, they needed markets to reach consumers. As a result, these communities started organizing cooperative grocery stores (aka food co-ops) to bring natural foods into their communities. But they faced a major hurdle, accessing conventional credit for their unconventional cooperative ownership structure.

In 1975, after receiving a flood of requests for start-up grant support, investor affiliates of the Haymarket People’s Fund ( ) convened regional co-op activists to solve the food co-op credit problem. The result they came up with was The Cooperative Fund of New England, or CFNE. CFNE advances community based, cooperative and democratically owned or managed enterprises, with preference to those that serve low income communities, through: providing prompt and reasonable financing; facilitating individual and institutional investment in socially conscious enterprise; and developing a regional skills reservoir to assist and advise these groups. During the past 37 years, CFNE’s assets grew from $60,000 to $13.6 million and its loan portfolio from $60,000 to $9.7 million. It now finances all cooperative sectors, including housing, grocery, energy, and agriculture, as well as co-housing, land trusts, and nonprofits serving basic community needs. These borrowers have created or sustained 7,600 jobs, over 4,000 affordable housing units and tens of thousands of business ownership opportunities for consumers.

During this time, no investor has lost any money in CFNE.

CFNE’s Borrowers 

CFNE’s co-op borrowers run the gambit of small businesses, including start-ups, expansions and conversions of existing businesses to co-op ownership. They include co-ops owned by workers, consumers, and producers. Here is a sample:

In 1986, three food co-op managers set out to build closer relations between consumers and farmers. Their enterprise, Massachusetts-based Equal Exchange, grew from a three person partnership to a 100+ member-owner worker cooperative. Equal Exchange first approached CFNE in 1989 to finance this growth. “Equal Exchange was able to get off the ground thanks to supporters like CFNE who were willing to take a risk on what then seemed like a crazy idea,” says founder and co-executive director, Rink Dickinson. Now, Equal Exchange has annual sales of over $45 million, while purchasing products from more than 40 small farmer cooperatives in over 25 developing countries from El Salvador to Ethiopia and India to Indonesia. ( )

Fedco Co-op Garden Supply was founded in 1978 in central Maine to sell seeds and other gardening supplies to cold-climate growers. As a hybrid cooperative, with both worker and consumer owners, Fedco now supports 25 full-time equivalent employees, with annual sales of over $4 million. CFNE has financed three of Fedco’s expansions from 1990 to 2011, each helping Fedco accommodate larger demand. “We love CFNE,” says Fedco founder C.R. Lawn “and I don’t know how we could have done it without them these last 20-plus years!” ( )

Deep Root Organic Co-op, in Johnson, Vermont, is one of the oldest organic vegetable cooperatives in the US. The co-op promotes local, organic agriculture through its twenty family-farm owners. Members are able to focus on their individual farm’s production, while using the co-op to purchase and market collectively. In 2010, CFNE financed a new warehouse and maintained a line of credit to help manage seasonality. ( )

Like many urban settings, New Haven, Connecticut, lacked a full-service grocery store, until now. Last fall, consumer-members opened the Elm City Cooperative Market, a 20,000 square foot store in a new mixed use/mixed income development that transformed the downtown from a food desert to a healthy food environment. The co-op created 100 jobs in this city of high unemployment. CFNE’s patient debt capital helped secure $7 million from other private and public sources.

CFNE and the Economic Crisis

Since the economic crisis hit, CFNE’s loan pool has grown by $9 million, tripling its impact in four years and reflecting both growing demand for community controlled businesses and growing interest in CFNE’s work by investors and donors. Co-ops and other former borrowers, including Equal Exchange and Fedco, have invested almost $1 million in CFNE, and CFNE was the first recipient of Small Business Administration funds earmarked for worker-owned co-ops. During this same period, demand for CFNE products grew by 40 percent, reflecting greater concern with food security, job creation and affordable housing.

New Opportunities

CFNE is taking advantage of a few new opportunities, including the release of an educational co-op oriented board game, Co-opoly ( ), the aforementioned United Nations declaration of 2012 as the International Year of Cooperatives, and the impending retirement of Baby Boomers resulting in potential co-op conversions.

The Baby Boomer retirement poses tremendous growth opportunities for the co-op economy through converting traditional businesses to co-op ownership. By selling business assets to consumers, workers, and/or producers, business owners can ensure the preservation of the business’ role in the community. This can be a faster and more stable way to grow cooperative economic impact than starting new co-ops, as conversions utilize existing customers, procedures, and assets. CFNE is financing numerous conversions, including a consumer buy-out of a rural Massachusetts general store, a worker buy-out of a Vermont health center, and multiple tenant buy-outs of manufactured housing parks.

How You Can Get Involved

Does this all sound interesting to you? Here are five steps you can take to support the growing cooperative economy:

  1. Identify the co-ops in your area, join them if you can, and purchase their goods and services. ( )
  2. If you own a business or are considering starting one, look into how cooperative ownership could benefit your goals. ( )
  3. If you have investment assets as small as $1,000, consider lending to CFNE or its sister, Northcountry Cooperative Development Fund.
  4. Finally, if you are in New England and want to start a co-op, please contact CFNE by calling 1-800-818-7833.

There are many challenges facing our communities on global, national and local levels, but the growing cooperative movement is providing solutions.

Article by Rebecca Dunn, who has been the Executive Director of the Cooperative Fund of New England since 1986. She has extensive experience as a business consultant and as a commercial bank loan officer for Barclays American. She was formerly a bank examiner for the State of Connecticut and has worked as a consensus process trainer and nonprofit advisor to any community organizations. Rebecca was named recently to the board of the Cooperative Development Foundation. She has a BA in economics from Trinity College and an MBA in finance. Micha Josephy contributed to this article.

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Publisher’s Note: The Politics of Influence and our Long Recovery

Welcome to the long recovery. Many thought, as I did, that our economic “downturn” would end as quickly as it began. But it seems the downturn has exposed lingering problems in our society and financial world as well as in energy, education, and healthcare, just to name a few. And in this election year, let’s not forget the problems in politics.

So yes, many challenges are not being adequately addressed. High unemployment and the trillions of debt accumulated by the US government and other nations are chief among these challenges. When we borrow too much, as the US has done, it makes us vulnerable to our lenders. Furthermore, our oil addiction has trapped our military in the Middle East, while many of those countries loan us money, along with China and Japan. Thus we see the need for more private sector jobs, more renewable energy, and less government spending/borrowing.

Innovative and prosperous solutions, however, are forthcoming. Many in Sustainable Investing and Business are working on these new ideas, which of course we’ve continued to highlight here. Though we believe investing money ethically can have a positive impact, this election year has spotlighted the unfathomable amount of dollars available to (unduly) impact and influence politics and politicians.

The overwhelming stream of election dollars is not transparent, since the Supreme Court’s “Citizens United” decision permitted Super PACs to do unlimited funding (from US and even foreign sources) of political campaigns. Simply put, politics and money are out of control.

Much of this could be addressed if companies, especially publicly traded companies, were required to disclose how much and to whom they give political contributions. Lobbying firms and lobbyists should also disclose their money sources well before the elections. It is important for ALL political parties to disclose this financial information. It is also fair and reasonable for voters to know which candidates are beholden to which organizations and companies.

We believe that transparency and accountability are keys to sustainability. The more open and honest a company is, the less likely something they’ve been hiding will be uncovered.

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This Spring 2012 issue commences GreenMoney’s 20th Anniversary year. We begin by interviewing eco-adventurer and environmental advocate Philippe Cousteau. Then, as we do every few years, we offer a full update on the NI Social Ratings on our Mutual Fund Performance Chart (in the Print editions), with insights by Michael Kramer of Natural Investments.

And because where you invest your money and where you bank matters, we feature articles on The Cooperative Fund of New England and on the New Resource Bank, based in San Francisco. Both are making positive impacts in and beyond their communities.

Also here on you’ll find several new books overviewed by their authors, including Cary Krosinsky who edited “Evolutions of Sustainable Investing,” and Jed Emerson & Antony Bugg-Levine on “Impact Investing.” Then check out our large Global Green Events calendar for information on numerous events such as the CERES Conference in Boston in April, the US SIF Conference in Washington, DC in May, and the TBLI Conference in Hong Kong also in May.

As mentioned, this is our 20th Anniversary Year. Coming up in Summer 2012 is Part 1 of two Special Anniversary issues. In the Summer 2012 special e-Newsletter you will read solutions-based articles on “The Next 20 Years” by Barbara Krumsiek, CEO of Calvert Funds; Gary Hirshberg, co-founder of Stonyfield Farm; Cheryl Smith, president of Trillium Investment Management; long time friend and SRI professional Hal Brill; and Megan Epler Wood of Planeterra on ecotravel. Be sure to sign up for this e-Newsletter here on

In closing, editor Ted Ketcham and I thank our readers, advertisers, sponsors and writers for a great first 20 years.

-Cliff Feigenbaum, Publisher and Founder, Greenmoney Journal

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