by Lisa Woll of US SIF – The Forum for Sustainable and Responsible Investment

With a vision of a world in which investment capital helps build a sustainable and equitable economy, US SIF looks forward every two years to the release of our Trends Report. The report anchors our understanding of the investment assets moving us in this direction. We are heartened to see that interest in this field continues to grow and that more and more assets are invested using sustainable and responsible investment (SRI) strategies.

At the same time, the country is still recovering from high unemployment and other effects of the financial crisis, legislative silence on climate change, continued concern about the financial regulatory system, unfettered secret corporate political spending, rising income inequality and soaring executive compensation. We are in the midst of what could be called a sustainability crisis.

The responsible investment field can help advance a more sustainable economy. We have already seen the industry build this capacity in a number of ways:

• As this report demonstrates, SRI assets are a significant part of the US financial market. Moreover, firms that have not historically identified themselves as SRI increasingly are adopting SRI strategies.

For example, the Principles for Responsible Investment has more than 1,000 signatory firms—with assets over $30 trillion—estimated to represent 20 percent of the total value of global capital markets. These signatories include not only the pioneers of sustainable and responsible investing but also more conventional investment firms that are beginning to develop SRI divisions or to analyze how portfolio companies’ environmental, social and corporate governance (ESG) policies affect their financial returns. Today, there is no longer any “typical kind of firm” engaged in SRI.

• The expansion of sustainable and responsible investing can be measured across an array of asset classes. As this report details, for example, there has been a continued growth in alternative investments engaged in SRI.

• Foundations have deepened their practice of mission investing—using the tools of finance to create positive social impact aligned with their mission. And in recent years, numerous institutions have begun to use the term “impact investing” to describe the investment of capital into vehicles—private and public—that create social or environmental benefits alongside financial returns, very much like the goals of sustainable and responsible investment.

• Similarly, the rise of investment in sectors like clean technology, microfinance and community development finance indicates that investors have an appetite for profitable investments that can address societal challenges, including helping to alleviate poverty or reduce carbon emissions.

• In fact, community investing (typically via banks, credit unions, loan funds and venture capital funds that invest in underserved communities here and abroad) is one of the fastest growing segments of SRI even though the assets in this space are small in comparison to other SRI assets. US SIF has recently undertaken several initiatives to broaden the definition of community investment and to engage a wider range of investors in this critical space.

• Changes in the professional investment industry driven by SRI professionals have generated new investment options for institutional and individual investors concerned about issues such as climate change, alternative energy, human rights, diversity and community investing. Specialized advisors, new products and access to retail platforms for community investment and other issues have all made for a more robust environment for individual investors interested in SRI.

• Globally, sustainable and responsible investors have changed investment practices by promoting the creation of specialized stock exchanges that require companies to disclose sustainability data to qualify for listing. Additionally, the growing popularity of responsible investing has contributed to the creation of scores of global SRI indices, which have set standards for corporate ESG performance and become benchmarks for investors.

• As a response to shareholder engagement by SRI advocates, global corporations increasingly embrace ESG practices and disclosure and incorporate these standards into their operations. In the past year, there has been a sharpened focus on both “integrated reporting” (which links a company’s strategy, governance and financial performance with the ESG context in which it operates) and on the newly created Sustainability Accounting Standards Board (which is establishing standards for integrated reporting and an understanding of relevant and material issues to 35,000 publicly listed companies in the United States). These developments promise a fundamental change in corporate reporting that is also likely to spur more companies to consider and adopt sustainable business practices.

• The sustainable investment community has engaged in the federal regulatory and legislative arenas as another avenue through which to create the conditions for a low carbon, resource efficient, and socially accountable economy. The work we have undertaken in addressing the financial crisis, corporate disclosure, greenhouse gas emissions, integrated reporting, political contributions and consumer financial protection helps create a national framework in which environmental, social and governance considerations in investing are able to become the norm.

As we look to the close of 2012, we are buoyed by the many advances our field has made, and by the continued growth in assets that aim to integrate financial returns with environmental, social and governance impacts. And yet, it is clear we have much more to do in order to further advance the scale of sustainable and responsible investment and to effectively grapple with other challenges to building a robust, equitable and sustainable economy. We hope you will join us in this important work.

– Lisa Woll, CEO of USSIF

2012 Report on Sustainable and Responsible Investing Trends in the United States

Executive Summary

OVERVIEW

Today, more than one out of every nine dollars under professional management in the United States is invested according to strategies of sustainable and responsible investing (SRI). The individuals, institutions, investment companies, money managers and financial institutions that practice SRI seek to achieve long-term competitive financial returns together with positive societal impact.

SRI strategies can be applied across asset classes to promote stronger corporate social responsibility, build long-term value for companies and their stakeholders, and foster businesses, generate jobs or introduce products that will yield community and environmental benefits.

Through surveys and research undertaken in 2012, US SIF Foundation identified:

• $3.31 trillion in US-domiciled assets at year-end 2011 held by 443 institutional investors, 272 money managers and 1,043 community investment institutions that apply various environmental, social and governance (ESG) criteria in their investment analysis and portfolio selection, and

• $1.54 trillion in US-domiciled assets at year-end 2011 held by more than 200 institutional investors or money managers that filed or co-filed shareholder resolutions on ESG issues at publicly traded companies from 2010 through 2012.

After eliminating double counting for assets involved in both strategies, the overall total of SRI assets is $3.74 trillion, a 22-percent increase since year-end 2009.

The assets engaged in sustainable and responsible investing practice currently represent 11.3 percent of the $33.3 trillion in total assets under management tracked by Thomson Reuters Nelson. From 1995, when US SIF Foundation first measured the size of the US sustainable and responsible investing market, to 2012, the SRI universe has increased 486 percent, while the broader universe of assets under professional management in the United States, according to estimates from Thomson Reuters Nelson, has grown 376 percent.

Because the scope of this study is focused on US-domiciled assets under management that are practicing sustainable and responsible investment strategies, it is a relatively conservative measure of the scope of the SRI industry. The tally of the global assets of the US money managers and institutional investors engaged in or exploring SRI strategies is many times larger. Throughout the survey and data-gathering phase for this report, US SIF Foundation identified many investors that are beginning to develop their in-house capabilities to analyze ESG criteria or are privately reaching out to companies to discuss issues such as executive pay or climate change. These practices, while noteworthy, technically did not meet the test to be included in the measure of assets for this study.

Nonetheless, these developments speak to the potential for further growth in the US sustainable and responsible investing market.

HIGHLIGHTS OF THE 2012 REPORT

ESG Incorporation

The total assets that are managed according to ESG factors that are explicitly incorporated into investment analysis and decision-making are valued at $3.31 trillion. Of this total, $1.41 trillion were identified within specific investment vehicles managed by money managers or community investing institutions, while $2.48 trillion were identified as owned or administered by institutional investors. Of these institutional ESG assets, $581.6 billion were managed for institutions through investment vehicles captured in research on money managers.

ESG incorporation by money managers and investment vehicles: The US SIF Foundation survey identified 272 management firms and more than 1000 community investing institutions that incorporate ESG issues into their investment decision-making. Their combined $1.41 trillion in assets under management reflects nearly a doubling from the corresponding figure for year-end 2009. The growth in these ESG assets reflects several factors, including a dramatic increase in the number of mutual funds that consider corporate governance criteria or avoid companies doing business in the Sudan, the rise of alternative investment funds that consider ESG criteria, and the growth in assets of banks, credit unions and loan funds with an explicit mission of community development.

The broad outlines of the ESG issues incorporated by money managers are as follows:

• Environmental investment factors are incorporated in the management of 551 investment vehicles with $240 billion in assets under management,

• Social criteria, which include Sudan-avoidance policies, are the most prominent in asset-weighted terms, incorporated in the management of $1.2 trillion across a wide range of 622 investment vehicles,

• Governance issues are incorporated by a total of 346 investment vehicles with $623 billion in assets, and

• Product-specific criteria, such as restrictions on investment in tobacco and alcohol, are included in the management of 390 investment vehicles with $290 billion in assets.

The assets and numbers of funds tracked as incorporating ESG criteria have continued their trajectory of dramatic growth since 2007. These assets, excluding assets of separate account vehicles, have increased 78 percent to $1.01 trillion in 720 distinct ESG funds in 2012 from the $569 billion tracked in 2010.

Registered Investment Companies

Among the universe of investment vehicles that incorporate ESG factors into investment management, registered investment companies, such as mutual funds (including those underlying annuity products), exchange-traded funds (ETFs) and closed-end funds, accounted for $644 billion, invested through 361 funds.

Alternative Investment Vehicles

US SIF Foundation identified 301 different alternative investment vehicles—private equity and venture capital funds, responsible property funds and hedge funds—with a combined total of $132 billion in assets under management. This segment of the ESG investment market has experienced as much as 250 percent growth in assets since 2010, when US SIF Foundation identified just $37.8 billion in alternative investment vehicles that incorporated ESG criteria.

Other Investment Vehicles

• Other Pooled Products: Forty-five other pooled products with $234.2 billion, typically commingled portfolios managed primarily for institutional investors and high-net-worth individuals, were invested according to ESG criteria.

• Separate Account Vehicles: Among separate account managers, 178 distinctive separate-account vehicles or strategies with $337.7 billion incorporated ESG factors into investment management.

• Community Investing: A total of 1,043 community investment institutions (CIIs), including community development banks, credit unions, loan funds, and venture capital funds, collectively manage $61.4 billion.

ESG incorporation by institutional investors: With $2.7 trillion in assets involved in ESG incorporation, in filing shareholder resolutions or in both strategies, institutional investors dominate the SRI universe documented in this report.

Institutional asset owners across the United States now consider environmental, social or corporate governance criteria in investment analysis and portfolio selection for aggregate assets of $2.48 trillion, a 23-percent increase since the start of 2010. This growth reflects, in large part, the near tripling of the assets, particularly those held by public funds, that review governance issues relating to executive pay or the quality and accountability of boards of directors, or that avoid investments in companies doing business in Iran. Another factor is the increased prominence of environmental issues, particularly relating to climate change and carbon emissions.

Shareholder Advocacy

A wide array of institutional investors—including public funds, religious investors, labor funds, foundations and endowments—and money managers file or co-file shareholder resolutions at US companies on ESG issues, and hundreds of these proposals come to votes each year. From 2010 to

2012, 176 institutional investors with $1.28 trillion in assets and 32 investment management firms with total assets under management of $251.3 billion filed or co-filed proposals. This level of involvement, both in terms of the numbers of institutions and managers involved and their overall assets under management, has been consistent since 2010, when US SIF Foundation similarly identified slightly more than 200 institutions and managers with combined assets of $1.5 trillion that filed resolutions from 2008 through mid-2010.

Additionally, US SIF Foundation identified substantially more managers since year-end 2009, and a 29 percent increase in the corresponding assets under management, that engage in dialogue with portfolio companies on ESG issues. This suggests that money managers increasingly are pursuing shareholder engagement strategies, even if they do not file shareholder resolutions. (As noted earlier, the assets involved in corporate engagement efforts are not counted towards the overall total of SRI assets unless they are also involved in filing shareholder resolutions or ESG incorporation.)

MAJOR SRI DRIVERS AND TRENDS

In recent years, the evolution and growth of SRI within US financial markets has been shaped by numerous trends:

• Money managers increasingly are incorporating ESG factors into their investment analysis and portfolio construction, driven by the demand for ESG investing products from institutional and individual investors and by the mission and values of their management firms. Client demand and values were the reasons most commonly cited by managers that responded to surveying—each motivation was cited by 72 percent of managers.

• The risks associated with the volatile and repressive Sudan regime continue to drive institutional investors and money managers to pursue targeted divestment from the country or active engagement with affiliated companies. Indeed, Sudan-related investment policies are the most prevalent ESG criteria incorporated into investment management, affecting more than $1.63 trillion in institutional assets and over $999 billion across all investment vehicles included in the money manager phase of research.

• The incorporation of governance criteria has become a leading ESG issue for institutional investors and money managers alike. Governance-related criteria affect $913.9 billion in institutional investor capital and are incorporated across 346 investment vehicles with combined assets of $623.3 billion. The most prevalent governance criteria considered in investment analysis and portfolio construction include executive pay, board issues, political contributions and broader policies on corporate governance.

• Consumer demand and campaigns persuading retail and other customers to “Move Your Money” from the large banks tarnished by the recent financial crisis boosted deposits in community-oriented banks and credit unions. Community development bank assets were up to $30.1 billion at the outset of 2012, a 73-percent increase since 2010. Community development credit unions experienced similarly strong growth, up 54 percent since 2010 to $17.1 billion.

• From 2010 to 2012, there has been a pronounced upward trend in vote support on environmental and social issues, with 24 percent or more of such resolutions each year receiving the support of more than 30 percent of the shares voted, up significantly from the levels of 2007 to 2009, when only 15 to 18 percent of environmental and social issues resolutions won such support levels.

• In response to shareholder campaigns for better corporate governance practices, a growing number of US companies are establishing more stringent standards for their board elections and no longer allow their chief executive officers to chair their boards.

• A leading concern for shareholders, especially since the Supreme Court’s Citizens United decision, is corporate political spending and lobbying; investors filed more than 100 resolutions annually in 2011 and 2012 seeking better review and disclosure by portfolio company management of these activities.

• Eighty-two money managers with $4.9 trillion in assets under management reported that they pursue dialogue with portfolio companies, up substantially from the 54 managers with $3.8 trillion in assets that answered this way at year-end 2009. This is a much larger pool of money managers and assets under management than those currently involved in filing shareholder resolutions.

By Cece Derringer of Homewise, Inc.

“Back yard” community investing is as central to American history as the Framers’ creation of our Federalist system, the rights movements that have brought equality to an increasingly diverse country, or the westward expansion that bestowed early riches upon our land.

Since the early 1700’s, when the innovative Moravian community of Wachovia in North Carolina was built to ensure prosperity for all its members, America’s communities have known the value of “back yard” investments. That heritage is fully at work today, helping people buy affordable homes in Santa Fe and surrounding areas of New Mexico through Homewise, an innovative non-profit that offers a proven platform for investing in the local community.

The Moravians labored mightily to invest in their own community, ensuring that all members were housed, had meaningful work, enough food from community gardens, access to health care and education for the town’s young women and men, and that their model would carry on into the future. Sustainability is not a new concept in community development.

For the Moravians, community investment did not simply increase financial resources, but also human capabilities, social equity and sustainability.

Another group of Americans, the industrialists of the 19th century, also left a valuable legacy, though they are often vilified as “robber barons.” They believed in concentrating capital in the community, with private companies building homes and facilities for their workers and investing in the cultural development of the town. Workers were provided health care, education, worship opportunities, planned communities in which to live, and for the most part, fairly safe working environments.

Public service institutions across the land like the libraries of Andrew Carnegie, the Massachusetts Institute of Technology, the public health schools at Harvard and Johns Hopkins, the Albright-Knox Art Gallery in Buffalo, the Museum of Natural History in New York are lasting resources of this past era of community investment.

However, in the post-war 20th century, as the middle class grew and America’s population expanded, the responsibility for housing, healthcare, education – even phone service for the underprivileged – seemed no longer to completely fall upon the working individual, or to be supported by the community philanthropist. It fell instead more on state, federal and local government.

But government cannot do it all, as the recent budget conundrums in Washington and many state capitals have shown. Thus, in the 21st century, we have the opportunity to rediscover the power of investing in our own back yards.

Modern financial investment has been a story of individuals and their money moving farther and farther apart to the point where the average investors don’t know where their money goes or what it does.

However, an emerging trend for investors is to align their money with their values. How and where to invest is beginning to matter. This is called “impact investing,” a blended value of financial and social return. Impact investing can convert capital into a compelling social solutions while it defies two widely held but outdated assumptions:

 
Impact investing, in a world where government resources and charitable donations are insufficient to address our communities’ social problems, offers a dynamic new alternative for channeling private capital for social benefit – right where you live.

Through impact investing, the community connectivity lost through 20th century investment strategies is being rediscovered. Impact investing empowers individual investors to empower their own communities. This requires competent and financially strong community development organizations. When you invest directly in your community – whether for affordable housing, economic development, health and wellness, education, energy efficiency, small business development, public safety, transit or urban regeneration – you want results.

From its founding in 1986, Homewise has sought to leverage community investment in New Mexico into affordable solutions for home ownership. During its first six years, Homewise was a small nonprofit engaged in home improvement and rehabilitation of the city’s poorer west side. In 1992, Mike Loftin became Executive Director of Homewise. In canvassing the organization’s existing clients, he discovered homeowners were complaining that their grown children could not afford to buy a home in Santa Fe.

Over the next decade, Loftin and his staff grew Homewise into a full-service agency promoting affordable homeownership through financial counseling and educational classes designed to help Santa Fe’s moderate-income residents.

Homewise, as part of its core mission, also developed a conduit for community investment funds to finance the construction, purchase and energy retrofits of homes in northern New Mexico, primarily in Santa Fe.

The only Community Development Financial Institution (CDFI) of its type in northern New Mexico, Homewise launched the Homewise Community Investment Fund to empower local investors and help bring stability and financially successful homeownership to the region.

The Homewise Community Investment Fund is a step beyond charity. It combines the financial benefit of investing with the social impact of donating, yielding an opportunity to receive a guaranteed return while making a positive impact on Santa Fe.

Since 1992, Homewise has assisted in creating 2,439 homeowners; 473 of the energy efficient homes they bought were newly built, which contributed to the Santa Fe area economy through construction jobs and local purchases of building materials. A total of $223.4 million has been loaned by Homewise to finance home purchases.

Additionally, Homewise has assisted 1,771 homeowners to make renovations and add value to their investments with a total of $22.4 million in home improvement loans.

By placing their money and trust in the Homewise Community Investment Fund, local citizens and businesses are giving working families the opportunity to buy homes, while allowing the American dream of home-ownership to thrive in the community.

Homewise is aware that investors want their money to be safe. Vital parts of our loan program include financial classes and coaching for our clients, and careful underwriting of the loans.

Typically, a person who participates in the Homewise program sees a significant increase in his or her credit score (an average of 15+ points), decreased debt and increased savings, which translates into a better risk for a mortgage or home improvement loan. The delinquency rate for Homewise clients is 2.9 percent, below the rate for even prime loans at regular banks, and far less than for loans made under the government’s FHA and VA programs.

For investors, this successful track record of creating financially secure homeowners means Homewise can assure the safety of their money. Additionally, every dollar invested in Homewise through individual investments is 100 percent guaranteed by Los Alamos National Bank, a community bank, shielding the investor from any risk of loss. And every dollar is cycled through the local economy, leveraging businesses and jobs, as well as neighborhood stability, lower crime and financial well-being – the welcome byproducts of homeownership.

“An investment in the Homewise Community Investment Fund is a unique opportunity to support the economic development of Santa Fe now and into the future,” says Owen Lopez, former Executive Director of the McCune Foundation, a strong financial supporter of Homewise.

The Homewise Community Investment Fund is impact investing at its most fundamental. A Santa Fean may invest with the fund and know exactly where his or her money is going, the specific results of the investment, and all with a guarantee and no brokers or fees.

This is a trend that will continue as our nation’s younger generations assume leadership in the future.

According to a recent poll some 77 percent of the “millennials” born since 1980 believe that business decisions based on greed are morally wrong, and more than 80 percent believe the ethics and values that shape our personal lives should apply in business as well.

As Leigh Buchanan writes in Meet the Millennials, “One of the characteristics of millennials … is that they are primed to do well by doing good. Almost 70 percent say that giving back and being civically engaged are their highest priorities.”

Alan Webber, co-founder of Fast Company and a Santa Fe resident, stated in a recent article, “Santa Fe’s problem – as is true for the small towns across the country – is different. It needs a new way to think about and look at an economic strategy. In the end, all economics is local. And that means it’s up to the people at the local level to articulate their own economic strategy, and then create their own economic future.”*

More communities like Santa Fe should consider ‘back yard’ investing, as it combines individual ideals with community needs. It is local, immediate, and a way people can devote their money to a vision of their community now and 25 years from now. Wise investing begins at home. It pays you back with interest – and with better lives for your family, friends and neighbors.

For more info on Homewise or its Community Investment Fund go to- www.homewise.org

Article by By Cece Derringer, Director of Resource Development and Communications, Homewise, Inc.

Article Note:

* “Small Town USA: Economics of Local – All Economics Is Local” by Alan Webber, co-founder of Fast Company, published in good-b 2/17/12.

by Woody Tasch, founder of Slow Money

In April New Society Publishers will release “Financing Our Foodshed: Growing Local Food With Slow Money,” by Carol Peppe Hewitt. As the founder of Slow Money, I was asked to write the book’s introduction. It was my privilege to do so and share with GreenMoney readers a glimpse into some whys and wherefores surrounding the emergence of Slow Money.

With what can only be called meta-fiduciary gumption, Carol has rolled her sleeves up to facilitate over $600,000 in loans from 59 individual lenders to 30 small food enterprises in North Carolina over the past few years. Homegrown City Farms, Dandalia Bakery, Lilly Den Farm, Bella Donna Restaurant, Lula’s Café, Reliable Cheese Company, TS Designs and Chatham Marketplace are just a few of the recipients of support via Slow Money North Carolina. Their stories, and those of the other investees, are presented at http://slowmoneync.org

A few months ago, I got a call from a New York Times columnist who was working on a column entitled “Investing For The Truly Fed Up.” He said, “I’ve been speaking to a lot of folks who don’t want their money sloshing around in the great global casino any more. They are sick of the excesses on Wall Street and scared by global financial uncertainty. But they need to make 7 percent on their money. What would you tell them?”

The wonderful, sad, crazy, sane truth is this: We of the Slow Money persuasion don’t know how much money we are going to make, when all is said and done, with the money we are putting into local small food enterprises. Most slow money investing takes the form of low interest loans. But some are direct equity investments. What will a portfolio of such investments yield over time? How risky are they? Compared to what? Put another way: Slow Money has a long way to go before it generates anything approaching the arithmetic predictability of an asset class.

So why do we do it? Partially because we want to see healthy food in our schools, clean water in our aquifers, more organic matter in our soil and less carbon in the atmosphere. Partially because we believe that organic farms and seed companies and restaurants and grain mills and creameries and cheese makers deserve our support for reasons that go far beyond economics, all the way to culture. And partially because we recognize a less wonderful, less sane, but equally sad, crazy truth: That which our wildly abstract capital markets make apparently simple is really wildly complicated. We give our money to people we hardly know to invest in things they don’t fully understand in distant lands none of us will ever visit. Then we securitize into billions of derivative pieces. Is this the recipe for a healthy future?

We of the Slow Money persuasion don’t think so. What follows is a peek at the ways some of us are working to put a little of our money to work differently. . . right now. . . on our way to our goal: a million people investing 1% of their money in local food systems.

* * * * * * * * * * * * * * *

INTRODUCTION From Financing our Foodshed

The search for antidotes to Wall Street excess and global financial uncertainty and the search for good things to do with our money take us to screened mutual funds and shareholder activism, credit unions and coops and community banks, Washington regulators, impact investing and triple bottom line metrics and microfinance.

And, as of the recently emerging Slow Money network around the country, these searches also take us to another place: back to our own neighborhoods where, one loan at a time, investors are connecting with local food entrepreneurs and rebuilding local food systems to fix our economy from the ground up.

In a way, nothing could be simpler.

I can still hear Carol Peppe Hewitt at a national Slow Money gathering: “It really isn’t complicated. There are local food entrepreneurs who need money and local investors looking for good places to put their money. We just need to connect them.” [Note to reader: The 2013 Slow Money National Gathering is April 29-30 in Colorado. See details below]

Carol’s work in North Carolina doing just that is a vital part of a process that has facilitated the flow of more than $21 million to 180 small food enterprises around the country since 2010. As of the end of 2012, Slow Money has 17 chapters, including one in France, and six investment clubs. Some 24,000 people have signed the Slow Money Principles (see them at the end of this article).

In a way, nothing could be simpler.

“Combine poisonous factory-farm tomatoes with disgraced investment banker Bernie Madoff. Throw in a stock market disaster. You get a public spooked by the dangers of industrial food production and investors wary of risky business. This may just be a recipe for a Slow Money revolution.”

   –David Gutnick, CBC News

During the past few years, traveling the country on behalf of Slow Money, I’ve come to believe there are a few million of us out there who feel in our bones how important and rewarding this “nothing could be simpler” really is. That’s why many observers have called Slow Money a movement, the website entrepreneur.com has listed it as one of the top five trends in finance, and some have called it a revolution.

Slow Money numbers are still very small in the scheme of things, but they point in a promising direction. Not just in the direction of more, but also in the direction of investing that offers a fundamental alternative to invisible, anonymous financial transactions.

Are we witnessing the slowing of a great historical pendulum, still on its way towards the peak of an economy based on extraction and consumption, but about to swing back in the other direction, towards an economy based on preservation and restoration? Perhaps.

This can be a frightening prospect—for what could be more alarming than the wake of a quadrillion McDonalds burgers? Or it can be a hopeful prospect, carrying with it all manner of emergent economic possibilities. Author Paul Hawken lays out the vision for an “ecology of commerce.” Our friends at BALLE point to the emergence of “local, living economies.” Journalist Amy Cortese and economist Michael Shuman point to locavesting. And lately, there’s been talk of insourcing that comes after decades of irrationally exuberant outsourcing.

Are we witnessing the early stages of the emergence of a nurture capital industry? After venture capital comes nurture capital, concerned less with the pursuit of extraordinary financial returns, courtesy of capital intensive high tech innovation, and concerned more with carrying capacity, sense of place, care of the commons, nonviolence, and ecological, cultural and economic diversity.

If this sounds a bit abstract, improbable or highfalutin, well, then, sit back and enjoy the pages that follow. Relax your inner fiduciary. Because nothing is more beautifully back down to earth than the experiences Carol Peppe Hewitt shares.

Warmth, common sense, compassion, courage, social entrepreneurship, fiduciary activism, and even a few dashes of American Dreamism and In Soil We Trustism—elements of all shine through these stories of small food businesses, the entrepreneurs who create them and the local investors who are supporting them. If we take these stories to heart, we will know that what is at work here is more subtle and beautiful than merely adding social capital and natural capital to financial capital to rejigger our accounting.

What do we hear when food entrepreneur Abigail Wilson says that “opening and operating the bakery is, for me, synonymous with graduate school”? First, we hear something that would make most professional investors run for the hills. Second, we hear a call to get beyond the false specializations of the global and return to the true generalizations of the local. We hear a call to reconnect to the places where we live, to take some of our money out of ever-accelerating and increasingly complicated and volatile global markets, and put it to work in things that generate tangible, immediate value to our families, our communities and our bioregions.

And of the risks?

An economist or a financier would have a field day deconstructing what you are about to read as a manual of High Risk, Low Return investing. To which I would offer the old aphorism: To a hammer, everything looks like a nail. To an economist, everything looks like an opportunity to Buy Low and Sell High.

Happily, Lyle Estil, one of the cast of characters to whom you are about to be introduced, is neither an economist nor a financier. He is an entrepreneur, philanthropist and author, and his vision says much about where we’ve been as a culture (Wall Street) and where we need to go (Main Street). Here’s how he addresses some of the most fundamental fiduciary issues on the Q&A page of Slow Money North Carolina’s website:

Question:  How are you qualified to handle my money?

Answer:  We are not. We have a deep seated belief that we can use capital to increase the resilience of our local economy, and we feel we need to try to do something. . .We are not “money managers,” or “loan officers,” or particularly skilled in finance. But we know people. And we have built successful ventures the hard way. We know the local food players in our community. And we understand business in Chatham County. Finally, we have some time on our hands, so we want to give this a try.

Wow. Come on. Let’s all let out a great big old Apple’s-Stock-Price-Isn’t-The-Measure-Of-All-Things “Wow!”

Each of the small food businesses that Slow Money investors in North Carolina are supporting is a perfectly imperfect meeting place of what E.F. Schumacher called “meta-economic,” what Wendell Berry calls “economics for a renewed commonwealth” and “imagination in place,” and what Carol Peppe Hewitt calls “a helluva way to run a produce section.”

Can we find the gumption to carve out a few dollars and some time to support this new economic imagination, this grassroots economic activism? Will it make a difference?

Carol’s experience in North Carolina suggests, laughs, imagines, dares, demonstrates and encourages us that we can and it will.

Written by Woody Tasch, February 2013

======

The Slow Money Principles

In order to enhance food security, food safety and food access; improve nutrition and health; promote cultural, ecological and economic diversity; and accelerate the transition from an economy based on extraction and consumption to an economy based on preservation and restoration, we do hereby affirm the following Slow Money Principles:

I. We must bring money back down to earth.

II. There is such a thing as money that is too fast, companies that are too big, finance that is too complex. Therefore, we must slow our money down — not all of it, of course, but enough to matter.

III. The 20th Century was the era of Buy Low/Sell High and Wealth Now/Philanthropy Later—what one venture capitalist called “the largest legal accumulation of wealth in history.” The 21st Century will be the era of nurture capital, built around principles of carrying capacity, care of the commons, sense of place and non-violence.

IV. We must learn to invest as if food, farms and fertility mattered. We must connect investors to the places where they live, creating vital relationships and new sources of capital for small food enterprises.

V. Let us celebrate the new generation of entrepreneurs, consumers and investors who are showing the way from Making A Killing to Making a Living.

VI. Paul Newman said, “I just happen to think that in life we need to be a little like the farmer who puts back into the soil what he takes out.” Recognizing the wisdom of these words, let us begin rebuilding our economy from the ground up, asking:

* What would the world be like if we invested 50% of our assets within 50 miles of where we live?

* What if there were a new generation of companies that gave away 50% of their profits?

* What if there were 50% more organic matter in our soil 50 years from now?

Slow Money’s 4th National Gathering

April 29-30, 2013  Boulder, Colorado

“Slow Money is one of the keys to a healthy future.”

—Bill McKibben, founder, 350.org

Money and soil: Did you know they are intricately connected? Join us at Slow Money’s fourth National Gathering, April 29-30, in Boulder, Colorado, to explore a new kind of investing in which we all shift a small percentage of our money into local food.

Slow Money’s National Gathering is a nexus of inspiration, collaboration, and meaningful action sparked through the sharing of ideas and experiences. Speakers include Carlo Petrini, the founder of Slow Food; and Mary Berry, Wendell Berry’s daughter who is leading the charge for the newly established Berry Center, along with a robust program of thought leaders, change-agents, investors, farmers and local food entrepreneurs.

Rebecca Adamson of First Peoples Worldwide interviews Bennett Freeman of Calvert Investments

Welcome to the sixth edition of GreenMoney’s Icons Interview Series, where we invite Sustainable Investment and Business leaders to interview other leaders in their field. This issue features Rebecca Adamson, Founder and President of First Peoples Worldwide. She is a leader, activist, and groundbreaking indigenous woman, who holds a distinct perspective on how indigenous people’s values and economic systems can transform today’s business models. Rebecca interviews Bennett Freeman who as Senior Vice President for Sustainability Research and Policy at Calvert Investments, leads the environmental, social and governance (ESG) analysis, shareholder advocacy and public policy work of the largest family of sustainable and responsible (SRI) mutual funds in the U.S with over $12 billion assets under management.

Both Rebecca and Bennett have been true leaders for many years. They continue to help us make money responsibly and make a real difference in our world. Here is the interview…

REBECCA:  What changes have you seen in SRI and ESG since you joined Calvert seven years ago and how do those changes position the sustainable investment community for the future?

BENNETT:  I came to Calvert in April of 2006 in a springtime of optimism and opportunity in the SRI world. Assets subject to some form of screening were rising. Our longstanding proposition that corporate responsibility and sustainability benefit investors as well as business and society was finally gaining wider acceptance and greater traction. The combination of years of steady engagement and at times pressure from SRI firms, faith-based investors and NGOs — had compelled major companies in virtually every industry from footwear and apparel to oil and mining to at least acknowledge, if not fully address, the range of critical issues raised by shareholders and other stakeholders. While companies were at least managing risk to their brands, the momentum of the game was shifting from defense to offense. Recommendations from McKinsey and Michael Porter that companies could gain competitive advantage by focusing on unmet environmental and broader societal demands were borne out as corporate giants as diverse as GE, Unilever and Google seized opportunities like alternative energy, sustainable agriculture, and digital access. When that spring Al Gore’s film “An Inconvenient Truth” opened to unexpected acclaim, climate change captured the attention of the American public as never before. Propelled by the imperative of tackling climate change, SRI was finally poised to make a quantum leap to the mainstream investor in parallel with the mainstreaming of a new progressive yet pragmatic agenda for sustainable and responsible capitalism.

When the financial crisis hit in mid-2008, the validation of our concerns over inadequate regulation of the financial markets and management of risk at the big banks were little consolation in the face of plunging assets and economic meltdown on both sides of the Atlantic. While the Dodd-Frank reforms are slowly being implemented and the Occupy movement’s demands have (for the moment) dissipated, our values and views gained validation. SRI more than survived; it demonstrated its resilience and growing relevance in a 21st century world that will be increasingly defined by the imperative of sustainability and the demand for accountability.

That growing relevance, in my view, is based on two significant changes over the last half dozen years that should give us renewed confidence in the future of sustainable and responsible investment.

The first change is a growing confidence on our part—and recognition on the part of traditional mainstream investors—that our wide-angle lens view of the world helps us see around corners and over horizons in ways that others have not. Calvert’s grave concern over inadequate attention to safety at BP in the wake of the Texas City tragedy in 2005 was the basis of a decision in 2008 that the company still did not meet our traditional “Signature” criteria applied to most of our SRI funds, despite a decade of leadership by the BP company within its industry on climate policy and alternative energy, human rights and revenue transparency. The Deepwater Horizon tragedy two years later was hardly a vindication but nonetheless a validation of our analysis.

Calvert is not only continuing to apply our longstanding corporate responsibility and sustainability criteria, but also increasingly integrating the most salient ESG-related risks and opportunities into our financial analysis of our portfolio companies because we believe that this approach translates into more informed investment decisions and stronger performance. The emergence of such “integration”—under development for several years at Calvert and now being applied to a growing number of companies across our Equities and Fixed Income complex—reflects and will in turn reinforce the proposition that Environmental, Social and Governance (ESG) factors signify our community’s values but can also translate into company valuations. That fundamental insight will drive 21st century Sustainable and Responsible Investing (SRI).

The second change is a growing confidence on our part that shareholder advocacy and public policy engagement not only contributes to a more sustainable capitalism but also can contribute to our investment performance by challenging company directors and managements to focus on the long-term drivers of success. That is why at Calvert we have for years pushed for greater diversity on corporate boards through the Calvert Women’s Principles, research reports and shareholder resolutions because we believe that a greater diversity of background perspectives is essential to good governance and strategic insight. That is also why we have taken leadership roles on relatively new and unconventional issues that we believe pose material issues for companies. One example is taking the initiative to push successfully for greater disclosure of revenue payments by extractive companies to the governments of countries where they operate around the world, given the range of political and regulatory risks related to corruption. Another is helping to shape a global standard for freedom of expression and privacy rights for Internet and telecom companies with not only human rights but also global user and brand trust at stake. The ability of sustainable and responsible investors to spot these types of risks, make them the focus of advocacy and policy initiatives and in turn factor them into our company valuations—without missing a beat in our financial analysis of companies—is our comparative advantage.

REBECCA:  At a time of continuing uncertainty in the financial markets and investors’ need for stability amidst ever-greater complexity, how can Calvert appeal to mainstream investors and still retain its values while being an agent for change?

BENNETT:  As we seek to broaden our appeal even more to mainstream investors, there is no question that Calvert will retain its core values and continue to be an agent of change. That commitment is not only our legacy; we believe that identity is the key to our future opportunity in the marketplace and no one believes that more passionately than Barbara Krumsiek, our CEO now for over 15 years. We believe that as sustainability and accountability become even more dominant forces in both the investment world and beyond, more mainstream investors—individual and institutional alike—will want to allocate portions of their portfolios to firms at the cutting edge of ESG analysis and integration together with high-impact shareholder advocacy and public policy.

That confidence led us to develop our SAGE strategies, in which we invest in some companies that may not meet each and every one of our comprehensive ESG criteria but we commit to intensive engagement around some of the toughest issues with the largest companies in the world, as we have done with Wal-Mart, Dow Chemical and Exxon Mobil among others. We think that most traditional, sustainable and responsible investors are glad that we are in the trenches even – or especially — with those kinds of companies and that a new generation of investors will be attracted to invest in funds that give them a direct stake in some of the great sustainability and accountability battles of our era.

But fund performance matters most to investors of just about every size and stripe—and we must continue to deliver where it matters most. The integration of financial and ESG analysis—that ability to see around those corners and over those horizons—will blur the lines between “mainstream” and “sustainable and responsible” investment as it demonstrates its added value and in turn continues to gain acceptance in the marketplace.

REBEECA:  When you came to Calvert it was the only Mutual Fund company with an Indigenous Peoples screen. What have you learned and what is your strategy for moving it forward?

BENNETT:  Calvert was indeed the first investor with an Indigenous Peoples screen—distinct from our even longer-standing human rights screen—thanks to your leadership, Rebecca, as a new board member at the time. It was important to make that distinction then in the mid-Nineties in order to sharpen the SRI community’s focus on the cultural and economic rights of indigenous communities in North America and around the world, and it is a commitment that Calvert and other responsible investors will maintain as those rights continue to be imperiled.

I think that Calvert has learned we can make a difference on several critical sets of issues for Indigenous Peoples in different arenas in which investors have both credibility with those we are trying to influence and a stake in the outcome of their decisions. We have urged companies and universities (through their endowments) to demonstrate greater sensitivity towards cultural symbols, whether brand symbols, media images or team mascots. We have pressed oil and mining companies to be more respectful of cultural and economic rights in connection with their impact on indigenous communities, as Calvert and other SRI firms are now urging Newmont Mining to mitigate the environmental and water threats posed to local communities by its Conga Mine project in the Andean Highlands of Peru. We have gained commitments from major oil companies to endorse the UN Declaration on the Rights of Indigenous Peoples (UNDRIP): from Exxon Mobil to disclose how it implements its already established commitment, and from Conoco Philips to make that commitment following our dialogue together with other SRI firms. We have also brought our perspective as an investor to bear on public policy as we did when Calvert wrote to President Obama and Secretary of State Clinton in 2010 urging the U.S. to sign the UNDRIP (as it did that December) and when we urged the World Bank to adopt strong stand-alone safeguards for Indigenous Peoples in its project financing and other programs.

Besides learning that we can make a positive difference by working with indigenous communities and leaders, we have also understood more than ever that even with the best of intentions we cannot represent those communities and their leaders. That has probably been a greater challenge for some environmental NGOs than for SRI firms, but we nonetheless must remain careful and respectful; we must always listen before we speak.

I think that a strategy for building on these successes should rest on two main premises. First, our values will compel us to continue to support Indigenous Peoples’ fight for the cultural and economic rights that are the key to their survival in the 21st century. Second, the materiality of many issues related to Indigenous Peoples—especially those arising in large extractive projects—should gain greater understanding within the mainstream investment community. While SRI firms can and must continue to lead, the large institutional asset managers and pension funds also have a responsibility to their shareholders and stakeholders when a major mining project teeters on the verge of collapse —because the company has lost its social license to operate after failing to engage local communities—as is the case now with Conga in Peru.

REBECCA:  What are Calvert’s leading shareholder proposals and top priorities for 2013?

BENNETT:  Our key areas for our 20+ shareholder resolutions this year are sustainability reporting; board oversight of environmental and social risk; corporate board diversity, climate risk, and water-related risk disclosure and management — a good balance between longstanding and newer themes for Calvert. With President Obama reelected, we will intensify our efforts in coalition with other investors, through the Ceres organization in particular, to move forward in a straighter line on climate and public policy. We will support the President’s use of executive authority to work through the EPA to further curb emissions and will look for ways to renew the quest for the Holy Grail—a price on carbon—that still eludes us at the federal level as support for cap-and-trade and carbon tax proposals remains insufficient.

This year we will also place an even greater emphasis on corporate governance—especially of environmental and social risk—in our dialogues with companies as well as shareholder resolutions. And the more we can demonstrate the materiality of the issues we raise, the more ground we will gain, both with the companies we are determined to influence and the investors we seek to attract.

BIOGRAPHY:

Rebecca Adamson, Cherokee economist, is Founder and President of First Peoples Worldwide. A leader, activist, and groundbreaking indigenous woman, Rebecca holds a distinct perspective of how indigenous peoples’ values and economic systems can help transform today’s business models. Ms. Adamson has worked directly with grassroots tribal communities, and nationally as an advocate of local tribal issues, since 1970. She established the premiere US development institute, First Nations Development Institute, in 1980, and in 1997 she created the first US based global indigenous peoples NGO, First Peoples Worldwide. Ms. Adamson’s work established the first microenterprise loan fund in the United States, the first tribal investment model, and a national movement for reservation land reform. As one of the few Native Americans on a mutual fund board, the Calvert Social Investment Fund, Ms. Adamson led the creation of the Calvert Foundation’s Community Notes, the only private sector investment vehicle for community development among financial institutions CDFIs. She has worked closely with US investors building the infrastructure, investment criteria, corporate research, and risk indicators for supporting Indigenous Peoples rights. Last year this work led the International Finance Corporation, the World Bank and the UN Principles of Responsible Investors to adopt standards for implementing policies regarding Indigenous Peoples, Human Rights and transparency. Ms. Adamson is active in the social investment community serving on the Calvert Social Investment Fund Board of Trustees, the Calvert Social Investment Fund Governance Committee, and co-chairs the Calvert Social Investment Fund Audit Committee and the Indigenous Peoples Working Group of the Social Investment Forum. She is technical advisor to the Global Reporting Initiative, an international corporate monitoring forum for sustainable business practice.

Bennett Freeman is Senior Vice President for Sustainability Research and Policy at Calvert Investments. Since 2006 Mr. Freeman has led the environmental, social and governance analysis, shareholder advocacy and public policy work of the largest family of sustainable and responsible (SRI) mutual funds in the U.S with over $12 billion assets under management based in Bethesda, MD. He has helped to develop the investment themes of new Calvert funds and contributed to Calvert’s leadership on issues such as Sudan divestment; extractive revenue transparency; Internet freedom of expression and privacy; water sustainability; and climate change adaptation.

Prior to joining Calvert, Freeman was a Managing Director at Burson-Marsteller from 2003-2006, where he led the Global Corporate Responsibility practice and advised multinational corporations on policy development, stakeholder engagement and communications strategies related to human rights, labor practices and sustainable development. Freeman served as a presidential appointee in three positions at the U.S. Department of State in the Clinton Administration. As Deputy Assistant Secretary for Democracy, Human Rights and Labor from 1999-2001, Freeman was responsible for the State Department’s bilateral human rights diplomacy. In that capacity, he led the year-long multi-stakeholder dialogue and negotiation to develop and launch the Voluntary Principles on Security and Human Rights as the global human rights standard for oil, gas and mining companies. He previously served as Senior Advisor to Under Secretary for Business and Economic Affairs Stuart Eizenstat and as Deputy Assistant Secretary of State for Public Affairs and Chief Speechwriter for Secretary Warren Christopher. Freeman was Manager-Corporate Affairs for GE based in the corporate headquarters in Fairfield, Connecticut and the Washington government relations office from 1985-93. He began his career as a speechwriter and presidential campaign aide to former Vice President Walter Mondale from 1982-84.

Freeman is Chair of the Advisory Board of Global Witness; Vice Chair of the Board of United to End Genocide; a Trustee and International Advisory Board member of the Institute for Human Rights and Business (IHBR); Board Secretary of the Global Network Initiative (GNI); a member of the Governing Board of the Revenue Watch Institute (RWI); and Board Chair of EG Justice. He served on the Board of Oxfam America from 2002-10 and represented Oxfam on the Board of the Extractives Industries Transparency Initiative (EITI) from 2006-09.

Bennett Freeman earned an AB in History (Highest Honors) in 1979 from the University of California at Berkeley and an MA (Honours) in 1981 in Modern History from the University of Oxford, where he studied as an English-Speaking Union Churchill Scholar at Balliol College.

By Cliff Feigenbaum, founder and Publisher, GreenMoney

As we celebrate this special 20th Anniversary Year, the media and individuals often ask me why and how I started the GreenMoney Journal (GMJ). I have often shared a story that began when I worked in a large regional hospital in the Northwest. After working and saving for several years I found that the mutual funds in my 401(k) plan held stock in tobacco companies, which seemed contradictory for a healthcare institution. As I brought it to the attention of the hospital CFO I realized that I personally was having trouble making well-informed and ethical financial decisions. An editor friend and I researched and then wrote an article on Socially Responsible Investing (SRI), and much to our pleasant surprise, the local business weekly published it.

More recently though, I realized the story of GreenMoney actually began when I was fired from a job at a local TV station; if I had not been fired I would not have been employed at the hospital. It is also noteworthy because as I was leaving that last day I said to the bosses, “Thank You.” That surprised all of us, especially me, though it was an unrewarding job. Also perplexing at the time was my best friend’s response, “Congratulations!”

Getting back to GMJ, after the article was published, we went to work on a small 6-page newsletter, while also giving SRI talks around town. My main theme was to help myself and others become conscious about our relationship with money and its impact, and how to align it with our values. As we worked diligently on subsequent early editions of this new publication, and having left the hospital job, a surprise came in the mail. Well-known activist and author Paul Hawken mentioned GreenMoney by name in the Socially Responsible Business issue of the Utne Reader in the Fall of 1993. Being named by Paul in a national magazine boosted our confidence, and gave us momentum.

Our circulation and SRI contacts expanded, and about two years later, in 1995, the GreenMoney Journal launched its website, GreenMoney.com

Then it happened again, — a huge momentum-building surprise came in 1997 when an acquisitions editor of Bloomberg Press—yes that Bloomberg—asked me to write a book about SRI.

In spite of my elation for the opportunity, I told them I was not sure we could do business together because GMJ believed in “Principles and Profits,” while Bloomberg just believed in Profits. But they convinced me that their company recognized this trend and wanted to be out in front with a book about it. Next, I called some good and very knowledgeable friends, Jack and Hal Brill, who had previously written about the topic and we all agreed to team up. In Spring of 1999 “Investing With Your Values” was released, with an updated version in 2000.

One of things I have valued most about GreenMoney Journal has been meeting lots of people and making friends. The sustainable business and investing community is made up of many wonderful and dedicated individuals and companies.

I will pick up the story of GMJ and its many friends in a future issue because we need to move on. But just know that if you feel called to make a difference in this world and have a vision for how—do it. In spite of many doubters in the early days and the very hard work involved, I felt this was vitally important and I was driven to succeed.

Over the years we have added e-Journals to the mix and recently upgraded our website to meet our design and information ethic – clean, simple and informative but not overwhelming. We are no longer simply an SRI publication, but more widely focused on sustainable business and impact investing. The divisive ‘social’ issues are not as interesting to us as the true bottom line impacts we can achieve by helping corporations and investors reach sustainability and beyond.

Now here’s another of those good surprises: in January I was named to The Top 100 List of Thought Leaders in Trustworthy Business for 2013. You can learn more about this award from the Trust Across America organization in our February 2013 issue on our website.

In this Spring 2013 issue you will find another set of great articles, including the continuing series of ICONS Interviews. This one is a discussion between Bennett Freeman of Calvert Investments and Rebecca Adamson of First Peoples Worldwide about the energy and extractives industries to which we are so addicted to in the US and around the world. Next our friend Woody Tasch updates us on his growing organization—Slow Money—and its goal of bringing money back to earth, literally. In these times we need financial organizations with positive community impact—here you will learn about Santa Fe-based Homewise, whose programs should be replicated across the country. Homewise helps qualified people get into their first homes with innovative and financially responsible solutions. We end with the very thorough SRI Trends Report on the financial totals, as well as investing and shareholder trends, in Sustainable and Responsible Investing published by the US SIF.

In closing, we always encourage conference attendance because learning is ever important. This Spring check out the Slow Money Conference in Boulder, CO; the US SIF Conference on Finance for a Sustainable Future in Chicago, IL; and the TBLI Conference in NYC. There are many other great events on our extensive Global Calendar here on GreenMoney.com

Once again we thank our readers and advertisers as we begin the next 20 years,

– Cliff Feigenbaum, founder and publisher,  cliff@greenmoney.com