A Total Portfolio Approach to Fossil Fuel-Free Climate Solutions
In mid-September, from the main stage of the 2016 Social Capital Markets conference (SOCAP), Croatan Institute President and Senior Fellow Joshua Humphreys announced the release of an educational fossil-free investment portfolio, the Divest-Invest Clean 15. The portfolio includes 15 investment strategies, across five major asset classes, offering institutional investors opportunities to invest in strategies that pursue solutions to climate change and other environmental challenges, ranging from renewable energy to organic agriculture to green buildings and sustainable infrastructure.
The Clean 15 Portfolio is available for download at- http://croataninstitute.org/publications/publication/divest-invest-clean-fifteen
“The fossil-fuel divestment movement has reached a critical moment,” said Dr. Humphreys. “Hundreds of investors with trillions of dollars in assets have pledged to divest from fossil fuels. Now they are increasingly asking how to invest in solutions to climate change. The Divest-Invest Clean 15 provides a valuable educational resource for this growing field.”
The portfolio was developed by a consortium of groups, including strategists and researchers from SOCAP, Good Capital, Martin Investment Management, Impact Assets, and Croatan Institute, and underwritten with the support of Farmland LP, Breckinridge Capital Advisors, Trillium Asset Management, Community Capital Management, Essex Investment Management Company, Fifth Season Ventures, Jonathan Rose Companies, and RBC Global Asset Management.
The 15 managers highlighted in the portfolio include Breckinridge Capital Advisors, Community Capital Management, Craft3, Essex, Farmland LP, Green Alpha Advisors, Iroquois Valley Farms, Jonathan Rose Companies, The Lyme Timber Company, North Sky Capital, Reinvestment Fund, Renewal Funds, Shelton Capital Management, SJF Ventures, and Trillium Asset Management. The composition of the portfolio was discussed on a dedicated panel at the conference, held at Fort Mason’s Southside Theater: “The Divest-Invest ‘Clean Fifteen’: A Total Portfolio Approach to Fossil-Free Investing.”
Presenting on the panel were Ellen Friedman, Executive Director of Compton Foundation; Michael Lear, Vice President of Athena Capital Advisor; and George W. Rooney, Jr., Chief Investment Officer of Collaboration Capital. Dr. Humphreys moderated the discussion.
Introduction from the Clean 15 Booklet
As part of the rapidly expanding fossil-fuel divestment movement, a wide range of investors, from philanthropic foundations and faith-based institutions to family offices and high-net-worth individuals, has pledged to divest from fossil fuels and invest in solutions to climate change. At the 2015 Paris Climate Conference, the Divest-Invest initiative announced that more than 500 institutions with over $3.4 trillion in combined assets had made commitments to divest from the world’s largest publicly traded coal, oil, and gas companies.
At the same time, growing numbers of impact investors are seeking opportunities to mobilize a fuller array of their portfolios in pursuit of beneficial social and environmental impact, alongside financial returns. The 2015 SOCAP conference in San Francisco included a dedicated Divest-Invest thematic track where impact investing practitioners and thought leaders came together to explore high-impact, fossil-free investment opportunities emerging across asset classes. Building upon those conversations at SOCAP15, a consortium of organizations has developed a total portfolio approach to fossil-free investing with impact. This paper provides the results of that initial effort. Dubbed the “Clean 15,” this Divest-Invest portfolio includes 15 examples of investment strategies across five major asset classes commonly found in diversified institutional investor portfolios: public equity, fixed income, private equity and venture capital, private debt, and real assets.
In developing the portfolio, the consortium sought out fossil-free investment strategies pursuing solutions to climate change and other environmental challenges, in themes ranging from renewable energy to sustainable infrastructure, from organic agriculture to clean technology. In order to respond to the needs of mission-driven institutional investors, the Clean 15 portfolio focuses on active managers with demonstrable track records of generating high social and environmental performance and competitive financial returns. The portfolio has an explicit domestic bias, with a strong preference for strategies integrating social impact, in addition to environmental performance. These various constraints, developed by the consortium, limited the potential universe of investment opportunities, but also sharpened the focus of the research and portfolio construction process. Over time as the field of fossil-free impact investing continues to mature, we anticipate expanding the criteria for inclusion in order to broaden the universe of opportunities and develop more diversified divest-invest portfolios beyond this initial Clean 15.
The Clean 15 Portfolio is available for download at- http://croataninstitute.org/publications/publication/divest-invest-clean-fifteen
For more information on Croatan Institute’s work on climate solutions, please visit the Fossil-Free Pathways program page at- www.croataninstitute.org/croatan-programs/fossil-free-pathways or contact Dr. Humphreys at josh@croataninstitute.org
