Finance as a Force for Nature–A Pioneering Approach to Investing

Finance has traditionally been a male-dominated industry. My prior professional experiences made this crystal clear, while simultaneously providing me invaluable opportunities to learn about the fundamental principles of investment management. Those experiences have led me to appreciate the myriad of intellectual and social benefits that can be derived from diversity of opinion and perspective. Seeking a more inclusive approach to investment management that incorporates inputs from a wide array of stakeholders, I made the decision in 2015 to alter my career trajectory by entering the realm of ESG investing as the CFO of Calvert Investments.

Socially responsible investing (SRI) has sought to broaden and expand upon traditional investment principles by incorporating considerations related to a variety of social and environmental issues. My experience at Calvert prompted me to push the boundaries of SRI by conceptualizing investment management in a new and innovative way. Fueled by my love of wildlife and the outdoors, I co-founded Karner Blue Capital on the belief that finance can be more than just a way to earn competitive returns for investors – it can be a true force for nature if we approach investing in a fundamentally different way.

A Changing World View

Karner Blue Capital’s focus on the preservation of biodiversity as an investment theme allows investors to align their investments with their values – an approach to investing that often has a special appeal for women. It inherently recognizes that we cannot continue to take from nature and not give anything back. It also recognizes that the future of our planet will require a more nurturing approach. Thankfully, this view is taking hold among most segments of the population – especially female and millennial investors.

Last month, a report released by Professor Sir Partha Dasgupta reached the conclusion that traditional economic thinking is leading us down a path of ruin and that we must adopt a new paradigm that he refers to as “inclusive wealth,” which would recognize the economic value of the planet’s natural capital. Similarly, a recent study by the World Economic Forum estimated that capital expenditures totaling as much as $2.7 trillion annually over the next decade will be needed in three socio-economic industries with material biodiversity impacts to ensure the regeneration and sustainability of nature for the future. Together with climate change, these three economic systems – food, land and ocean use; infrastructure and building; and energy and extractives – are responsible for the endangerment of approximately 79 percent of threatened species (25 percent of all species are currently under threat of extinction).

Although seemingly daunting in scope and size, these industrial metamorphoses represent a significant opportunity, especially for visionary female investors and business leaders who recognize the societal threat of biodiversity loss, and who are willing to act swiftly to build a more sustainable natural infrastructure and global economy. To that end, in 2020, I was proud to have Karner Blue Capital co-launch the Finance for Biodiversity Pledge as one of 26 founding signatories. The Pledge is a consortium of insurers, asset managers and lending institutions united in their commitment to biodiversity. Signatories of the Pledge recognize the need for transformative change in business practices and have agreed to collaborate and share knowledge with others, engage with companies, assess impacts, set targets and report publicly to encourage and facilitate change in the private sector.

The Karner Blue Way

It hasn’t always been easy to introduce the Karner Blue Capital methodology in the world of finance as it stands in contrast to the expectations of many industry practitioners.

Rather than focusing first on corporate profitability, Karner Blue Capital creates its investable universe by prioritizing the extent to which companies integrate biodiversity considerations into their business operations and supply chains.

Our pioneering approach is intentionally designed to capture as much corporate biodiversity performance information as possible – without allowing that analysis to be influenced by profit or expected financial performance – in order to ensure that our peer-relative biodiversity assessments are comprehensive. It is then, only after we have established our investable universe, that we apply a Quality at a Reasonable Price investment analysis to select companies for inclusion in our strategies. By emphasizing the primacy of biodiversity over traditional financial analysis, our investment strategies are laser focused on identifying and investing in solutions that halt biodiversity loss.

Karner Blue Capital’s strategies are grounded in my belief that innovative companies focused on problem-solving and best practices relating to biodiversity preservation, environmental protection, climate change mitigation, and animal welfare can better position their businesses for growth and success in today’s marketplace. To bring that belief to fruition, we have designed a proprietary research platform to help identify those companies leading their industries in biodiversity performance while avoiding companies that manufacture or distribute socially detrimental products including fur, firearms, tobacco, alcohol, and coal.

To further enhance Karner Blue Capital’s potential for impact, we focus intensely on identifying companies that leverage technological and innovative solutions designed to monitor and measure the positive and negative impacts of supply chains on ecosystems all over the world. Our efforts are intended to resonate especially with women and to present them with an opportunity to participate in a transformative movement while investing in our collective future.

Investing in the Future

In the end, I hope this growing movement to deploy economic tools to preserve biodiversity continues to thrive, not only for the sake of our economies, but also for future generations whose health and safety directly depend upon the existence of a robust and biodiverse planet. The time is now for women across the globe to be the agents of change that the world needs them to be. With one million animal and plant species now threatened by extinction – the most in human history – and greenhouse gas emissions doubling since 1980, women have a tremendous opportunity to use finance as a force for nature.

 

Article by Vicki Benjamin, CEO of Karner Blue Capital. Vicki is a co-founder of the Adviser and has been its Chief Executive Officer since it commenced operations as an investment adviser in 2018. Vicki maintains a 57 percent ownership stake in KBC. Ms. Benjamin was a partner at KPMG from September 2005 until February 2015, when she joined Calvert Investments, Inc. as its Chief Financial Officer. She served as the President of Calvert Investments, Inc. from January 2017 through June 2020. She received a B.A. from the University of New Hampshire and an M.B.A. from Bentley University McCallum Graduate School of Business.