Sustainable Investing: Good News for 2022 and Beyond

For women-led and impact leading Domini Impact Investments, sustainable investing isn’t a trend; it’s a tradition. CEO Carole Laible explains what’s ahead for sustainable investing in 2022—and why women are the ones that will continue to power its momentum.

Impact investing is everywhere these days. It’s in the news. It’s a part of an increasing number of investment portfolios. And with the urgent call from the 2021 Report of the Intergovernmental Panel on Climate Change,¹ I expect all eyes will continue focusing on sustainability throughout 2022. This growth is a greatly appreciated phenomenon to watch unfold.

Interest in sustainable investing, also known as socially responsible, ESG (environmental, social, and governance), ethical, or impact, investing has never been stronger. Recent statistics and the results of Domini’s survey conducted in partnership with Kiplinger, support this statement. We’re seeing that more than ever, investors care—and they care a lot. They understand that if we are to live on a green planet and if we are going to allow every human to thrive, then they must play an active role.

Last year, 33 percent of $51.2 trillion in total U.S. assets under professional management were invested in sustainable, responsible, and impact investing strategies.² As more asset managers enter the impact investing space, I smile; their entry is competition, yes—but more importantly, it’s the fulfillment of Domini’s vision. Since our inception, we have worked to make “investing for good,” the way all investing is done. Real progress is being made toward this goal.

It’s also incredibly satisfying to see the leadership of women in this transformation. I say this not only because it was our founder, Amy Domini, who helped launch the sustainable investing movement, or because we are a women-led organization, but also because on a daily basis, I witness the power of women investors, big and small, coming together to harness the power of finance to build a better future. A recent RBC Wealth Management study of their U.S.-based clients found that “female clients are almost twice as likely as their male counterparts to say it is important that the companies they invest in integrate ESG factors into their policies and decisions….[and are] more likely to prioritize ESG impact when considering what companies or funds to invest in, while male clients are much more likely to prioritize financial performance.” Women in particular, and a great many men too, look to sustainable investing to help express their care for the climate, for low-income communities, and for global health, knowing that all of these things are interconnected. They understand — often from personal experience — that gender diversity starts at the top. As companies hire more women and include more diversity in their upper management and on their boards, the organizations realize both better balance and better financial results. MarketWatch reported that companies with diverse teams attain 19 percent higher revenue than those that lack diversity.³ As part of our investing criteria, we consider diversity as a universal key performance indicator. But despite these statistics, the U.S. financial world is still struggling to realize the benefits diversity brings—at least if the largest public financial institution statistics are representative. According to a Deloitte study, only six of the 107 largest public financial institutions in the U.S. had female CEOs in 2019.

As investors, let us remember that what gets measured gets managed. When ethical investors decide not to invest in a company because it has no women on its leadership team or board, other companies start to consider the diversity of theirs. When we invest in low carbon footprint companies, other companies start paying attention to their own carbon footprint. When we boycott companies aiding warlords, companies reconsider aiding warlords for profit.

We can also use our voice as investors to create change when needed. Last year our firm communicated with companies on topics related to gender diversity, climate policy, executive compensation, and drug pricing. We were successful in reaching agreements with several companies. For example, we recommended that an automobile manufacturer publish a Diversity, Equity, and Inclusion report—and they did.

What gives me great hope is that while more than 70 percent of the respondents of our survey said a company’s environmental practices, social issue management, and governance policies are very or somewhat important to them when choosing investments, impact investing proves to be even more popular with younger investors.  Ninety-one percent of Millennial respondents to our survey say they are likely to add these types of investments to their portfolios soon. Baby boomers helped build the industry, and the younger generations will help propel it forward. Our future holds hope to be greater and greener as investors come together with mutual care for people, planet, and profit. That’s good news for 2022—and well beyond.

 

Article by Carole M. Laible, who is on a mission: to harness the power of finance to build a better world.

Since joining Domini Impact Investments in 1997, she has contributed to making that ideal a reality. Under her leadership as CEO, the impact-only investment adviser with $3 billion assets under management has empowered investors to grow communities, inspire companies, preserve the planet, and create a world of shared prosperity.

“Impact is when care reaches,” says Ms. Laible. But for Ms. Laible, this statement isn’t just a talking point; it’s a way of life. Besides being responsible for the overall research (the firm conducts proprietary in-house research) and mutual fund operations of Domini, she has been active in the fossil fuel divestment movement, supporting its efforts through public outreach and advocacy, including commenting on the issue, publishing op-eds, and participating in a roundtable on divestment of the NYS Common Retirement Fund.

With over 20 years of impact investing experience, Ms. Laible played a key role in the launch of a new strategy for the Domini Impact Equity Fund, for which she is also the Co-Portfolio Manager. It’s a role she also holds for the recently launched Domini Sustainable Solutions Fund and the Domini International Opportunities Fund. She also oversees the current investment strategy and sub-manager selection for the Domini Impact Bond Fund and the Domini Impact Equity Fund.

Instrumental in helping to make ‘investing for good’ the way all investing is done, Ms. Laible ensures Domini continuously shares information, works with peers, listens to stakeholders, and welcomes others to the industry. “We want our firm to demonstrate how today’s connections fuel tomorrow’s prosperity,” says Ms. Laible.

The rising momentum of the impact investment movement doesn’t surprise Ms. Laible, who has understood for decades that positive social, environmental, and financial returns aren’t mutually exclusive. “What’s good for people and the planet, is typically good for business” she says.

Nothing defines that legacy more than Domini’s Impact Investment Standards. “They’re a key differentiator for the firm,” says Ms. Laible, who serves on the Domini Standards Committee to define, clarify, and implement them. She also maintains a voting seat on Domini’s Impact Review Committee, which is responsible for the oversight of all companies’ consistency with Domini’s social and environmental standards and determination of investment eligibility.

In addition to her work at Domini, Ms. Laible is also a founding member of the Sustainability Accounting Standards Board™ (SASB)™ Investor Advisory Group. She works to support diversity in the field of finance, including as a Global Angel member of 100 Women in Finance.

Methodology

The Kiplinger-Domini national public opinion poll on ESG Investing was conducted August 4 to August 10, 2021, with 1,029 respondents. The survey has a margin of error of +/- 3.52%. Respondents were screened for age (25 and older), annual income (at least $75,000), and non-retirement investments (minimum of $10,000). A survey quota was implemented around familiarity with the term “ESG investing” to ensure that about half of the respondents were familiar with the term prior to taking the survey. Responses for some questions may not add up to 100 due to rounding or may exceed 100 if respondents could select more than one response.

Before investing, consider the Domini Funds’ investment objectives, risks, charges and expenses. Contact us for a prospectus containing this and other information. Read it carefully.

The Domini Funds are not bank deposits, are not insured and are subject to certain risks. You may lose money. The Domini Impact Equity Fund is subject to impact investing, portfolio management, information, market and recent events risks. The Domini International Opportunities Fund is subject to foreign investing, geographic focus, country, currency, and impact investing risks. The Domini Sustainable Solutions Fund is subject to sustainable investing, portfolio management, information, market and recent events risks. The Domini Impact International Equity Fund is subject to foreign investing and emerging markets, geographic focus, country, currency, and impact investing risks. Investing internationally involves special risks, such as currency fluctuations, social and economic instability, differing security regulations and accounting standards limited public information, possible changes in taxation, and periods of illiquidity. The Domini Impact Bond Fund is subject to impact investing, portfolio management, style, information, and market risks.

The Adviser’s evaluation of environmental and social factors in its investment selections and the timing of the Subadviser’s implementation of the Adviser’s investment selections will affect the Fund’s exposure to certain issuers, industries, sectors, regions, and countries and may impact the relative financial performance of the Fund — positively or negatively — depending on whether such investments are in or out of favor. Public health crises caused by the COVID-19 outbreak may exacerbate other pre-existing political, social and economic risks in certain countries or globally. Shares of the Domini funds are offered for sale only in the United States. DSIL Investment Services LLC (DSILD) distributor, Member FINRA.  11/21