Tag: Featured Articles

Equal Exchange-A Mission Accomplished by Ted Ketcham GreenMoney

Equal Exchange: A Mission Accomplished

By Ted Ketcham, GreenMoney Journal

Ted Ketcham GreenMoney
Ted Ketcham, GreenMoney editor

It was a fortuitous sharing of vision and willingness to take risks that drove Equal Exchange founders Rink Dickinson, Jonathan Rosenthal, and Michael Rozyne in 1986 to move forward with their vision of Fair Trade and a better world. The three were managers at a food cooperative in New England who dreamed of a large and inclusive economy that lifted up the prosperity of growers in the Third World — growers whose poorly paid labor had long kept the wealthy in comfort and the growers in poverty.

Meeting once a week for three years to discuss how best to change the way food is grown, bought, and sold around the world, they hatched a plan for a new organization to be called Equal Exchange that would be:

  • A social change organization that would help farmers and their families gain more control over their economic futures.
  • A group that would educate consumers about trade issues affecting farmers.
  • A provider of high-quality foods that would nourish the body and the soul.
  • A company that would be controlled by the people who did the actual work.
  • A community of dedicated individuals who believed that honesty, respect, and mutual benefit are integral to any worthwhile endeavor.

They launched an alternative trade model that utilized direct trade, established long term contracts, and offered higher-than-market prices to small coffee farmers. In the traditional trade model, buyers go through a series of middlemen to purchase coffee beans from plantation farmers. Prices are determined by these middlemen.

They left their jobs. They invested their own money, and they turned to their families and friends for start-up funds and let them know there was a good chance they would never see that money again.

Equal Exhange tea workerThe idea of Fair Trade, as practiced by Equal Exchange, was to establish direct relationships between growers and buyers, betting that consumers would support the cooperatives by paying a little extra for higher quality coffee. The profits were shared equally.

Today, while they are a much larger organization with more than 100 worker-owners and a significant national and international scale, they are still breaking conventions when they buy from their trade partners in organic, gourmet coffee, tea, sugar, bananas, avocados, cocoa, and chocolate bars and olive oils produced by farmer cooperatives in Latin America, Africa, and Asia.

Encouraged by Equal Exchange’s Fair Trade success, other producers have succeeded on a similar scale. Fair Trade foods that were once limited to local markets and expensive groceries are now distributed in Walmart, Kroger and Publix, among many other retailers. For many years consumers perceived the fair trade movement as existing primarily for middle or upper-class consumers in large cities, but that image is changing.

This change has not come without obstacles from the beginning. In 1988, for example, the White House objected to Equal Exchange (or anyone else) dealing with the Nicaragua’s Daniel Ortega government. President Reagan’s Office of Foreign Assets Control attempted to place a trade embargo on Nicaraguan coffee, which effectively/blocked their primary distribution. This embargo could have ended their experiment in fairness right away, but the young company found a loop-hole: if the coffee was roasted in another country it became a product of that country, and therefore a legal commodity that could be traded between the U.S. and Nicaragua, via Mexico.

The founders were already in close contact with representatives from a village movement in Sri Lanka, and in 1987, Equal Exchange brought in its first high-quality black tea, bolstered by the knowledge that tea drinkers numbered a close second to coffee consumption on the planet.

In 1991 Equal Exchange became a part of the European Fair Trade network, aligning with groups that were far ahead of U.S. Fair Trade markets. This led to additional contacts in India, and Central and South America. By the end of 1994, what had once been the “pipe dream” of reaching $1 million in sales had become a reality. Equal Exchange was a worker-owned cooperative with 20 members—with departments, managers, and a growing number of outside investors.

In 2004 Equal Exchange could not ignore the excesses of the chocolate trade. Most of the world’s chocolate comes from West Africa, where child labor is a part of the process, tantamount to slavery. Children who had never tasted chocolate were sent up trees to retrieve the cacao used in our chocolate bars.

In 2001 a partnership between cocoa, sugar, and dairy cooperatives led to Fair Trade hot cocao mix; the success of cocao led, in 2004, to the introduction of three chocolate bars, which today number 11 choices on their website.

Equal Exchange products are available online, in stores, and in many churches and Saturday markets. Covenant Community United Methodist in Spokane WA for example, raises candy-sale profits to help village children attend school in a small church in El Paisnal, El Salvador. It appears that church attendance may spike a bit on those Sundays.
Equal Exhange products

Help Support Authentic Fair Trade

To support authentic Fair Trade, purchase fairly-traded products from small farmers. Your shopping choices support or discourage actions by businesses. By supporting Equal Exchange, you help reclaim the food system – to make it better for farmers, consumers, and the planet. Equal Exchange suggests:

  • Ask for Equal Exchange products at markets, food co-ops or cafés.
  • Serve Equal Exchange coffee, tea or hot cocoa at your place of worship.
  • Raise money for your organization by fund raising with Equal Exchange products.

Equal Exchange hopes consumers will join with them to deepen their understanding of these issues and take actions. They cannot transform the food system without the active, deep and committed participation of citizen-consumers. An authentic Fair Trade system, according to Equal Exchange, requires democratic organizing of producers in the South, worker democracy for businesses in the North, and active citizen involvement in the North.

The future is clear for Equal Exchange, stating, “Our vision includes breaking new ground by bringing Fair Trade home—by fostering direct relationships with family farmers here in the United States. Our collective achievements of the past 30 years prove that we can create change beyond our wildest dreams.”

  

Article by Ted Ketcham  Since the early days of the GreenMoney Journal, writer and now retired teacher, Ted Ketcham, has worked with publisher Cliff Feigenbaum as copy-editor and sometimes writer, happy to help in the cause of social and environmental justice.

Equal Exchange products are a special calling for Ted, and he has written about them and other Fair Trade causes in past issues. He has visited Central America, and participated in scholarship drives in El Salvador. Ted serves on the Board of Shalom Ministries, an organization that feeds the homeless and hungry in Spokane, WA.

Featured Articles, Food & Farming, Sustainable Business

Setting the Benchmark for Sustainable Agriculture

By Craig Wichner, Farmland LP

Craig Wichner of Farmland LPLike many Americans, I’ve started travelling again. Flying over the Midwest recently on my way to a conference in New York, it was hard not to be awed by the sight of mile after mile of cropland – around 180 million acres – growing just two crops, corn and soy.

What’s less visible from 30,000 feet but very evident on the ground, however, is the immense cost of growing these two crops year after year – topsoil loss, chemical residue in the soil from pesticides like 2-4-D and atrazine, a loss of pollinators, and vast water pollution. This type of agriculture is also at the center of a system responsible for about a third of the planet’s greenhouse gas emissions.

U.S. agriculture has a concentration problem. It started 50 years ago, when the head of the USDA told farmers to plant for maximum production – from “fence row to fence row” and “get big or get out.” It worked. Today, 56 percent of American cropland acres are growing just corn and soy.

 

Lack of Crop Rotation in US Corn Acres - Farmland LP

Crop diversity and crop rotation, once the hallmarks of land stewardship and productivity, are vanishing. Only one-third of America’s corn acres are planted sustainably, defined as planted once out of four years. Roughly 62.5 percent of corn acreage rotates only minimally, alternating between soy and corn. And of these, about 10 million acres have practically no crop rotation at all, planting corn in ten or more years of a 12-year period, according to USDA data. That’s a large-scale problem, as those continuous-corn acres comprise three times more than all the organic cropland in the U.S. combined.

What’s even more troubling is that some industry players now want to classify their damaging practices as “sustainable” agriculture. They’re seeking to paper over destructive practices to make their products more appealing to consumers and meet investor demand for ESG accountability. Sadly, greenwashing has come to agriculture, with some trying to put green lipstick on their pig.

Misleading people about “sustainable” agriculture is possible because there are neither legal nor science-based standards for it. The Certified Organic standard, on the other hand, is grounded in Federal Law, managed by the National Organic Standards Board, which is an independent body appointed by the US Department of Agriculture.

Yet even without a formal standard, nearly everyone agrees that certain farming practices are harmful, and clearly not sustainable, such as growing corn year-after-year on the same farmland. This practice is entirely dependent on genetically modified crops and requires increasing amounts of toxic herbicides, pesticides and fertilizers to try to overcome the damage it causes to the soil and ecosystem.

 

Certified Organic is the Benchmark Standard from Farmland LP

In our view, any self-proclaimed standard for sustainable agriculture should meet a three-part test:

1) Independence. It should have an independent board with full transparency of membership, affiliations and decisions.

2) Materials and Practices. It should identify specific materials and practices that are prohibited, as well as those that are required. For example it would bar the use of chemicals like 2-4-d (Agent Orange) or soil fumigants (nerve gas) and prohibit practices such as continuous corn, or even a corn-soy rotation, which is a below-average practice in the U.S. It should require crop rotation of 3 or 4 crops, or set aside 1-5 percent of land as pollinator habitat or ecosystem reserve, or mandate use of cover crops.

3) Impact and Outcomes. It should produce specific, measurable on-farm changes and outcomes, ideally affecting regional or global goals. Examples might include clean water, improved ecosystem function or habitat improvement, carbon sequestration, or food production (vs producing ethanol as a fuel additive).

The USDA Certified Organic standard meets these criteria today. Its 15-member National Organic Standards Board includes: organic farmers; environmental conservationists; organic processors; a retailer; a consumer representative; a USDA accredited certifying agent; and a scientist with relevant background. Authorized certifiers review documents and inspect fields to ensure farmers and products meet these rigorous standards. And 40 years of published scientific research supports the many benefits of organic agriculture on human health, soil health, and the ecosystem.

Investors and consumers are waking up and beginning to ask tough questions of farm managers. But rather than make changes, some organizations try to claim they have “sustainability standards,” with pretty logos and appealing marketing language, although they permit the worst agricultural practices that we’re all trying to change.

One misleading standard that’s popular with large institutional managers was organized by the firms themselves, including support from giant industrial agriculture companies. There is no independent standards body, there are no restrictions on ag practices, and they don’t change outcomes. It’s like having tobacco companies set health standards. But strong investor demand for (real) sustainable agriculture, combined with no legal restrictions on what they can represent and clever marketing, has grown them to over 2 million acres in about two years – a level it took certified organic land 25 years to reach.

It takes three years for a farm to become Certified Organic. It’s not designed to be an easy, check-the-box process. But the benefits to organic certification are clear and tangible to farmers, in terms of higher crop prices and acreage rents, and to the environment.

 

Crops Increase Income from Farmland LP

Our own experience bears this out. We’ve shown that organic farming is both good for the environment and can generate attractive returns. Our first fund had a 69 percent financial gain in net asset value over seven years. As importantly, a two-year USDA-sponsored study on our 4,200 acre California farm shows we also generated a 46 percent net gain for the ecosystem, measured by data-driven metrics including: carbon sequestered in the soil, harmful conventional ag practices avoided, enhanced biodiversity, establishment of healthy pollinator habitats, and improved quality and reduced use of water for crops.

Helping agriculture become more sustainable is a daunting but important challenge, and some aspects are not always clear-cut.  But some assessments are easy to make. Any purported standard that allows the worst-of-the-worst agricultural practices, such as monocropping continuous corn, to certify as sustainable is not legitimate.

We all should support sustainability initiatives that promote independent standards with science-based criteria and verifiable environmental and health benefits. And we all should stand up to greenwashing and self-declared standards. Investors and consumers are demanding real change, and those who mislead should not harvest their support.

 

Article by Craig Wichner, CEO of Farmland LP, the largest fund manager of organic farmland in the US, with 15,000 acres in Washington, Oregon and Northern California valued at over $200 million.

Read Craig’s June 2021 GM article: Roots & Returns: Craig Wichner Explains Regenerative Agriculture

Featured Articles, Food & Farming, Impact Investing, Sustainable Business

Food and Ag - Finding Sustainble Solutions Old and New

Food and Agriculture: Finding Sustainable Solutions, Old and New

By Mary Beth Gallagher, Domini Impact Investments

Mary Beth Gallagher of Domini Impact Investments.2I recently had the opportunity to sit on a panel on the importance of preserving our forests, alongside the founders of the Lenape Center and other experts. The Lenape are an Indigenous people with historical territory in what is now known as New York, New Jersey, and Pennsylvania. As a New Yorker based at an investment firm in NY, I found their reflections especially affecting. One of the Lenape Center leaders reframed our discourse on the United Nations climate goals and global deforestation risks, putting it in historical context. As land was forcibly taken from Indigenous tribes and our economy grew with roots in extraction and exploitation—of people and our natural resources—society developed systems that are fundamentally unsustainable. Just as the cause of these problems is rooted in 400 years of history, so too are some of the most powerful solutions.

An Unsustainable System

One example of this extractive model is industrial agriculture. Our global food systems have been under increasing pressure, with 2.37 billion people around the world without food or unable to eat a healthy balanced diet, a crisis exacerbated by the pandemic and again by the tragic war in Ukraine.

The predominant agricultural models are generally run by a few major players, whose monoculture crops, use of chemical fertilizers and pesticides, and long supply chains have climate impacts and often contribute to economic hardship for farmers. An estimated 23 percent of global carbon emissions are from agriculture and land use change. Climate change, water scarcity, and the degradation of biodiversity may result in the loss of seeds and arable land.

Frameworks for Change

All this amounts to a global environmental crisis. A recent UN Intergovernmental Panel on Climate Change (IPCC) report reinforced this urgency, noting that improved land stewardship and afforestation are among our greatest available tools to mitigate climate change. In October 2021, the UN recognized the right to a clean, healthy and sustainable environment as a human right. This encompasses a right to sustainably produced food free of toxins—and, further, calls for meaningful protections for environmental human rights defenders who have fought to protect their land from exploitation.

There is a powerful alternative model from the Lenape people that can be applied to many of these challenges. Over centuries, the Lenape have protected and stewarded their seeds, and they are now attempting to return seeds to their homeland, Lenapehoking. This is a demonstration of the acknowledgement of their land and cultural seed sovereignty. It is also a poignant embodiment of what regenerative and sustainable agriculture mean in practice.

Drawing Connections at Domini

Regenerative agriculture involves practices that equitably use land to address climate change, biodiversity, soil health, and the well-being of workers and local economies. In 2019, Domini launched its Forest Project, focusing on the systemic importance of forests to environmental systems, businesses, and investments. We recently drew more explicit connections between our forest work and our sustainable agriculture work, recognizing the relevance of our expectations across all. Deforestation and large-scale agriculture plantations result in similar conversion of land, from old growth forests or wild mixed-use purposes, to a single monoculture crop. From a climate perspective, this reduces climate resilience and carbon sequestration benefits. It also erodes soil health and contributes to biodiversity loss. The importance of equity around land rights, food sovereignty, and the rights to self-determination are similarly fundamental.

How We Analyze Companies

At Domini, as an investor in public equities and fixed income portfolios, we look to be additive in addressing key sustainability challenges through our investments and engagements. Specifically for forests, we identify our direct and indirect impacts, encourage a forest positive system, and collaborate with partners and investors to elevate this work. This manifests through the refinement of our industry specific key performance indicators (KPIs) that our research analysts use to evaluate companies for investment. It also informs our expectations of companies that we advance through engagement and leads us to advocate for strong public policy.
Domini Forest Project triad
At Domini, we are encouraged as more companies recognize the importance of their agricultural inputs and land use in meeting global “net-zero” climate commitments. Many are setting science-based emissions reduction targets, which include their supply chain, often adopting regenerative agriculture commitments.

At this stage, expectations are still emerging, so we are meeting with companies we invest in to better understand the scope of their commitments. For example, we ask about the percentage of their supply chain covered, which regenerative practices are deployed, and how equity and justice are incorporated. Meeting these commitments generally requires actions from suppliers. To understand the depth and quality of companies’ supplier engagement, we ask about how Indigenous and local communities are consulted in designing new models, and the technical assistance and incentives to help farmers adopt regenerative practices. And as this continues to evolve, we’ll encourage companies to be transparent about their methodology and impact measurement. All of these changes should be reflected in companies’ long-term business planning and capital expenditures, including investments in innovation. 

Learning from the past and looking ahead

The scope of Domini’s engagement and investment goes beyond traditional food and beverage companies. We look favorably on innovative new models of agriculture, often investing in companies that advance state-of-the-art technology and use practices that will benefit ecosystem and business outcomes in the long term. For example, we invest in a U.S. farming company that uses non-GMO seeds, integrated pest management, and chemical-free agricultural practices that result in significant reductions in energy and water use. We appreciate the similarity of this new innovative solution with what Indigenous communities have long known and incorporated in their stewardship practices.

Our future calls on us to collectively identify and scale such solutions, while respecting the rights of Indigenous communities, honoring their cultural traditions, and following their lead. The Lenape diaspora and other Indigenous leaders have practices of cultural and ecosystem regeneration unique to their communities and land. We encourage companies to make their business models more resilient and equitable—by building relationships with Indigenous and local communities and learning the unique lessons that they offer.

 

Article by Mary Beth Gallagher, Director of Engagement at Domini Impact Investments LLC. Ms. Gallagher, an attorney and former Executive Director of a non-profit organization representing institutional investors, has been advancing social justice and human rights issues for most of her professional career.

Ms. Gallagher is responsible for leading Domini’s engagement efforts with portfolio companies, broader stakeholder groups and policy makers, as well as developing initiatives and campaigns in areas such as worker’s rights in the supply chain, climate change mitigation, deforestation, health, and racial justice. In Domini’s work to advance ecological sustainability, Ms. Gallagher encourages companies to adopt policies and practices that advance the low-carbon transition, also in alignment with the needs of workers and community stakeholders. Forests are an important aspect of the discussion on climate resilience. Domini’s forest project is committed to understanding the drivers of forest destruction, biodiversity loss, and the impacts on the rights of Indigenous peoples, and addressing this through our investment decisions, and engagement efforts, to further forest value creators.

Prior to joining Domini in 2021, she was the Executive Director of the non-profit organization Investor Advocates for Social Justice. In this role, she represented institutional investors in stewardship and shareholder advocacy with corporations to encourage more disclosure and responsible business practices to advance systemic change. Ms. Gallagher holds a B.S. in environmental science from Boston College and a J.D. from the Washington College of Law at American University. She is a Member of the New York Bar, admitted in 2009. She was a Peace Corps Volunteer in Benin, West Africa.

Disclosures:

Before investing, consider each Fund’s investment objectives, risks, charges and expenses. Contact us at 1.800.225.3863 for a prospectus containing this and other important information. Read it carefully.

An investment in the Domini Funds is not a bank deposit, is not insured, and is subject to certain risks, including loss of principal. The market value of Fund investments will fluctuate. You may lose money. The Domini Impact Equity Fund is subject to certain risks including impact investing, portfolio management, information, market, recent events, and mid- to large cap companies risks. The Domini International Opportunities Fund is subject to certain risks including foreign investing, geographic focus, country, currency, impact investing, and portfolio management risks. The Domini Sustainable Solutions Fund is subject to certain risks including sustainable investing, portfolio management, information, market, recent events, mid- to large-cap companies and small-cap companies risks. The Domini Impact International Equity Fund is subject to certain risks including foreign investing, emerging markets, geographic focus, country, currency, impact investing, and portfolio management risks. Investing internationally involves special risks, such as currency fluctuations, social and economic instability, differing securities regulations and accounting standards, limited public information, possible changes in taxation, and periods of illiquidity. These risks may be heightened in connection with investments in emerging market countries. The Domini Impact Bond Fund is subject to certain risks including impact investing, portfolio management, style, information, market, recent events, interest rate and credit 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 depending on whether such investments are in or out of favor. The value of your investment may decrease if the Adviser’s or Subadviser’s judgement about Fund investments does not produce the desired results. There is a risk that information used by the Adviser to evaluate environmental and social factors, may not be readily available or complete, which could negatively impact the Adviser’s ability to evaluate such factors and Fund performance.

The Domini Funds are only offered for sale in the United States. DSIL Investment Services LLC (DSILD) distributor, Member FINRA. Domini Impact Investments LLC is the Funds’ Adviser. The Funds are subadvised by unafilliated entities. 5/22

Featured Articles, Food & Farming, Impact Investing, Sustainable Business

Why Slow Money-by Woody Tasch - Slow Money Institute

Why Slow Money?

By Woody Tasch, Slow Money

Some Thoughts on Fiduciary Responsibility, Mutually Assured Destruction and Small, Diversified Organic Farms

Woody Tasch Slow Money(Above photo: 0% loan recipients Blain Snipstal and Samaria King of Juniper’s Gardens (Brandywine, MD)

Since the slow money movement’s first low interest loan to a local organic farm in 2010, more than $80 million has flowed to over 800 small farms and local food businesses, via volunteer-led groups in a few dozen communities. Events of the last few years have emphatically accentuated our shared concerns.

The pandemic heightened appreciation of community supported agriculture and local food systems. COP26, Greta Thunberg and wildfires highlighted the urgency of climate change. Another kind of wildfire—that of populism—erupted in ways that were surprising to those who assumed that neoliberal democracy was ascendant and secure. And, today, Mutually Assured Destruction, that Dr. Strangelove-esque doctrine of nuclear deterrence, is brought to our breakfast tables and into our hearts and minds by the war in Ukraine.

The connection of war to issues of food and farming goes far deeper, has far deeper historical and systemic roots, than the current disruption of Ukrainian wheat and sunflower exports. We are talking, here, of the 10,000-year agriculture-enabled process of urbanization that turned the Fertile Crescent into the Oil Patch, taking us from the nomadism of hunter-gathering to the nomadism of cyberspace.

Oxymoronically, agriculture, as it became subsumed by and central to industrialization and globalization, passed—as if Passing Go on a Monopoly board—the culture of Taking Care of The Places Where We Live and proceeded straight to Big Box Stores And The Realm of Cheap Shelf-Stable Calories.

The Green Revolution and industrial agricultural systems are dedicated to increasing production via large-scale agricultural operations and global supply chains, in order to feed the growing world population. Since the mid-20th century, they’ve been doing this to a T, powered by synthetic fertilizers, herbicides, pesticides, GMOs and other food and farming technologies. As the threshold of the new millennium arrived, something called “the food movement” emerged. Consumers in developed countries woke up to what was being degraded, ecologically and culturally, by the advent of highly-processed food. Community supported agriculture and farmers’ markets expanded. In 1989, Carlo Petrini famously pronounced when McDonald’s opened in Rome, “We don’t want fast food. We want slow food.” Slow food became a movement, linking hundreds of thousands of consumers, producers, chefs and food activists in many scores of countries, in support of indigenous food culture and biodiversity. Then, slow money came on the scene to address the investing side of things.

If we want to preserve and restore small, diversified organic farms, we are going to fund them not only as consumers, but as investors. Which is going to require new ways—slow, small and local ways—for capital to flow across the boundaries of investing and philanthropy.

Over the past few years, some of us have begun accomplishing this via SOIL groups, with SOIL standing for Slow Opportunities for Investing Locally. We’re pooling local charitable donations and then making 0% loans to organic farms and food businesses, by majority vote of member donors—one person, one vote, no matter the size of the member’s donation. When loans get paid back, the money recirculates as future loans. Today there are five groups (four in Colorado and one in Virginia), with two in formation (one in Montana and one in Israel). They’ve loaned almost $2 million to more than 60 farms.

Slow Money - Soil Boulder meeting at Lone Hawk Farm-Longmont CO
SOIL Boulder meeting at Lone Hawk Farm, (Longmont, CO)

Recently, we’ve launched beetcoin.org as a platform for small donors across the land to participate in this process, too, building a grassroots source of capital for use as matching grants to SOIL groups. We are aiming for widespread replication of local 0% loan groups in the coming decade, fixing things from the ground up in ways that industrial food systems and industrial financial systems cannot.

Bombs come from above, as do edicts from the Great Fiduciary in the Sky.

The latter are not designed to kill, of course. Fiduciary processes are designed to increase efficient capital flows, in pursuit of higher living standards. However, there is such a thing as too much efficiency. At some point, the pursuit of efficiency comes at irredeemable costs to diversity. Biodiversity. Cultural diversity. Economic diversity. We begin to think that diversification, upon which investment strategies depend, is more important than diversity, upon which living systems depend.

Two Roots Farm Emma Colorado - Slow Money
Two Roots Farm received a 0% loan, (Emma, CO)

Efficiency is not exactly at war with Diversity. Or is he? Efficiency does sometimes seem hell-bent, as if he were a kind of Greek god, to vanquish Diversity, who might become, were the Fates to smile, his better half. The whole world, the future of our species and so many others, depends on the outcome of their relationship.

Mutually Assured Destruction as a geopolitical doctrine is almost mythic in its cultural implications. Perhaps what is being destroyed is our very capacity for myth, for elevated storytelling, part of which, in the 21st century, must include a new economic narrative. Mutually Assured Destruction is not a terribly satisfying system for keeping the peace and it is an awfully sad expression of our increasingly desperate need, in these times of multiple crises, for greater mutuality.

Hence the need for those of us of a certain persuasion to get together directly, locally, personally, informally. Yes, we are funding small diversified local farms and local food systems. We can track the number of farms, the amount of food produced, nutrient density, price, the amount of carbon sequestered. We can develop new metrics. But at a level that is both deeper and simpler, we are finding new ways to reconnect to one another, to the places where we live and to the land.  In the name of health and peace.

Aha Fake Trillions by Woody Tasch

Article by Woody Tasch is founder of the Slow Money Institute and author of AHA!: Fake Trillions, Real Billions, Beetcoin and the Great American Do-Over (Slow Money Institute, 2021)

Featured Articles, Food & Farming, Impact Investing, Sustainable Business

Finding a Career in Financial Services with ESG Investing by Sarah Adams of VERT Asset Mgmt - photo Jason Goodman on Unsplash

Finding a Career in Financial Services with ESG Investing

By Sarah Adams, Vert Asset Management

Above photo credit: Jason Goodman on Unsplash

Sarah Adams of Vert Asset Mgmt.There’s a conventional attitude toward work that entails leaving everything you do outside of work behind, as though nothing else exists. With this perspective, you are encouraged to fit your family, your morals, yourself, around the job.

I was raised that way. As an elementary school kid, if I had to call my mom at work she’d answer the call in a hushed tone, as though she was receiving an illicit phone call. Her office was not interested that her 10-year-old needed to be picked up from school, let alone that she had kids at all.

These jobs still exist, many of us have worked these jobs. Thankfully, there is another path, and some of us are fortunate enough to be able to take it. These days, it is my passion and interest in environment, social, and governance (ESG) investing that guide my career, not the job itself. Today, I work as Chief Sustainability Officer and co-founder at Vert Asset Management. But getting here wasn’t straightforward, or easy.

I did not study to go into finance. On a lark, I landed a college internship at a brokerage firm during the height of the dotcom boom in the late 90s. My financial services initiation, some would say ‘hazing’, was straight out of movies like Boiler Room. It was fast-paced and exciting to be near a NASDAQ trading desk. But there was an unspoken understanding that I leave my conscience at home. It was clear to me from this early exposure that investments had lost its humanity (if it had any to begin with).

In the field of finance there has long been an expectation that your background and interests should be in math and cold calculations. This is why so many engineers find their way into financial services. However, for those like myself (a history major) who are more interested in context and strategy, there is space in financial services for those roles, but they are more peripheral.

My light bulb moment occurred in 2006 when I was working in the UK at an institutional asset manager. I learned that UK city and county pension funds were required to ask socially responsible questions when searching for new asset managers. Why? Because they represented a large number of disparate beneficiaries who lived and worked in their geographical area, and they invested for the protection of all of these people’s retirement.

Back then, most investment professionals, including my bosses, rejected the notion that investments should take into account “non-financial” issues like environmental, social, and governance risks. Needless to say, things have changed. The 2020 Global Sustainable Investment Alliance (GSIA) report estimates that 35 percent of all professionally managed assets now incorporate sustainability criteria. Seven out of the ten largest pension funds in the world integrate ESG, including Japan’s Government Pension Investment Fund with assets over $1 trillion at the end of 2021.

Is ESG Investing One Way to Attract More Women into Finance?

I’ve tried several times to devise an exit out of finance to work in more creative and collaborative industries. The last time I left, I thought that in order to really roll-up my sleeves and work on corporate accountability, I needed to work in policy and research. It was while I was working at a non-profit on financial reform that I realized that there was just so much information available that investors were not including in the way they look at markets.

There is an entire ecosystem of service providers creating and disseminating non-financial information to markets now including: non-profits like CDP, ESG researchers, accountants like KMPG, PwC and E&Y. In fact, E&Y just launched E&Y Carbon to help companies with carbon accounting and corporate disclosures to the marketplace. There are standard setters working to refine what is meant by non-financial metrics with financial materiality. In 2018, Sustainability Accounting Standards Board (SASB) identified material indicators in 77 industries. They are now part of the International Sustainability Standards Board bringing integrated reporting mainstream.

ESG issues are interdisciplinary. While financial and accounting metrics have become standardized over time and through usage, ESG metrics are still evolving. Many ESG metrics are still considered ‘externalities’ because the market struggles to measure their economic value – things like clean air and well-being are hard to price. But integrating these environmental and social issues into markets is an opportunity for those from non-math fields because it takes an understanding of people and planet to value them.

Research by Professor Brad Barber, a Professor at UC Davis Business School and a member of Vert Asset Management’s Advisory Board, analyzed the absence of women in finance in 2017 by examining the percentage of women who’ve earned the Chartered Financial Analyst designation as a proxy. It was less than 20 percent. Barber concluded that more women would be in financial services if they were encouraged to study STEM subjects – science, technology, engineering, math. This would certainly help. But there are now more non-STEM roles in financial services. Investment management needs financial planners and advisors, researchers, sustainability experts, integrators, and communicators too.

There are increasingly more professional educational choices on sustainable investing to choose from than ever before. The CFA Institute now offers a Certificate in ESG Investing. The College for Financial Planning offers the Chartered SRI Counselor (CSRIC). The standard-setter SASB offers its own Fundamentals of Sustainable Accounting Certificate (FSA).

Flexible and Remote Work a Welcome Change

I found it difficult to get a job with small children at home even after reorientating my career to focus on sustainability. One friend told me bluntly that as a young mother, “you just aren’t attractive to the marketplace.” A well-known sustainability consultancy didn’t hire me because I had not worked directly with corporate sustainability reports before, despite the fact that I have a background in finance and completed two master’s degrees in environment policy and sustainability.

I took the rejection as an opportunity to start my own business consulting with financial advisors on the landscape of philanthropy and impact investing. I called it Values-Based Investing Consulting, borrowing from a concept that was used at the time within financial services to start to orientate investors to investment managers around an emerging set of non-financial criteria.

Entrepreneurship and small businesses often offer more flexible working conditions than bigger firms. But the pandemic has changed all that quite dramatically. Women can now work from home with flexible hours at all sorts of companies.

In 2016, that entrepreneurial spirit led me to co-found Vert Asset Management with my husband Sam Adams. As the Chief Sustainability Officer, I lead on engagement which is three main areas: 1) communicating with the companies we invest in about ESG topics like net-zero goals, 2) building capacity within financial services for ESG disclosures, and 3) creating good business practices as a business ourselves, a Certified B Corp.

If you are interested in the interdisciplinary topics of environmental, social, and governance and how they influence businesses, you might consider a career with ESG. If you have hard time reconciling the person you need to be for your day job versus the person you are outside of work, ESG could be a good fit. If you want to be part of the solution, instead of being part of the problem, again ESG! The traditional requirements of a finance career, i.e., a STEM background and the lack of a personal life, are falling away. There are so many opportunities today at the intersection of finance, business, and sustainability.

 

Article by Sarah Adams, Chief Sustainability Officer and Co-founder at Vert Asset Management. Vert was founded to bridge the gap between financial services, capital markets, and environmental advocacy.

Sarah has a multidisciplinary experience across the finance sector and environmental policy. Before Vert, Sarah started a consultancy educating financial advisors on sustainable and impact investing in the UK and US. Previously, Sarah worked in institutional finance. Additionally, she worked on social finance initiatives for advocacy NGOs in the UK.

Sarah is interested in the development of sustainability education for financial services. She sits on the USSIF Education Committee and is a teacher for the Chartered SRI Counselor (CSRIC). She earned the CFA UK Certificate in ESG Investing and the Sustainability Accounting Standards Board’s FSA Credential. Sarah has a BA in History from UCLA (US), a MSc in Environment and Sustainable Development from University College London (UK), and a MA in Environmental Law from SOAS (UK).

Featured Articles, Impact Investing, Sustainable Business

How to Avoid Greenwashing When Choosing ESG Investments by Lori Keith of Parnassus Investments

How to Avoid Greenwashing When Choosing ESG Investments

By Lori Keith, Parnassus Investments

ESG strategies are rapidly gaining popularity as interest in supporting companies that manage their carbon footprints, invest in their employees, and promote diversity surges. As more and more funds claim the ESG label, how can investors effectively decide which investments are genuine?

Lori Keith of Parnassus Investments

Avoiding Investments that Masquerade as ESG Choices

If you’re seeking to align your financial investments with your values, your decisions about which funds to include in your portfolio take on an additional dimension of complexity. Naturally, you should look for funds that most closely align with your own principles. And, above all, you should take steps to avoid any ESG-labeled fund that does not diligently pursue its stated objectives.

A Practical Framework for Evaluating ESG Funds

Here are some steps you can take to perform effective ESG due diligence and avoid being misled by labels:

  1. Read the prospectus and review the holdings. The prospectus should identify whether all the fund’s holdings are evaluated using ESG metrics, or whether the fund simply employs screens to exclude a few types of companies, such as tobacco or gambling firms, but does not vet each company in the portfolio for broad ESG progress. The prospectus should also reveal whether a fund “considers” ESG or fully integrates ESG criteria into its investment process and portfolio construction. In addition, reviewing the holdings can provide insights about whether the Fund’s portfolio aligns with the claims made by the fund company.
  1. Learn about the fund’s investment philosophy and process. Does the fund have a discernable ESG philosophy, and does the investment process include ESG analysis? Does the team perform their own ESG materiality assessment, or do they rely exclusively on third-party research providers for ESG ratings on companies? Do the portfolio managers and analysts actively buy into the ESG process, and are they truly engaged in assessing material ESG risks and opportunities?
  1. Investigate what the portfolio managers seek to gain by choosing ESG-vetted investments. Do they consider ESG progress an indicator of company quality? Are they seeking to avoid material ESG risks?
  1. Look for markers of stewardship excellence. Does the fund manager disclose their proxy voting decisions, and do these decisions align with their stated ESG values? Does the investment firm encourage positive change in portfolio companies through engagement with senior management? Does the firm maintain memberships in any independent organizations that promote ESG investing, such as Ceres or US SIF?
  1. Consult third-party sources. For example, Morningstar has several ESG rating systems. The Morningstar Commitment Level qualitatively evaluates funds’ commitments to ESG and rates them on a scale ranging from Leader to Low. The Morningstar Sustainability Rating measures how the companies held in portfolios are managing their ESG risk relative to the fund’s Global Category peer group. Funds may also be given carbon scores by Morningstar.

The good news is that there are many more choices for ESG investors than ever before. However, because regulatory standards don’t yet exist, it is important to do your own homework to make sure your financial investments match your values.

 

Article by Lori Keith, the Director of Research at Parnassus Investments and Portfolio Manager of the Parnassus Mid Cap Fund with responsibility for portfolio management for the firm’s Mid Cap strategy. She joined Parnassus Investments in 2005 after serving as a Parnassus research intern. Before joining the firm, Ms. Keith was a Vice President of Investment Banking at Deloitte & Touche Corporate Finance LLC and was a Senior Associate in Robertson Stephens & Company’s investment banking division. Prior to that, she worked in the management consulting practice at Ernst & Young. Ms. Keith received her bachelor’s degree in economics from the University of California, Los Angeles and her master’s degree in business administration from Harvard Business School.

Disclosures

For the current holdings of the the Parnassus Core Equity Fund, the Parnassus Endeavor Fund, the Parnassus Mid Cap Fund, the Parnassus Mid Cap Growth Fund and the Parnassus Fixed Income Fund please visit the fund’s individual holdings web page. Current and future portfolio holdings are subject to change.

The views expressed are subject to change at any time in response to changing circumstances in the markets and are not intended to predict or guarantee the future performance of any individual security, market sector or the markets generally, or the Parnassus Funds.

ENVIRONMENTAL, SOCIAL, AND GOVERNANCE GUIDELINES – The Fund evaluates financially material ESG factors as part of the investment decision-making process, considering a range of impacts they may have on future revenues, expenses, assets, liabilities, and overall risk. The Fund also utilizes active ownership to encourage more sustainable business policies and practices and greater ESG transparency. Active ownership strategies include proxy voting, dialogue with company management and sponsorship of shareholder resolutions, and public policy advocacy. There is no guarantee that the ESG strategy will be successful.

Mutual fund investing involves risk, and loss of principal is possible. There are no guarantees any investment strategy, including a socially responsible (ESG) investment strategy, will be successful in any market environment.

The Parnassus Funds are underwritten and distributed by Parnassus Funds Distributor, LLC.

US SIF: The Forum for Sustainable and Responsible Investment is the leading voice advancing sustainable investing across all asset classes. Its mission is to rapidly shift investment practices toward sustainability, focusing on long-term investment and the generation of positive social and environmental impacts. Our members, representing $5 trillion in assets under management or advisement, include investment management and advisory firms, mutual fund companies, research firms, financial planners and advisors, broker-dealers, banks, credit unions, community development organizations, non-profit associations, and asset owners.

Ceres is a nonprofit organization transforming the economy to build a just and sustainable future for people and the planet. Ceres works with the most influential capital market leaders to solve the world’s greatest sustainability challenges. Through powerful networks and global collaborations of investors, companies and nonprofits, Ceres drives action and inspires equitable market-based and policy solutions throughout the economy.

Before investing, an investor should carefully consider the investment objectives, risks, charges and expenses of the Funds and should carefully read the prospectus or summary prospectus, which contains this information. A prospectus or summary prospectus can be obtained on the website, www.parnassus.com or by calling (800) 999-3505.

Energy & Climate, Featured Articles, Impact Investing, Sustainable Business

Changing your relationship with Money for Good by Dani Pascarella of OneEleven Financial Wellness.

Changing Your Relationship with Money for Good

By Dani Pascarella, OneEleven Financial Wellness

Above photo: ©Getty Images, courtesy of OneEleven Financial Wellness

Dani Pascalrella - CFP and Founder of OneEleven Financial WellnessThe concept of financial wellness is often associated with managing your money the right way or having a certain net worth. But this definition leaves out something just as important as the numbers – how your finances impact your mental and physical well-being. At OneEleven Financial Wellness, we are changing that by looking at more than just the numbers and taking a holistic approach to personal finance. Our Wealth Coaches help our members change their relationship with money for good and build healthy spending habits.

According to the APA, money is the #1 cause of stress in America. There is a huge need for apps like OneEleven that can help Americans reduce this stress and get to the root cause of why it’s happening. We’re not alone in these beliefs, Well+Good listed financial wellness apps (including OneEleven) as one of top self-care trends for 2022. This year, it’s predicted that financial wellness will continue to expand as we embrace this new convergence of money, psychology, and technology. Now more than ever, people have strategies at their fingertips to learn effective financial habits and take control of their financial situation.

What Motivated Me to Leave Wall Street and Launch OneEleven

My own money story begins with my mother, who at a very young age had to learn how to support herself financially. At age 16, my mom was living completely on her own in New York City. Despite having massive financial struggles in her early years, she was able to become a homeowner and comfortably retire early – all because she was able to reframe her relationship with money.

This isn’t the norm. We live in a world where socioeconomic status often predicts your future. But seeing this kind of financial transformation firsthand and knowing what is possible, I became deeply motivated to help people manage their finances. After graduating college, I started my career on Wall Street in private banking where I ended up managing money for individuals with $25 million or more in the bank.

Working on Wall Street, I became painfully aware of the wealth gap in America and how hard it is to get good financial guidance if you’re not already rich. The type of financial services available to my private banking clients weren’t accessible to people who needed it the most. Even more, important financial topics are not taught in school. Our education system never taught us how to have an emergency fund or spend in a way that is in line with your values.

I felt that the status quo needed to change so I left on a mission to democratize financial wellness in our country by launching OneEleven. The OneEleven Financial Wellness app gives our members access to 1-on-1 private coaching, custom financial plans (that would otherwise cost them thousands of dollars), educational video lessons, and accountability to stay on track to achieve their goals. Our goal is to make financial wellness as accessible as possible. Our memberships are offered by organizations to their employees at little to no cost, as well as directly to individuals on our website.

Money Advice for Women

• Boost your money knowledge.

Learning about personal finance is so powerful. The knowledge will give you a better understanding of your financial situation and also help you increase your confidence when making financial decisions. There are many ways to do this (podcasts, courses, books, coaching, etc.), but what’s important is you find the method that works best for you. At OneEleven, our clients have access to an entire library of short video lessons where they can learn about money topics in just a few minutes per day. They can also work 1-on-1 with their Wealth Coach to apply what they learn to their personal lives.

• Work on your relationship with money.

The majority of Americans live paycheck to paycheck, but oftentimes this is a result of spending habits more than income. That is why a big part of our approach at OneEleven is helping people to develop healthy spending habits and changing their relationship with money so that they can become financially well. The end result of this can look like a couple of things:

  1. You’ve created a spending plan that is aligned with your personal values. Every dollar you spend is getting you closer to the person you want to become.
  2. You saved up an emergency fund with at least 3-6 months of your living expenses. With this financial insurance, you won’t ever have to fear unexpected expenses.
  3. You feel confident about your financial decisions. This can be achieved by taking the time to learn those money topics that weren’t taught in school.
  4. You have a plan for your future, and you are consistently saving towards those goals. When you are funding your future goals and see that number increase, it is motivating and encourages you to stay on track.
  5. You have little to no financial stress!

By creating a realistic spending plan, building healthy money habits, and investing in your future, you can break the regretful spending cycle, avoid debt, and increase your happiness by feeling confident with your financial situation.

• Start Investing Sooner Rather Than Later.

When it comes to investing, the best time to start is now! Sometimes high-interest credit card debt or a lack of savings may take priority, but the sooner you start investing the better.

Statistically, women live longer than men; the average life expectancy at birth is 79 years for women, 72 years for men (PRB). Additionally, women also earn less because of the pay gap. So, this means we have to do a lot more with a lot less.

The solution is compounding and understanding the time value of money. If you want to be a millionaire by age 65, start saving at age 25 by putting $322 away a month. If you wait to start your retirement savings until 35, you’d need to put away $736 to become a millionaire at age 65. That’s more than double the contribution, just because you waited 10 years.

 

Article by Dani Pascarella, CFP®, Founder of OneEleven Financial Wellness 

Dani is a Certified Financial Planner™ and earned a B.A. and M.A. in International Business from the University of Florida and a M.S. in Journalism from Columbia University. She previously worked on Wall Street where she managed money for ultra-high net worth individuals with at least $25 million in investable assets. While working on Wall Street, Dani became painfully aware of the wealth gap in America and left to democratize financial education in our country by launching OneEleven. In her free time, she loves hanging out with her husband and black lab. Her favorite activities include yoga, boxing, and reading biographies.

Featured Articles, Impact Investing, Sustainable Business

Investing in Women, Impacting the World

By Stella Tai, Praxis Mutual Funds

Above: Stella meeting with representatives from SunCulture, an organization connecting rural farmers with solar power.

 

Stella Tai-Praxis Mutual FundsIn my 15-year career working as a woman in impact investing and its various facets geared towards investing in women, I have learned that communities and families benefit greatly when women thrive economically.

In December 2021, I had the privilege of visiting several organizations in Kenya supported through Praxis Mutual Funds’ commitment to community development investing. This was alongside a visit to my family in my birth country, after five years of being away. This article is a personal reflection on how impact and gender lens investing delivers real-world impacts – and how advisors can help their clients understand those impacts.

Impact investment moves capital to where it’s needed most. This often revolutionizes the lives of women and girls. During my visits, I saw what capital was achieving, on the ground among rural women, many of whom were poor, and on small farms using affordable products developed and customized to meet their needs. This solidified the importance of this work in my mind.

Gender lens investing (GLI) is critical in closing global gaps in access to capital and thereby increasing human capital wealth, education and helping countries achieve their full developmental potential. In a more diverse and equal society, everyone benefits.

Project in Kenya

Many rural women in Kenya face specific and unique challenges such as a lack of easy access to clean water and affordable clean energy. When there are appropriate interventions, these women are placed on the fast track to achieving economic milestones that can propel them and their families into the middle or the upper-middle class.

The organizations I visited were not founded with the primary purpose of helping women, but by evaluating the results of these investments through a gender lens, it becomes clear that the positive effects on the lives of women and girls are disproportionately greater.

SunCulture client Mrs. Ndegwa: Local women farmers are able to access solar-powered farming technology because of SunCulture.

SunCulture – This organization focuses on providing energy access through solar home and irrigation systems. About 65 percent of land in sub-Saharan Africa is tilled, plowed, weeded and watered manually. I met with two industrious women farmers whose lives had been transformed by access to energy.

SunCulture off-grid solar panels and tech provide smallholder farms with reliable lighting, water generation and mobile charging
SunCulture off-grid solar panels and technology provides smallholder farms with reliable lighting and mobile charging.

With access to a water pump for their wells, they could irrigate their farms more efficiently and increase productivity. The energy then led to increased yields and higher incomes for their households, which in turn meant that these women could invest in their children’s educations – creating more opportunities for the future of their families.

BioLite cookstoves provide a safe way to cook food - Praxis Mutual Funds
BioLite cookstoves provide a safe way to cook food, charge electronic devices, and generate light for families in Kenya.

BioLite – BioLite developed a clean energy cookstove and home lighting solar system with USB ports for charging devices like cell phones. They aim to bring electricity to the nearly 600 million people in sub-Saharan Africa who are not connected to the national electricity grid and the hundreds of millions more who live with unreliable connections and are plagued by frequent blackouts.

Investors need to appreciate the benefits these stoves offer women specifically. To meet the domestic needs of their families, many rural women often walk hours to fetch water or carry wood for cooking, which can be arduous and takes time away from a girl’s education or a woman’s economic opportunities. These regionally appropriate innovations not only connect the whole families with electricity, but the stoves allow women to cook more safely and redeem precious time to better themselves educationally, economically and socially.

What Does the Future Hold?

Impact investments with a gender lens are projected to increase over the next decade across all asset classes. In recent years, we’ve seen growing demand from investors to take gender into account when considering impact investing.

Additionally, the projected wealth transfer to women is predicted to increase from about $50 trillion in 2015 to $72 trillion, that is two-thirds of the worlds’ wealth, by 20301. Women investors are more likely to demand increased inclusivity, diversity, and values-aligned investing, which may lead to increased consideration of gender in impact investing.

Gender-lens investing is a field that will continue to grow, considering the increased attention and engagement with the 17 UN Sustainable Development Goals (SDGs)*. SDGs relevant to gender include SDG 5 (gender equity), SDG 10 (reduce inequality), SDG 8 (sustainable economic growth) and SDG 7 (sustainable energy).

The SDGs aim to end poverty, protect the planet and ensure prosperity for all. As more investors and investment companies call for alignment with these goals, gender equity and equality will become areas of greater interest for impact investors.

What Can Financial Advisors Do?

Advisors interested in impact investing that incorporates a gender lens should initiate the conversation. They can open the door to a discussion on a client’s gender lens investing goals by engaging with clients on how they can better align their portfolios or a portion of their portfolios with their values.

Secondly, advisors can familiarize themselves with gender lens investing topics and be ready to engage with the clients, especially women, as their percentage of global wealth continues to grow.

Another option for advisors is to encourage the use of donor advised funds that hold immense opportunities for increasing a client’s impact. DAFs are a powerful tool that allows investors interested in aligning their investment portfolios with their values to make charitable contributions while simultaneously getting tax benefits.

Advisors and/or their clients can take part in insight trips and observe how their funds contribute to improvement in the lives of women and girls. This is a great way for younger people to be inspired at the start of their investment journeys and for established investors to confirm the difference their investments are making in the world.

One of my hopes is that, as an industry, we might build greater collaborations around gender lens investing themes. For example, investment firms, both for-profit and non-profit, and other stakeholders such as government entities interested in gender lens investing can collaborate on sharing information, participating in deals, spurring innovation, building systems of educating clients and thereby accelerating greater amounts of capital flowing into this theme.

The cumulative effect of all these efforts will deliver real impact and will also help investors understand the range of possibilities available on the investing spectrum — from 100 percent philanthropic to 100 percent market-rate returns and everything in between.

How Praxis Approaches Community Development Investing 

By committing approximately 1 percent of its funds to Community Development Investing nationally and internationally, Praxis has further deepened its commitment to GLI. This investment is managed by Calvert Impact Capital, a nonprofit investment firm that makes loans to roughly 100 mission-driven organizations worldwide with high impact social and/or environmental focus such as micro-finance, affordable housing and cooperatives.

As of 2021, the CIC portfolio had impressive gender impact numbers. Women represented:

  • 70% of the end clients of the borrowers.
  • 53% of the borrower staff.
  • 42% senior leadership in borrower organizations.
  • 43% of the board of directors.

Impact investing through a gender lens is an accelerator to gender equity and equality not only in the United States but globally. If we want to effectively give people the tools they need for economic and educational advancements, focusing on raising the economic power of women is a key step in creating lasting change. That is why at Praxis Mutual Funds, we are committed to making real impacts when it comes to gender equity and why we are passionate about showing advisors the effects of gender lens investing.

 

Article by Stella Tai, Stewardship Investing Impact and Analysis Manager

Stella provides primary leadership for the promotion, integration and development of impact investing and reporting. Before joining Praxis, she was assistant vice president of Lending at FINANTA, a Community Development Financial Institution (CDFI) in Philadelphia. Stella has served on the board of Chariots for Hope, a nonprofit supporting a network of eight children’s homes in Kenya, her country of origin. Connect with Stella on LinkedIn.

Footnote:
[1] “Here’s who will benefit the most from the $59 trillion ‘Great Wealth Transfer’”: Bankrate, Sept. 25, 2018
*  In 2015, the UN announced the Sustainable Development Goals as a call to action for countries, governments, funders, and investors to unite to accomplish 17 global goals. These goals recognize that ending poverty and other deprivations must go hand-in-hand with strategies that improve health and education, reduce inequality, and spur economic growth – all while tackling climate change and working to preserve our oceans and forests. The UN has provided a framework of specific indicators to measure progress and a timeframe to achieve them by 2030, both of which reinforce the urgency and crucial nature of this work.

About Praxis

Praxis Mutual Funds is a leading faith-based, socially responsible family of mutual funds designed to help people and groups integrate their finances with their values. Praxis is the mutual fund family of Everence Financial, a comprehensive faith-based financial services organization helping individuals, organizations and congregations. To learn more, visit praxismutualfunds.com and everence.com, or call 800-348-7468.

Consider the fund’s investment objectives, risks, charges and expenses carefully before you invest. The fund’s prospectus and summary prospectus contain this and other information. Call 800-977-2947 or visit praxismutualfunds.com for a prospectus, which you should read carefully before you invest.

Praxis Mutual Funds are advised by Everence Capital Management and distributed through Foreside Financial Services, LLC, member FINRA. Investment products offered are not FDIC insured, may lose value, and have no bank guarantee.

Energy & Climate, Featured Articles, Food & Farming, Impact Investing, Sustainable Business

Investing in Water Stewardship by Thomas Schumann and Willem Buiter

Investing in Water Stewardship

By Thomas Schumann and Willem Buiter, Thomas Schumann Capital & Columbia University

Scarcity of fresh, clean water will be a defining issue for the 21st century. It will be a major challenge – for many an existential one – even if climate change is addressed effectively. Further global warming will exacerbate freshwater shortages in much of the world, although increasing evaporation and higher average precipitation will benefit some regions. Reduced snowfall, rising sea levels, increased likelihood and severity of extreme weather events will adversely affect the availability and quality of fresh water in many regions. Freshwater scarcity is one of the key dimensions of water risk confronting businesses in every sector of the economy, as captured in the TSC Water Security Index.

Fresh water is a unique resource. It is essential to life, prosperity, and environmental sustainability. Many see it as a gift from God. It is also a limited, scarce resource. Given enough time it is renewable through nature’s hydrologic cycle, or, more expeditiously, through the expenditure of real resources on recycling through treatment and purification. At any given point in time demand outstrips supply and water must be rationed.  Every community faces the challenge of designing a rationing mechanism that is efficient, environmentally sustainable, and just. Markets for physical water and for water rights must play a key role in ensuring efficient and environmentally sustainable water use. The government must ensure an equitable and sustainable allocation of water.

Water is also a private good that can be allocated efficiently using the market mechanism. First, it is “rival in use” (you can’t drink, what I am drinking). Second, it is in many cases quite easily “excludable”: the cost of preventing “free” water consumption is often low. Excludability requires that water consumption is observable and that property rights in water can be enforced. There are issues with the definition and enforcement of surface water rights, that can become acute when a river is shared by two or more nations. Groundwater rights can encounter common access problems. All these issues are surmountable. Water can be priced.

Thomas Schumann Water Security Investor on Fintech.TV
FINTECH TV The Impact:  In this episode Thomas Schumann, a sustainability pioneer and the only expert for Water Security investment and financial products, discusses why the climate crisis is a water crisis, lack of water risk assessment, the global effect of the water crisis and much more.

It will not be possible to achieve a fair, efficient, and sustainable allocation of fresh water unless water is priced in all its uses to reflect its opportunity cost and scarcity value, including any negative environmental externalities.

Making sure that the true social marginal cost of delivering fresh, clean water is charged for agricultural water use is key. Globally, agriculture irrigation accounts for 70% of all freshwater withdrawals. The figure is over 40% in many OECD countries, including the USA.

Agricultural water is frequently provided for free or at heavily subsidized prices. Making farmers pay the full social marginal cost of water will raise the cost of agricultural products, including food and other essentials. This will disproportionately impact low-income households. The government should address these equity issues through income support using fiscal instruments, like a universal basic income.

Household water consumption likewise is often priced well below its social marginal cost. Raising household water prices inflicts hardship on low-income households. Again, fiscal support for low-income households must be forthcoming to address this fairness issue. A second-best solution would be to use a “block tariff”, making the social minimum volume of water available at a low price (or free of charge) but charging the full social marginal cost for water use above the social minimum volume.

The physical integration of water markets is far from complete. In California, agricultural water district rates in June 2021 ranged from $200 – $500 per acre-foot in the southern end of the Central Valley to less than $1.00 per acre-foot in some districts in the northern part of the state. Cross-border freshwater scarcity differences can be even more dramatic – compare the water-abundant UK or the Netherlands to the water-deprived nations in the Middle East and North Africa (MENA).

Transformative projects are underway to deepen integration of physical water markets and reduce interregional price differences in an environmentally sustainable manner. Two examples are sponsored by Thomas Schumann Capital. One is SkyH2O’s Atmospheric Water Generation (AWG), based on a proprietary technology which extracts clean fresh water from the atmosphere. Productive capacity can be located close to the ultimate customers. Two key drivers of financial viability are atmospheric humidity and the cost of energy. The second pathbreaking initiative is Project Greenland which aims to bring the abundant high-quality fresh water contained in the polar icecaps to markets in the MENA region. Its Iceberg Management and Water Extraction Program identifies appropriate free-floating North Atlantic icebergs which are towed to an operational location in the west of Scotland where the ice and water are processed for further transportation to the ultimate MENA consumers.

The higher water prices that are necessary and unavoidable will serve environmental sustainability by discouraging wasteful water usage; they will also boost the financial viability of innovative private sector projects like the two sponsored by Thomas Schumann.

As the integration of the physical water markets progresses, deeper and more competitive spot markets for water rights have developed. Notable examples can be found in California and in Australia. The trading of long-term leases and forward contracts has prompted the creation of a water rights futures market in California. Other water rights derivatives markets are imminent. Properly regulated and supervised these markets for water rights as an asset can improve the intertemporal allocation of water. The water century is here now.

 

Article by Thomas Schumann, Thomas Schumann Capital and Willem Buiter, Columbia University

BIOGRAPHIES:

Thomas Schumann is the founder of Thomas Schumann Capital. He is a sustainability pioneer and expert for Water Security investment and financial products. His birthplace, Frankfurt am Main, Germany’s financial capital, and the 2015 world’s most sustainable city according to the Sustainable Cities Index inspired his path. Thomas’ MTP (Massive Transformative Purpose) is Agenda 2030, “Transforming our World”, specifically United Nations Sustainable Development Goal 6 “Water Security” and 13 “Climate Action”.

Willem Buiter is an independent economic advisor and speaker. He is currently an Adjunct Professor of International and Public Affairs at Columbia University and an Adjunct Senior Fellow at the Council on Foreign Relations. He was Global Chief Economist at Citigroup from 2010 to 2018 and a Special Economic Advisor at Citigroup from 2018 to 2019. Previously, he was Chief Economist and Special Counselor to the President of the European Bank for Reconstruction and Development and an original member of the Monetary Policy Committee of the Bank of England. He was the Juan T. Trippe Professor of International Economics at Yale University and has also held professorships at the London School of Economics and Cambridge University. He is the author of 78 refereed articles in professional journals and seven books.” He is an advisor/consultant to Thomas Schumann Capital.

Energy & Climate, Featured Articles, Impact Investing, Sustainable Business

The Role Investors Play in Addressing Global Water Challenges by Suleyman Saleem Calvert Research and Mgmt

The Role Investors Play in Addressing Global Water Challenges

By Suleyman Saleem, Calvert Research and Management

(Above photo credit: Getty Images, courtesy of Calvert Research and Management)

 

Suleyman Saleen Calvert Research and MgmtResponsible investors seek the potential for long-term value creation and positive impact throughout the global capital markets. In doing so, asset managers like Calvert Research and Management look to invest in companies and other issuers that balance the needs of financial and nonfinancial stakeholders as well as demonstrate a commitment to the global commons and to the rights of individuals and communities. Climate change has been a key investment strategy focus, as more investors subscribe to the overwhelming conclusion of climate scientists that the Earth’s climate is warming, and human activity is the primary driver of this warming.

Amid all of the key factors related to climate change, water stands out as the most nuanced – it is both a symptom and a cure. Higher atmospheric temperatures are one of the primary culprits of climate change, causing the expansion of sea water and melting of polar ice, which are projected to raise global sea levels by 0.26-0.77 meters by 2100 in a 1.5-degree scenario and even higher in a 2-degree scenario (note: we are currently on a path above 2 degrees).

In certain regions, water scarcity will likely continue to emerge as a threat to daily life. Different regions face different problems such as access to clean drinking water and adequate wastewater treatment in more agricultural regions and infrastructure and water distribution challenges in cities. Similarly, companies face their own water-related challenges based on what they produce and where they are located. But water also has some of the greatest potential to mitigate the effects of climate change by decarbonizing power generation, industry and transport – which, in total, comprise over 65% of global greenhouse gas emissions.

This naturally leads to the question of the role companies and investors can play. Companies that are leaders in water efficiency and water reuse practices as well as companies offering innovative solutions to global water challenges may be in position to outperform their competition over the long term. Investors can play their parts by allocating capital to companies equipped to meet these challenges. We believe that driving capital to responsible companies in the water industry will drive more investment in solutions to global water challenges.

Ways to Look at Water

The reality of water scarcity is that stewardship is a financially material issue for many industries. Water is essential for natural resource inputs along manufacturing supply chains; negative impacts on scarce water resources can influence a company’s social license to operate and can impact consumer preferences.

A multipronged approach to investing in water is needed to actively address global water challenges as well as to ultimately balance the risk and opportunity. Our ESG research framework identifies water as a scarce resource for the vast majority of the industries that comprise the global economy, with a particular focus on companies that limit their own usage or that of others.

Four key areas of focus are:

  • Water utilities and distributors: Responsibly deliver and provide clean water at affordable rates, which we view as essential for economic growth and development.
  • Water technology: Have proven or emerging technologies that test, monitor or improve the quality of water, or address the efficient use of water, helping reduce consumption globally.
  • Water infrastructure: Are addressing the growing and urgent need to invest in the rehabilitation of aging infrastructure or expand infrastructure in order to deliver clean water to communities and drive economic growth.
  • Solution providers: Are leading their peers in water efficiency and reuse practices in the most water-intensive industries, effectively reducing overall water demand.

Companies that are low in water intensity and have implemented closed-loop systems, such as those in health care and technology services, may be in better short- and long-term positions to limit water usage. Our approach to solution providers is grounded in understanding the impacts of technology, infrastructure and services limiting the use of our most precious natural resources.

Within this universe of companies, it’s also important to consider water usage leaders that provide solutions to other issues. Companies mining metals such as copper and lithium are critical to electrification but often operate in water-stressed regions such as South America and Southeast Asia.  Instead of avoiding companies exposed to those regions, we have found many of these companies understand their geographic predicaments and have responded by implementing groundbreaking desalinization and solution mining techniques that close the loop.

Finally, responsible investors can play a role in water stewardship efforts through engagement. One critical need is for better disclosure on industry-specific water impacts. Industries’ impacts on their local watersheds vary. Some industries consume vast amounts of water, while other industries’ water impacts come from the conditions of water discharge. Understanding the specific impacts of a company on the environment and the communities it operates in is dependent on better company disclosure. Active engagement directly with company management is one way to advocate for more transparency and consistency of this information.

 

Article by Suleyman Saleem, Vice President and ESG senior research analyst for Calvert Research and Management, which specializes in responsible and sustainable investing across global capital markets. He is responsible for environmental, social and governance (ESG) research coverage of the industrials and materials sectors. He joined Calvert in 2019.

Suley began his career in the investment management industry in 2010. Before joining Calvert, he was a senior equity research associate at BMO Capital Markets and Susquehanna Financial Group. Previously, he was a research analyst at Episteme Capital Partners.

Suley earned a B.A. in economics and history from the University of Pennsylvania

 

The views expressed are those of Suleyman Saleem and are current only through the date stated. These views are subject to change at any time based upon market or other conditions, and Calvert disclaims any responsibility to update such views. These views may not be relied upon as investment advice and, because investment decisions for Calvert are based on many factors, may not be relied upon as an indication of trading intent.

Investing involves risk including the risk of loss. There is no guarantee that any investment strategy, including those with an ESG focus, will work under all market conditions. Investors should evaluate their ability to invest for the long-term, especially during periods of downturn in the market.

Calvert Research and Management is part of Morgan Stanley Investment Management, the asset management division of Morgan Stanley.

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