SRI Conference Reflections
I attended the 29th Annual SRI Conference in Colorado Springs last week and, as always, came away informed and inspired. There is so much positive impact happening around the world by incredibly dedicated investors, yet there is so much that remains to be done. Here are a few of my key takeaways from the conference:
The US SIF issued its 2018 Trends Report, illustrating that $12 trillion of U.S. assets are now invested in SRI strategies, representing 25% of all professionally managed assets. This represents 38% growth just in the past two years!
Current hot topics in shareholder advocacy include plastic pollution, deforestation, and fossil fuel company accountability for climate change.
The Race of Our Lives
Jeremy Grantham, co-founder and chief investment strategist of Grantham, Mayo & Van Otterloo, presented powerful and frightening evidence of the negative effects of climate change. He refers to the urgency of humans working together to reduce global warming as “The Race of Our Lives.” We have no time to waste! If you are interested in this white paper, here is a link to the abridged version (the original was 35 pages long, and I have it if you’d like it).
Kurt Summers, Treasurer, City of Chicago, discussed how his team has transformed the city’s entire portfolio to investments that consider environmental, social and governance (ESG) criteria. A large portion of their portfolio is in fixed income investments and they have been able to reduce risk, increase yield and increase total returns…while investing directly in bonds that have a positive impact for the City of Chicago. Examples would include bonds that support the development of low-income housing and bonds that support the development of small businesses in underserved areas.
Reversing the Skepticism
Chad Myers, Chief Meteorologist, CNN, described how he used to be a skeptic of human-induced climate change, until about five years ago after doing extensive weather-related research. He stated that there is clear scientific evidence of CO2 increases since the industrial revolution around the year 1900 and it is impacting weather patterns. For example, while the frequency of hurricanes has not necessarily increased, they are wetter and more powerful in recent years due to rising sea levels caused by global warming. He noted that, while China is the largest cumulative polluter (CO2 emissions), the U.S. is, by far, the largest polluter per person.
Professor Daniel Esty, Yale Law School, outlined “Mega Trends in Sustainability” that will shape our world regardless of politics. These megatrends include: people and businesses are no longer waiting for governments to take action on environmental and social issues, real leadership on environmental issues is occurring at the state and local government level, information technology is providing data-driven solutions to climate change, and investor demand for SRI is high and growing…every individual is now a “watchdog” of bad corporate behavior.
BlackRock is one of the largest investment management firms in the world. Earlier this year, it’s CEO, Larry Fink, sent a letter to CEOs of publicly-traded companies entitled “A Sense of Purpose,” that reminds businesses that, to prosper over time, they must not only deliver financial performance but also show how they make positive contributions to society. Michelle Edkins, BlackRock’s Global Head of Investment Stewardship Team, commented that, while the letter was controversial in the U.S., it was very naturally accepted globally. BlackRock, and other institutional investors, believe that a company’s concern for all stakeholders is crucial for long-term sustainability.
Finally, I participated in a falconry class while in Colorado (see photo)…so cool! It was fascinating to learn about raptors such as falcons, eagles, hawks, and owls…and amazing to watch how they soar, hunt and respond to a falconer’s commands. Many species of these magnificent birds have been endangered over the years, and falconers have been instrumental in the resurgence of some of these birds of prey. We will be making our firm’s annual donation of 5% of company revenues to the World Wildlife Fund in December!