Editor’s note: This article is part of a continuing series in which Paul Ellis, a well-known advisor and consultant on sustainable investing strategies, interviews industry professionals on the topics of millennials and sustainable investing. What follows is an interview with two industry experts from Zevin Asset Management LLC, a global SRI/ESG investment management firm that uses a top-down economically driven approach to build institutional and individual portfolios: Robert Zevin, chairman, chief investment officer and senior portfolio manager; and Sonia Kowal, president and director of socially responsible investing.

To read the first article in the series, click here: /news/the-wise-woman-and-the-millennial-23738.html

To read the second article in the series, click here: /news/millennials-leading-the-way-in-sustainable-investing-24019.html

To read the third article in the series, click here: /news/millennials-mainstreaming-impact-investing-24487.html

 

Paul: Robert, according to your bio, you proudly went to jail during the 1968 Columbia student protests, and in the 80s you wrote and gave public testimony about the effects of anti-apartheid divestment on stock portfolios. Looking at your performance numbers over the last nearly two decades that you have had your own firm, your success as an asset manager and your social justice activism might seem paradoxical to some people in the investment industry.

Robert: Yes, the old argument about whether there’s a detrimental effect to introducing social, environmental or personal values into investing. Many investment professionals have correctly concluded that this has no negative effect on performance. But socially responsible investing (SRI) attracts people whose primary interest and skills are on the social side, so this could be one reason why their good investment results look more unusual.

Paul: Sonia, your first degree was in Zoology.

Sonia: Yes, it was 1999, and I wanted to be David Attenborough and tend to baby lions, but I was relegated to studying worm poop through a microscope. I was studying in Scotland, a financial center, so when a big asset manager was recruiting for their graduate program, I applied.

Paul: You went to work for Baillie Gifford before you had a finance degree?

Sonia: They prefer hiring people with diverse backgrounds to get different views of the investment world. They were also having a hard time attracting women, so I was in the right place at the right time. But I started wrestling with social issues and how they intersected with what I did day-to-day. I didn’t realize that SRI existed. So in 2005, my husband and I quit our jobs to travel around the world.   

Paul: Robert, how did you begin working as a portfolio manager?

Robert: When I started college, I thought I would be a literature major and writer. But I ended up as an economic historian and professor at Berkley and then Columbia. I was also involved in political movements and managing money for relatives and friends on a non-paid amateur basis. After I decided to register as an investment advisor, I began getting socially responsible clients because I was raising money for social causes. They pushed me in that direction rather than the other way around.

Most investment managers are rewarded for good performance in the short term, whereas clients are saving for retirement or running pension funds or endowments with a 100-year time horizon. So I decided that diversifying to avoid loss was more important than adding alpha through performance. What are all the bad things that can happen, and what would we want to own if some do happen? 

Paul: Sonia, you came back to the United States and went to work for EIRIS, a leading SRI research firm.

Sonia: That’s right. I ran the Boston office where I learned a lot about corporate social responsibility (CSR) and how to ask companies the types of questions that elicit change. As a traditional financial analyst, I didn’t know how to get a thoughtful response or how to press when I didn’t get a helpful answer.

Paul: Then in 2009 you joined ZAM as SRI director.

Sonia: Yes, to help the firm focus on research and advocacy and acquire new clients, which is typically by referral. Robert’s rationale is the more people we know, the faster the word spreads.

Paul: Robert, what led you to choose Sonia for that role? 

Robert: I interviewed Sonia and found this very imaginative, inquisitive, thoughtful person who had traveled the world with her husband James without a lot of money. And Sonia knew three times as many people in the SRI world as I did. Sonia was the eighth person to join us. Prior to that, we didn’t have the resources for shareholder advocacy and networking with others in the field. Since then, she’s delivered everything we hoped for and more. 

Paul: Robert, did you start ZAM as an employee-owned and managed firm?

Robert: No, when I started in 1997, I was the only full-time employee—I had a part-time secretary. We began adding people to our investment team in 2007, and in 2010 we turned it into a company owned by all the employees except for me. We used the LLC, but today I would use a worker-owned coop.

Everyone who has been with the firm for two years is a shareholder. Everyone sees the financial reports, total payroll and expenses and interviews new hires. It's very collegial with flat decision making and pay structure.

Paul: Sonia, in 2014 you became president of ZAM, in addition to your investment responsibilities.

Sonia: Yes, and the most positive part is that Ben Lovell, who had been president for a number of years, is still here. Ben was commuting from Maine to Boston every day so something had to give. I also joined the board of managers, which oversees the decision making but is very transparent. We do a lot of listening and interpreting—so president is not a traditional telling people what to do role.

Paul: Sonia, as a millennial, can you talk about your interaction with presidents of other firms?

Sonia: I got very positive notes from other female presidents when my new role was announced! From the outside, I can understand why it might seem strange because I'm young and come from the social issues side of the business rather than the investment side. But given the way we operate it makes sense. And Robert is not a traditional guy, and we're not a traditional firm.

Paul: Robert, you've been doing this work for a long time. How has it changed, and what’s on the horizon?

Robert: One of the biggest changes from the 1970s is the terminology: from SRI to ESG [environmental, social and governance]. SRI conveyed that we were part of a social movement. We demonstrated in the streets, attended shareholder meetings and testified before state legislatures and university boards.

As social investing grew and came under attack, social investors responded by arguing the opposite: Think of us as ESG investors and not as a social movement. In other words, ESG investing is just as valid a way to make money as good value or growth investing.

That's a retreat from being a social movement but an effective advance for getting institutional business. While not as exciting as SRI was, millennial investors give this argument a warm reception. We'll see if this reception brings greater global social and environmental impact.   

Paul: Sonia, what would you say to millennials considering a career in SRI?

Sonia: It's important to know the rules of the financial industry so you can influence them successfully.

Paul: Robert, any advice for young folks?

Robert: I think some formal education is required, at least undergraduate. The best people I've hired didn’t have MBAs or finance degrees. They studied history or sociology and have been very good investors with diverse backgrounds and experience.

Paul: Sonia, many people in our industry consider Robert a living legend. What's it like working with him?

Sonia: It's a tremendous opportunity and makes my job easier because I have credibility in the SRI world. More important is how Robert made his name: through a thoughtful approach to investing and total commitment to social justice movements and the people involved.

It's exciting to have the kind of mentor who goes about his work in a way different from most investment professionals, like giving the business to the employees. Those kinds of choices are pretty much unthinkable, even inside the SRI field. He's a tremendous example for us all. 

Paul Ellis founded Paul Ellis Consulting to work with financial advisors who want to integrate sustainable and impact investment strategies for their clients. Robert Zevin is chairman, chief investment officer and senior portfolio manager for Zevin Asset Management LLC. Sonia Kowal is president and director of socially responsible investing for Zevin Asset Management LLC.