[Disruption breeds consequences and changes. In our last interview with socially responsive asset managers, we looked at how Covid-19 has acted as an inflection point for social investing and moving it well beyond its already existing upward trendline. This inflection point has been powering a major change in thinking and actions across health, justice, as well as, in government, corporate, and personal responsibility mainly due to the visceral impacts and universally relevant effects to daily life, business, and employment realities. Every day in the news, in personal discussions, and in our attempts to deal with this massive disruption in our lives, we can now clearly see interconnections and consequences.
To dig a little deeper and get a better understanding of what is happening in this new evolving environment, the Institute for Innovation Development decided to reach out again to a cross-section of socially responsive asset managers — from ESG to impact to focused thematic strategies — and get their real world, in-the-trenches perspective and thought leadership. We would like to thank Ultimus Fund Solutions — one of the largest independent fund administrators — who provided introductions to some of their socially responsive asset manager clients and that has created fund vehicles for all of them to enable more access for investors to socially driven investment options.
Let me reintroduce you to our panel and then we will jump into getting a true lay of the land from the following experts in this field:
Erika Karp, founder and CEO, Cornerstone Capital Group—a New York City-based registered investment advisory firm whose mission is to serve clients who wish to align their investments with their impact priorities without sacrificing financial returns.
Robert Uek and Bill Page, co-managers of the Essex Environmental Opportunities Fund—Essex is a Boston-based investment manager that operates at the nexus of environment and finance investing in companies that enable greater natural resource and energy efficiency.
Matthew Blume, director of ESG Research and shareholder activism, Pekin Hardy Strauss Wealth Management, managers of the Appleseed Fund—a Chicago-based independent firm providing funds and separate account strategies for investors that support their values through impact and ESG investing.
Zin Bekkali, CEO, Silk Invest—a London-based advisory firm that invests in listed equities across Global Frontier Markets—predominantly in Africa, the Middle East, Frontier Asia and Latin America—with a strong focus on impact investing and has been a signatory to the UN Principles of Responsible Investing since 2011.
Venk Reddy, founder and chief investment officer, Zeo Capital Advisors—a minority and woman owned, San Francisco-based fixed income investment manager focused on short-term corporate debt and ESG high yield.]
Bill Hortz: What type of corporate actions do you see as a new bar of corporate responsibility behavior?
Cornerstone: The newest bar for corporate responsibility is about transparency and consistency. The disclosure of material ESG factors by companies is a critical way to give investors insight into the extent to which a company is conscious of the environmental, social risks and opportunities it faces. This is a critical indicator of the overall Governance of the company. Beyond disclosure, companies must be consistent in words and deeds (e.g. If a company states that it embraces diversity, it must truly drive women and people of color into positions of authority. And if a company truly wants to support a fossil fuel free energy transformation, it wouldn’t say that it will reduce carbon emissions but have no targets to do so, while lobbying to lower standards.)
Essex: There is room for much improvement in corporate responsibility. Historically, the bar has been set pretty low as the corporate world has placed profitability and stock returns above all other concerns. We need to expect more from companies and the message is finally being heard in the corporate boardrooms.
The fragility of human life and our society has been starkly unveiled over the past months. If we want to maintain capitalism, then we need to realize that there needs to be a better measurement of success than we have traditionally used. We need longer investment horizons and a recognition that good corporate behavior (which includes environmental stewardship, better treatment of employees, etc.) leads to superior investment returns over time.