Most mutual fund companies are birthed by people steeped in the financial services industry. Green Century Capital Management wasn’t. In fact, the people who dreamed up the company were as far removed from financial services as they come. That’s because Green Century is owned by a federation of nine state-level Public Interest Research Groups (PIRGs), collectively known as US PIRG. The PIRGs are a grassroots advocacy organization focused on public health and environmental issues.

The PIRGs arose in the early 1970s based on a model for college activism proposed in a book co-written by Ralph Nader and Donald Ross called Action for a Change. (Nader is no longer associated with the organization.) 

“Green Century Capital Management formed in 1992 as a way for PIRG members and other like-minded people to be able to invest with their conscience and values while avoiding the worst polluters,” says Green Century president Leslie Samuelrich. 

Among other things, the PIRGs saw Green Century as a place within their network that could work directly with corporations to affect change, which differs from their usual M.O. focused on public outreach.

In addition, Green Century is a way for PIRG to fund its advocacy campaigns because fund profits on the management side belong to ownership—i.e., the PIRGs.

“The ownership is unique,” Samuelrich says. “There’s no other mutual fund company that has this structure.”

Green Century operates two mutual funds. The Green Century Balanced Fund is an actively managed fund typically holding 60% to 75% in multi-cap stocks and 25% to 40% in investment-grade bonds. The fund’s approach is growth at a reasonable price, and it invests in companies with good environmental track records. The fixed-income side includes green bonds that support energy efficiency and emission reduction programs through domestic and international corporations and agencies.

The fund is subadvised by Trillium Asset Management, a longtime player in the sustainable investment space. 

The Green Century Equity Fund is a passive fund that tracks the MSCI KLD 400 Social ex Fossil Fuels Index, a custom index created with Green Century input and calculated by MSCI Inc. that excludes companies in the oil, coal and natural gas industries. The KLD 400 Index, formerly the Domini 400 Social Index, is a long-standing index composed of companies meeting certain environmental, social and governance (ESG) standards. 

The fund is subadvised by Northern Trust Investments. Green Century Capital administers and sets the direction for both funds. 

As for the dynamic between the PIRGs and Green Century, Samuelrich says her company works with the PIRGs mostly in shareholder advocacy on issues ranging from antibiotics in food to deforestation, where the PIRGs run the grassroots campaign and Green Century files shareholder resolutions. 

Samuelrich notes that retail investors make up about half of the two funds’ client base. Other core customers include financial advisors who want to get into this space or are already there, and wirehouses that are responding to the growing demand for ESG investments.

The Green Century Equity Fund is three-star-rated by Morningstar and has slightly underperformed the S&P 500 during most milepost periods from the past 10 years. The Green Century Balanced Fund is four-star-rated and has bested its benchmark during the past three years, but also has underperformed over a 10-year period. 

“Our goal is to deliver competitive returns and to also have the added value of making the companies less open to risk because of their environmental track record, with the additional part of delivering environmental policies that are good for society,” Samuelrich says.