By Shilpi Chhotray
We all know the phrase “money makes the world go around.” What many involved in grassroots sustainability and social responsibility may not know is how impact investors are moving the needle on several key global issues, such as corporate transparency, sustainable agriculture, women’s empowerment and arguably our greatest challenge — addressing a rapidly changing climate. Furthermore, these investors are focusing on pressing national issues like LGBT rights, affordable housing and millennial involvement in corporate decision-making.
For instance, investors from top wealth management firms like Timothy Smith, director of environmental, social and governance engagement at Walden Asset Management, are advocating for greater investment around climate policy at the state level.
As an active member of the environmental community, my perception of the financial industry has historically equated to visions of Wall Street: Ivy-league educated white men in dark suits with flashy Rolex watches, playing their obligatory role to generate profit, no matter what the global repercussions entail. My recent attendance at the Conference on Sustainable, Responsible, Impact Investing (SRI) in Colorado Springs, however, made me rethink this stereotype and piqued my interest in solutions-based investing for positive community change.
Perhaps because I am a millennial who cares specifically about the nexus of women and the environment, the topic of women’s empowerment and increasing the millennial voice in sustainable investing really hit home for me at the conference this year. And the data speak for themselves: Women and millennials place greater emphasis on transparency and investment that supports their values.
According to PAX World Investments, by 2030, two-thirds of the nation’s wealth will be owned by women. Several SRI panelists reiterated the most tactical move firms can make is hiring a woman at the executive level, and I couldn’t agree more. Although women continue to face an uphill battle for equality in the workforce, recent reports indicate companies that bring women into leadership positions experience higher financial returns and better overall performance. Financial services executive and last year’s SRI service award recipient, Geeta Iyer, poignantly stated, “someday all of the women leaders will just be leaders,” and this should be advocated for across all fields — not only the private sector.
Furthermore, millennials are pioneering the way for major shifts in corporate social responsibility (CSR) –deemed ‘millennials new religion.’ To this end, 7 out of 10 millennials consider themselves social activists and are actively engaged in CSR issues. Divesting from fossil fuels is an impressive example: Currently; more than 400 campuses are engaged in the divestment movement. Students continue to pressure universities and other NGOs to expel their holdings of coal and oil investments. Corporate transparency and accountability, cooperative business solutions across sectors, and community reinvestment will be top priorities for millennials in the coming decade. It’s no surprise that major corporations like Monsanto are seeking millennial advice on public engagement. To be clear, millennials are just as interested in making a profit as older generations, however — a profit intrinsic to socially and environmentally conscious initiatives.
Financial advisors in the impact investing sector are noticing this marked shift and are taking it into account. Focusing on investing in companies with a social and environmental focus and engaging in investment aligned with societal values, all while turning a profit, is more and more the norm. B Corps are raising the bar of company performance. Sequentially, corporations reduce their environmental footprint and increase social responsibility while still enjoying competitive advantages in a newer, greener marketplace.
The Global Impact Investing Network states, “Impact investing has the potential to unlock significant sums of private investment capital to complement public resources and philanthropy in addressing pressing global challenges.” Case in point, earlier this year, Green Century Funds backed Wilmar’s — the world’s biggest palm oil trader – commitment to zero deforestation measures in their supply chain. Impact investors represented more than $250 billion in assets for this game-changing forest conservation policy, demonstrating a major market shift towards the reduction of environmental and social risks.
As Jackie Haynes, senior director of supplier responsibility at Apple, indicated, “sustainability is a journey; we may never be done,” though we must all play our part to live within the capacity of our planet. I firmly believe that advancing technology, sound policy and the growing field of impact investing, coupled with efforts of mission-driven nonprofits, will lead to greater global sustainability progress.
Image courtesy of Future500
Shilpi Chhotray is a Stakeholder Engagement Manager at Future 500, a global nonprofit specializing in stakeholder engagement and building bridges between parties at odds—often corporations and NGOs, the political right and left, and others—to advance systemic solutions to urgent sustainability challenges.
Follow Shilpi on Twitter: @ShilpiChhotray