With the goal of shaking things up on a global level, the Andreessen Horowitz-backed asset management platform OpenInvest has become a signatory to the United Nations-supported Principles for Responsible Investment (PRI), the world’s leading proponent of responsible investment.
Since its founding in 2015, OpenInvest’s mission has been “to democratize capital and give every investor an easy and low-cost way to fully reflect their values in their portfolios, using their investments as a powerful tool to drive social change.”
The company’s platform enables customization, direct indexing and impact investing at scale for financial advisers, institutions and individual investors. It works by asking investors about issues they care about—with examples including climate change, human rights and gender equality—and then automatically creates a customized index fund comprised of companies that do best on those topics. Individuals can join the platform with a minimum $100 investment.
“We call it the post-fund future,” Claire Veuthey, director of ESG and impact for OpenInvest, told TriplePundit. “We strongly feel this is where industry is heading. Technology has made possible direct indexing which enables a ton of customization. An investor on our platform can buy individual stocks and maintain a product that looks like an ETF [exchange-traded fund] product but is customized to what they care about. It’s part of the growing conscious consumer trend and a really intense desire for customization.”
Joining the PRI will bolster OpenInvest’s desire to change the asset industry and improve the industry’s technology by giving them a seat at the table with the broader investment community, Veuthey said.
The PRI, launched in 2006, today has over 2,300 signatories. It's made up of six voluntary and aspirational investment principles that offer a menu of possible actions for incorporating ESG (environmental, social and governance) issues into investment practice.
The OpenInvest platform integrates multi-sourced ESG data and offers a number of causes, such as divestment from fossil fuel producers and major greenhouse gas emitters, as well as investment in corporate women leaders, LGBTQ-friendly companies and companies supporting refugees.
Joining the PRI is “not really a stretch for us," Veuthey added. "There’s nothing we’re doing that is not ESG, but being under the auspices of a global collaborative organization is a way to keep moving the industry forward.”
It’s not surprising that OpenInvest chose this moment to join the global movement in responsible investment—which, as 3p has reported on extensively, is growing in leaps and bounds. According to a recent survey, global sustainable investment reached $30.7 trillion at the start of 2018, and investors who integrate environmental, social and governance principles into their portfolios now represent about $17.5 trillion, up 69 percent from 2016.
It seems that OpenInvest’s largest backer, Andreessen Horowitz, one of the world’s most well-known venture capital funds, agrees. It led OpenInvest’s $3.25 million investment seed round in 2017.
“Their support is a huge testament to what we’re doing,” Veuthey told us. “They see the investment industry as very much ripe for disruption. The large investment institutions have worked the same way for decades. My sense is that venture capitalists like Andreessen Horowitz see the writing on the wall and understand the shift that is taking place.”
The founders of OpenInvest, one of the first venture-backed public benefit corporations, come from the hedge fund industry or large banks (Veuthey is former head of ESG for Wells Fargo Asset Management) and some are civil society leaders. What they have in common “is changing the game of what is possible in public investing,” Veuthey said.
She sees a tipping point on the horizon, where OpenInvest’s vision of mainstreamed ESG investing and a more democratized form of impact investing becomes a standard approach.
“Will it happen in 2019? I’m not sure, but it is starting to happen in smaller networks, [based on] the conversations we’ve seen," she said. "There’s a real tension between what compliance regulations and control require in large organizations and the customization that technology enables. We think that the transparency we can offer financial advisors—which they can share with their clients—is going to become even more important.”
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Based in southwest Florida, Amy has written about sustainability and the Triple Bottom Line for over 20 years, specializing in sustainability reporting, policy papers and research reports for multinational clients in pharmaceuticals, consumer goods, ICT, tourism and other sectors. She also writes for Ethical Corporation and is a contributor to Creating a Culture of Integrity: Business Ethics for the 21st Century. Connect with Amy on LinkedIn.