A Post-Election Impact Investor Survival Kit
By Guest Contributor
By Ana Olaya-Rotonti
Donald Trump has been elected President of the United States. This headline took much of the world by surprise on November 8, 2016. Beyond the initial shock, perhaps half of the citizenry of the United States are feeling very pessimistic about the future under a Trump presidency.
While more clarity will arise with time, some early concerns are not completely unfounded. Indeed, some of the postures the president-elect has taken are the antithesis of the people, organizations, and investors who care about environmental sustainability and social equity for all.
On the environmental policy front, for example, the president-elect's words and actions to date point toward reversing U.S. commitments to international climate agreements, reducing regulation, and weakening the Environmental Protection Agency (EPA).
Will such fears materialize and what will happen if it does, are questions underpinning the anxiety felt by many. However, much still remains to be revealed by the new administration. Zachary Karabell reminded the attendees of the 27th annual Conference on Sustainable, Responsible, Impact (SRI) Investing on November 8th that "we live in a continuous unfolding of the present." So while change from the policies of the Obama administration is inevitable, the content and extent of the changes remain uncertain. You can view Karabell's full presentation here.
SRI Is a Growing and Is Here to Stay
Conference attendees renewed the resolve shared by the millions of people who are working to create a better world where we can live sustainably and consciously. Indeed, it is almost a duty to continue to be a voice for progress.
Action of the responsible investment community is perhaps more important now than it has ever been. Impact-oriented investors should remain confident that they can achieve environmental and social goals and catalyze positive change. The SRI community is strong, growing, and can continue to encourage the responsible business behavior and positive impact for years to come, regardless of the priorities of the next administration.
According to the US SIF Foundation's Biennial Report on U.S. SRI Trends 2016 sustainable, responsible and impact investing assets now account for $8.72 trillion, up nearly 33% in the past two years, and now representing one in five dollars invested under professional management in the United States.
Shareholder engagement also remains on the rise. According to the same report, from 2014 through the first half of 2016, more than 200 institutional investors and money managers collectively controlling at least $2.56 trillion in assets filed or co-filed shareholder resolutions on ESG issues.
A Progressive Movement
The movement toward environmental sustainability in the U.S. has been evolving and progressing since the late 1960's. It's a rich and inspiring story, but the full history of the movement is far from being completely written. Today, we live in a time where the environmental issues that we face are more global, widely recognized, studied, and understood than ever before.
Consumers and investors alike are taking action into their own hands by aligning their environmental views with their investment and consumption choices. For example, the desire to rid investment portfolios of fossil fuel extraction companies has resulted in more than 500 institutions representing over $3.4 trillion in assets making some form of divestment commitment from fossil fuels, according to 350.org estimates.
The demand for coal in the U.S. is likely to continue to be low and, absent some type of unprecedented politically motivated incentive program being created to shore up the coal industry, it may never experience a recovery. According to the EIA's 2015 Annual Coal Report, coal production consumption, and employment fell more than 10% in 2015. The declining trend has continued into 2016 where, through the end of October, 2016, comparable year-to-date coal production was 20% lower than in 2015.
While it may be plausible that the new Trump Administration may look for ways to boost the fossil fuel industry, it will face significant market obstacles such as low prices and limited access to capital. Cheaper natural gas has displaced dirtier forms of energy and will continue to do so as long as the economics make sense. Renewables are now price competitive in about half the U.S. and the vast majority of new power that has come online the past few years have been from renewables. Job creation among solar and wind suppliers tell the tale of disruption, growth, and change that is quickly transitioning the U.S. economy away from climate change causing fossil fuels.
And much still remains uncertain. A recent article by the published in the Wall Street Journal, quoted Secretary of State John Kerry speaking to the United Nations representative assembled in Marakech: "While I can't stand here and speculate about what policies our president-elect will pursue, I will tell you this: In the time I have spent in public life, one of the things I have learned, some issues look a little bit different when you're actually in office compared to when you're on the campaign trail."
We should all find some degree of comfort in the fact that the economics of these sectors will make it much harder for the new administration to unwind the progress that's been made on the environmental front. In a Brookings article, Mark Muro explains how cities and states, market dynamics, technology, and private capital will keep driving progress despite presidential preferences. Moreover, we should not lose sight of the fact that consumer choice will always have the power to affect the supply and demand of certain goods and services. So even though the polls are closed and the ballots have been counted, people's still have choices.
Where Do We Go From Here?
At this year's SRI Conference, a panel of industry experts consisting of Bennett Freeman, Board Secretary of the Global Network Initiative, Joe Keefe, President and CEO of Pax World Investments, Lisa Woll, CEO of US SIF, and First Affirmative President, Steve Schueth, addressed the "where from here" question brilliantly.
In this discussion, the panelists agreed on the fact that these are important times for impact investors. At the end of her remarks Woll, challenged each person in the crowd of over 700 to ask themselves what they can do to make a difference within the next year.
Encouraged by this call for resolve and action, here's a list of things you can do today, tomorrow, next week, and throughout the year to continue to make progress on the environmental and social fronts in the new political environment:
- Carefully define your own agenda and identify paths to implement it.
- Make your impact goals known to your financial advisor.
- Invest in companies that meet clear SRI and ESG principles with a long-term mindset.
- Learn about and exercise your shareholder rights.
- Make informed consumption decisions in your everyday life.
- Educate yourself and others about environmental and social issues.
- Engage with your local legislators and communicate your concerns and priorities.
- Engage with your local community on how to lead on sustainability and social issues.
- Take a hit, occasionally: Make choices that align with you vision of a truly sustainable future despite price/convenience.
- Be a role model for change and treat all with dignity and respect.
The full panel discussion can be viewed here.
First Affirmative understands that the ways we save, spend, and invest can dramatically influence both the fabric and consciousness of society. We believe that in addition to the benefits of ownership, investors bear responsibility for the impact our money has in the world. Are you making conscious decisions about the impact of your consumer purchase and investment decisions?
NOTE: Mention of specific companies or securities should not be considered an endorsement or a recommendation to buy or sell that security. Past performance is no guarantee of future results.
Posted: December 14, 2016