Social(k) Blog

How do I participate in fossil fuel divestment when investments are in my company retirement plan?

Rob Thomas — Tue, 11 Jun 2013 17:28:14 +0000

Many of us are concerned about Climate Change. We replace incandescent light bulbs, drive less, buy carbon offsets when traveling and above all else we DO NOT BUY BOTTLED WATER. However since most of us are not institutional investors, pension managers or Richie Rich types with huge stock portfolios, we feel a little left out when it comes to Fossil Fuel Divestment.

An online survey by First Affirmative Financial Network found the following:

Over half of sustainable, responsible, impact (SRI) investment industry professionals say that retail investors (65 percent) and institutional investors (53 percent) are currently expressing interest in fossil fuel-free portfolios in the face of growing signs of climate change, according to First Affirmative Financial Network’s Fossil Fuels Divestment Survey.

Released in anticipation of the 24th annual SRI Conference (http://www.SRIconference.com) October 28-30, 2013 at The Broadmoor in Colorado Springs, Colorado, the online survey was conducted by First Affirmative Financial Network between April 22 and May 8, 2013. More than 2,000 SRI industry professionals were asked to weigh-in on 12 questions regarding fossil fuel-free portfolios and related investor concerns. The survey was completed by 466 licensed investment professionals, asset managers, investors, and representatives of SRI investment companies, community development financial institutions, and social research/proxy voting organizations.

Other key survey findings include:

77 percent see growing risks for investors associated with fossil fuel company holdings in their investment portfolios.
30 percent of those surveyed either already do – or are getting ready to – offer fossil-fuel free portfolios to investors.

63 percent believe that investors will in the next 10 years start divesting in meaningful numbers from fossil-fuel companies due to climate change implications of such energy sources.

As Steve highlighted, it’s fossil fuels that are the number one producer of carbon in the atmosphere, which is in turn the top human cause of global warming. Fossil fuel divestment is thus the prime issue facing investors concerned about the environment. So you ask, “How can I participate in divesting of fossil fuel companies?” My answer: Talk to your employer about the company retirement plan.

Many mutual funds own companies active in extraction, production, transportation and use of fossil fuel. These companies have business models that rely on extracting all the fossil fuel they can, by any means necessary, and burning it. If they do what is right for the world and slow—and eventually stop—the burning of their reserves, the way things are now means they will suffer huge balance sheet losses. Two factors are going to push them toward burning less fossil fuel, and therefore losing value to shareholders: First, governments will place more and more regulations on them and second, investors and consumers will steer away from fossil fuels because of increasing awareness, and the profits that can be made will decrease.

At the end of the day, I don’t need to make anything more than a financial argument here. Awareness of global warming is not going away, and alternatives to fossil fuels are only becoming more developed and prominent. These companies’ oil and coal holdings are no longer the safe long term investments they were in the 20th century. If just 10% of your retirement plan money is investing in these companies you could be in for more than bad weather. When you look for 6% annual returns and see a drop in value from 10% of a portfolio’s holdings, you’ll find yourself setback. To avoid this, speak to your employer or retirement plan provider about divestment from fossil fuels.

Your employer may or may not consider fossil fuel stocks as volatile as you do. They might even completely disagree with the science of climate change. Either way, if they are not be willing to move the company plan from Fidelity to Social(k). Instead ask your employer to consider adding one or two of the funds available today that are fossil fuel free, such as Portfolio 21, Green Century Balanced, Shelton Green Alpha, Pax World Global Enviromental Markets, and CRA Qualified Investment Fund.

These funds are leading the way with fossil fuel free portfolios. Nervous your portfolio will under-perform by not owning energy producers? This webinar slide-deck walks through how portfolios can avoid Carbon Risk and not sacrifice returns. Empower yourself and become active in divesting of fossil fuel stocks in your company 401(k), 403(b) or 457 plan. It’s no longer only the big guns who can vote with their dollars. Here is a guide to bringing fossil free portfolios to your employer’s attention.

Rob Thomas

About Rob Thomas: Rob saw a need for more than one or two Environmental, Social or Governance, ESG, screened funds in an organization’s retirement plan. In 2000 there were no viable options for smaller organizations to add a respectable set of screened funds to a plan. Rob created Social(k) as an option for responsible and sustainable organizations looking for a retirement plan that matched the organizations DNA. To date almost 300 companies have agreed with Rob and offer Social(k) at their place of work. Join MoveOn.org, Democracy Now, Honest Tea, 350.org, Social Venture Network, B lab, RSF Social Finance, Green America, Social Investment Forum and a few hundred others as Social(k) supporters.

Good Buzz vs Bad Buzz from another early adapter to Social(k) – Guayaki

Rob Thomas — Fri, 07 Jun 2013 20:06:43 +0000

Guayaki saw value in Social(k) early on. We have watched the team grow and prosper with a sustainable model that not only offers indigenous people a way to support themselves, but in doing so they are saving a rainforest.

Sustainable Harvest Saves a Rainforest

Guayaki makes a difference

Over ninety-five percent of South America’s Atlantic Rainforest — the native home of yerba maté — has been cut down for hardwoods, to grow GMO crops, and to raise cattle.
But Guayaki‘s restorative business model is helping to protect the remaining five percent of Atlantic Rainforest by sustainably harvesting organic maté in the shade of its native environment — proving that the rainforest is worth more to everyone standing than it is cut down.

Guayaki partners with small farmers and indigenous people who are committed to caring for the forest. And harvesters are paid a fair wage. This stable annual income offers local communities a real alternative to the destructive industrial model. When money grows on trees, no one cuts them down.

And Guayaki’s way doesn’t just halt rainforest destruction; it’s regenerative, and it’s on track to restore over two hundred thousand acres in the next ten years.

This message of sustainability brought to you by Guayaki and Social(k).

Social(k) adds $125 million to ICCR Accord on Fire and Building Safety in Bangladesh.

Rob Thomas — Fri, 07 Jun 2013 00:09:29 +0000

A global coalition of over 200 institutional investors representing $2 trillion is asking industry leaders to quickly implement systemic reforms that will ensure worker safety, welfare, and adopt a zero tolerance policy on global supply chain abuses. At this point over 200 institutional investors have signed the accord. These investors represent sizable blocks of shares in many companies involved with oversees manufacturing of not only clothing but many other goods imported and sold to us, the consumer. We are concerned that a profit at any cost model is not only morally wrong but not financially prudent.

We join apparel industry leaders to use the tragedies in Bangladesh as a tipping point and hear our concerns about workers safety and welfare.

INDIGENOUS Fair Trade + Organic, a Social(k) client, and friend from way back, is offering to make their proprietary Fair Trade Tool available to ANY brand that publicly accepts the CHALLENGE that they will produce clothing in a way that is safe, ethical and honors people and planet.

ICCR: Transforming the Corporate World for the Common Good. Harnessing their power as shareholders in the world’s largest and most influential corporations, ICCR members work in coalition to promote corporate practices that ensure long term business growth while measurably improving environmental and social impacts.

READ Global wins The Lipman Family Prize for creating positive social impact.

Rob Thomas — Fri, 24 May 2013 18:46:14 +0000

Love to see our clients in the news

The Social Venture Network is an organization I became involved with in 1998. Gary Hirshberg was leading Social Venture Institues at Hampshire College. Seth Goldman was just beginning work on Honest Tea and presented the business case to the group. Seth and I stayed in touch, when Honest Tea needed a 401(k) we got the call. Another story.

My point is that through my involvement with and support of the Social Venture Network Social(k) has a rock star client list. READ Global is one.

But don’t take my word alone, read about it at Warton School of Business where they discuss the overall qualification. “Winners of the Lipman Family Prize are models for the good that they achieve as well as for their approach and implementation. The winner of the Prize tackles universal problems in a local setting — and, as such, offers an approach, model, or innovation that can be adapted to create a positive impact elsewhere.”

SVN friend Tina Sciabica is quoted in the Himalayan Times May 22 while visiting the local version of a Jhuwani Community Library at Bachhauli in Chitwan district.

Congratulations to READ Global. Executive Director Tina Sciabica and Founder Toni Neubauer.

Social(k) early adapter takes stand on Fair Trade + Organic fashion after Bangladesh tragedy.

Rob Thomas — Wed, 22 May 2013 19:03:47 +0000

In the Bangladesh clothing industry we have seen fires and building collapses kill 1500 and injure at least a 1000 more. The working conditions in third work factories across the world are deplorable as giant multinational corporations pursue constant increases in profits in a race to the bottom. We have heard that a garment made in Bangladesh costs about $6.50. We also read here that a living wage, safe work sites and fair labor practices would add 25 cents to that garment.

Over a dozen of these corporations say they are trying hard to monitor working conditions in some way but they are not able to do a better job, or they are not responsible for conduct of private companies in these countries at the end of the day. The result is 14 multinational corporations refusing to pay for a strict nationwide inspection program.

However 123 investors and stakeholders organizations, representing over $1.2 trillion in assets under management, issued a statement calling on industry leaders to implement systemic reforms that will ensure worker safety and welfare, and to adopt zero tolerance policies on global supply chain abuses.

Scott and Matt understand the pressures these corporations are under, but you buy the products, or decide not to buy the products at the end of this chain. With that in mind they ask you, the consumer to join Indigenous, other brands, retailers and a growing number of consumers who are insisting on consciously produced fashion.
Take the PLEDGE: “I will find out where the garment I am about to purchase came from and who made it. I will not wear anything that people are suffering and dying to produce.” It’s that simple. When you take steps to learn about your clothes, and spend in a way that demonstrates your values you are changing the fashion industry.

This story brought to you by a Social(k) plan sponsor.

Gore Offers Sustainable Capitalism as Night-Vision Goggles for Investors – Bloomberg

Rob Thomas — Mon, 20 May 2013 15:57:23 +0000

Gore Offers Sustainable Capitalism as Night-Vision Goggles for InvestorsBy Eric Roston May 20, 2013 7:42 AM EDT 1 Comments "
Bear with me,” Al Gore said to a rapt crowd of about 200 last Monday night at the fourth annual U.S.-India Energy Partnership Summit in Washington. He was asking the audience’s indulgence as he offered a scientific analogy to describe his investment philosophy.
Traditional investors focus on a narrow part of the spectrum of value that any company, or economy, produces, he said. Mainstream accounting in that way is like visible light. It’s all that eyes can see but makes up just 2 percent of the complete electromagnetic spectrum, the band of radiation that extends from high-powered gamma and x-rays to microwave and radio frequencies.Generation Investment Management, the firm Gore founded 10 years ago with former Goldman Sachs Asset Management Chief Executive Officer David Blood, tries to widen the bands of light that it sees by incorporating sustainability analysis. It’s an approach that values environmental, social and governance criteria “ESG” and long-term time horizons.
There’s a lot of information that’s material today — water, carbon, working conditions in far-flung suppliers — that hasn’t always been important to investors before.“If you take the rest of the sustainability factors into account, you can get a fuller and more realistic image, and that’s what we try to do,” he said.Generation Investment Management beta-tested its approach to what Gore and Blood call sustainable capitalism before the firm started investing client money.
It’s worked so far. “Knock on wood, we have done extremely well,” Gore said.Bloomberg News estimated Gore’s wealth last week at $200 million, in a 3,700-word investigation by Ken Wells and Ari Levy. Public filings show that in 2008 through 2011 London-based Generation racked up almost 140 million pounds $218 million in profits to be split among its 26 partners, Wells and Levy wrote. As founders, Gore and Blood are thought to have the largest equity stakes; the firm doesn’t disclose partnership equity or how the partners split profits, a spokesman told Bloomberg News.

Related: Call It What You Like — New Investing Approach Gains Followers: The GridGore Is Romney-Rich With $200 Million After Bush DefeatMajor U.S. Cities at Risk for Climate-Related Water ShortageResource Strain Pushes Coca-Cola, Dow to Put Price Tag on NatureGore cited Generation’s analysis of BP Plc as an example of their approach. “We were invested in British Petroleum, BP, when we started,” he said. The company’s CEO from 1995 to 2007, Lord John Browne, was an early climate hawk and made sustainability a rhetorical and marketing focus. After BP’s 2005 Texas refinery fire and its 2006 pipeline spill in Alaska’s Prudhoe Bay, Generation “looked at the safety culture and found that it had not been pushed into the American acquisitions. So we got out of BP — before the Deepwater Horizon,” he said.To refine Gores metaphor, sustainable investing is more akin to donning night-vision goggles, which extend human vision into the infrared band. That’s the part of the electromagnetic dial at which bodies radiate heat. It’s the same emission band as that other invisible thing Gore is known for trying to get people to see: atmospheric carbon dioxide.Analysis and commentary on The Grid are the views of the author and dont necessarily reflect the views of Bloomberg News.Visit www.bloomberg.com/sustainability for the latest from Bloomberg News about energy, natural resources and global business.

via Gore Offers Sustainable Capitalism as Night-Vision Goggles for Investors – Bloomberg.

THE 2013 SRI CONFERENCE FOSSIL FUELS DIVESTMENT SURVEY

Rob Thomas — Thu, 16 May 2013 16:48:30 +0000

SRI PROFESSIONALS SURVEY: MAJORITY OF RETAIL, INSTITUTIONAL INVESTORS INTERESTED IN “FOSSIL FUEL-FREE PORTFOLIOS”

63 Percent of SRI Professionals Expect Climate-Prompted Fossil Fuel Divestment in Next 10 Years

NEW YORK CITY AND COLORADO SPRINGS – May 16, 2013 – Over half of sustainable, responsible, impact (SRI) investment industry professionals say that retail investors (65 percent) and institutional investors (53 percent) are currently expressing interest in fossil fuel-free portfolios in the face of growing signs of climate change, according to First Affirmative Financial Network’s Fossil Fuels Divestment Survey.

Other key survey findings include:

· 77 percent see growing risks for investors associated with fossil fuel company holdings in their investment portfolios.

· 30 percent of those surveyed either already do – or are getting ready to – offer fossil-fuel free portfolios to investors.

· 63 percent believe that investors will in the next 10 years start divesting in meaningful numbers from fossil-fuel companies due to climate change implications of such energy sources.

First Affirmative President Steve Schueth, producer of The SRI Conference, said: “The survey findings strongly suggest that fossil fuel free investing is one of the SRI industry’s next big issues. Ours is an incredibly dynamic field, and as we develop the agenda for the 24th annual SRI Conference in October, we are working hard to present speakers and sessions focused on the most timely, important, and pressing topics. Fossil fuel free investing is already becoming a nationwide movement, and it’s likely to gain momentum as the impacts of climate destabilization are felt far and wide.

In addition, the survey also found that:

· 67 percent of respondents believe that 2013 is the right time for investors to assess and perhaps alter their approach to investing in traditional energy companies.

· 40 percent of those surveyed worry about increased diversification risk in fossil fuel free portfolios, in their role as a fiduciary to clients.

· 24 percent of those surveyed said they would be able to adequately replace the most carbon-intensive fossil fuel companies in portfolios they managed/advised with holdings that exhibit similar risk/return characteristics.

The full survey findings are available online at http://216.30.191.148/sricfossilfuelsurvey.pdf.

About The SRI Conference

The 24th annual SRI Conference (http://www.SRIconference.com), the leading North American forum for investors and investment professionals involved in sustainable, responsible, impact (SRI) investing, will be October 28-30, 2013 at The Broadmoor in Colorado Springs, Colorado. Please contact Krystala Kalil, at 888-774-2663 orkrystala@SRIconference.com.

About First Affirmative Financial Network

First Affirmative Financial Network, LLC () is an independent Registered Investment Advisor (SEC File #801-56587) offering investment consulting and asset management services through a nationwide network of investment professionals who specialize in serving socially conscious investors. First Affirmative produces The SRI Conference (http://www.SRIconference.com).

Call It What You Like — New Investing Approach Gains Followers – Bloomberg

Rob Thomas — Thu, 16 May 2013 15:10:31 +0000

More than 11 percent of investments under U.S. professional management were selected for companies’ financial performance and their social and environmental responsibility in 2012. That’s $3.74 trillion of the $33.3 trillion in investments scanned for environmental, social and governance criteria known as ESG, according to a November report by the U.S. SIF Foundation.Individuals and institutions are increasingly on the lookout for investment strategies that help them achieve environmental and social goals.Call it what you like — sustainable investing, responsible investing, socially responsible investing, impact investing, green investing or just ESG — this practice is bringing new approaches into the traditional investment industry. The field has expanded tremendously since trail-blazing funds, such as the Dreyfus Third Century Fund and the Pax World Fund were launched in the early 1970s. Today, sustainable investors might be concerned with climate change, alternative energy, human rights, diversity, community investing or other issues. We have seen a blossoming of specialized advisors and consultants and new investment products across all asset classes.Many studies have shown that sustainable investing does not mean additional risk or compromised returns. To cite just one paper, Deutsche Bank last year reviewed 100 academic studies of socially responsible investing and found that companies with high ESG ratings also have a lower cost of capital for both debt and equity pdf. It also found that funds dedicated fully to sustainable investment fared as well as conventional funds.Major investment management firms recognize that current and potential clients have a growing interest in sustainable practices. Nearly 1,200 asset owners, investment managers and professional service partners have signed the United Nations-backed Principles for Responsible Investment and are starting to disclose their ESG performance. Eighty-two U.S. money managers with $4.9 trillion in assets ask portfolio companies about ESG issues. Just 54 managers, with $3.8 trillion in assets, reported doing so two years earlier, according to the U.S. SIF Foundation.Some small and family foundations have already rethought their endowment investments or stepped up shareholder engagement with portfolio companies in light of their missions. They include the Needmor Fund, Jessie Smith Noyes Foundation and the Wallace Global Fund. Some larger foundations, such as the W.K. Kellogg Foundation, are also committed to investing in alignment with their mission.Sustainable investment is growing because investors and other stakeholders recognize its ability to deliver returns and influence corporate behavior. Investors have persuaded publicly held companies to disclose their risk from climate change, adopt sustainable forestry practices, check runaway executive pay and address labor and human rights conditions in their supply chains. They have encouraged investment strategies that promote economic development and expand financial services in poor communities.Many consumers already think about the sustainability of the products they buy, their commutes and what they eat. It’s natural to extend that logic to their investment portfolios.The practice may be less intuitive but is no less important for institutional investors. Their decisions can help advance a more sustainable and equitable economy.Woll is CEO of U.S. SIF: The Forum for Sustainable and Responsible Investment, which holds its annual conference in Chicago next week, and the U.S. SIF Foundation.

via Call It What You Like — New Investing Approach Gains Followers – Bloomberg.

How to Optimize ESG Factors in Portfilio Construction

Firehammer — Sun, 12 May 2013 16:42:29 +0000

Are you interested in screening out certain types of investments in your 401(k)? Considering going Fossil Fuel Free but nervous you will under-perform by not owning energy producers? This webinar slide-deck walks through how portfolios can avoid Carbon Risk and not sacrifice returns.

Click to Download PDF

Giant investment bank taken over by hippie alarmists | Carbon Risk an issue

Rob Thomas — Thu, 28 Mar 2013 16:16:49 +0000

London-based HSBC is a banking and financial services company, very old and very large — the sixth largest public company in the world. Greenpeace it ain’t. So it’s striking that the latest report from the financial giant sounds strikingly like the hippie alarmism of a Bill McKibben, a Joe Romm, or a … me. Then again, our hippie alarmism sounds a lot like the science surveys put out by the International Energy Agency, the World Bank, MIT, and the U.S. National Climate Assessment.So I guess we’re all hippies now.The report is called “Peak Planet” you gotta pay for it, unfortunately — Giles Parkinson has a great write-up and it’s about the threat of climate change and “the next upswing in the climate agenda.”The broad story HSBC sketches is familiar. If we want to hold warming below 2 degrees Celsius over pre-industrial levels, there’s only so much carbon we can dump in the atmosphere. That’s our “carbon budget.” We can either budget for an 80 percent chance or a 50 percent chance of avoiding 2C obviously the budget is bigger if the chances of success are reduced. Like so:HSBCThe difference between the bars on the left and the bars on the right shows that, between 2000 and 2012, we used up about 420 gigatons of our budget. At the rate we’re going, says HSBC, we’ll burn through the 80 percent budget by 2026 and the 50 percent budget by 2039. To avoid that unpleasant outcome, global carbon emissions need to peak soon — by 2020 at the latest, says HSBC — and begin declining rapidly.Achieving that wildly ambitious aim would mean, as McKibben so well elucidated, leaving somewhere between 60 and 80 percent of current fossil fuel reserves in the ground. That’s about $27 trillion worth of value that must be set aside.That fact is so stark, so absurd, that it has taken some time to sink in. But it’s happening. Earlier this year, investors worth $87 trillion demanded that companies begin disclosing their “carbon risk.” As HSBC puts it, “The contradiction between global carbon budgets and fossil fuel reserves is gaining increasing attention.”

via Giant investment bank taken over by hippie alarmists | Grist.