Reflecting on SRI in the Rockies and True Impact
November 5, 2009
By Taryn Goodman
“We need another screened mutual fund like we need a hole in the head.” This direct quote from a presenter at the 2009 SRI in the Rockies Conference seemed to capture the same sentiments I was feeling during my time at the event. As a new employee of RSF, I am continually amazed at the innovative paths we choose to take here as it relates to impact investing (and beyond), which is why I was so surprised by the intense focus on screening at this conference.
In 2005, RSF first decided to focus its Donor Advised Fund Portfolio on impact investments. At that point, we had been working with asset managers to invest in funds that screened companies according to their environmental and social impact, finding best-in-class investments in each category for the portfolio. Nearly five years later, we have altered that strategy as we decided it did not fit with our core belief that investments need to be direct, transparent and personal, nor did it allow us to realize the true transformative impact which we seek in all we do. To that end, our current portfolios rely heavily on private equity investments, ensuring transparency and deep social impact as well as a holistic approach to change.
Even though they are not always focused on unique, ground-breaking investments that support deep social and environmental change, SRI in the Rockies attendees are still pushing the limits and providing a valuable resource focused on keeping public companies and the financial system in order. The idea of advocacy was a key theme at the conference, with Phaedra Ellis-Lamkins from Green for All, Smeeta Ramarathnam from the SEC, and Damon Silvers from the AFL-CIO urging the community to use their voice along with their dollars to promote change and reform as it pertains to the financial system, corporations, and the federal government.
While advocacy using dollars and voices is a clear and important need, I would still urge industry leaders to look beyond pure screening and shareholder voting, as these types of investments/activities do not provide pioneering impact. I now realize that what I thought was common sense – moving your cash to community development banks where it is working to create low-income jobs and support smaller communities; using your dollars to support direct investment in revolutionary approaches to solving the world’s problems; not looking for short term gains while creating greater economic loss, etc. – is actually what makes RSF so special and unique.
I think Ben Cohen of Ben & Jerry’s fame put it best when he asked RSF CEO Don Shaffer and me, “Why are you guys so weird?”
Taryn Goodman is Impact Investing Manager at RSF Social Finance.
- Published by Kyle Foley
- Categories: Events, Investing, Money, Social Finance
Hear, hear!
I have a question: how can we call something “socially responsible investing” when there is a strong argument to be made that those investments are – hopefully – merely less-bad investments?
Shouldn’t somebody hold the SRI industry (which I consider myself a part of) to account for this misleading nomenclature? Hey civil society – where you at? We need more than just new models of finance, we need to reclaim what “responsibility” and “socially conscious” and “sustainability” really mean.
A generation of investors is being initiated to investing practices that are effective at providing less critically inclined practitioners peace of mind, but unfortunately that peace of mind among investors does not translate into forces for peace in the world. We need to bring those two notions of peace into alignment and we can only do that by forcefully asserting responsible use of language.
We’re all intelligent people thinking about this stuff. Can’t we agree that the current phase of global capitalism that our 401k’s finance is fundamentally unsustainable?
I propose a new motto for next year’s SRI in the Rockies “Remember the real world.” The real world is not Wall St. The real world is the promising local business who has a solid product and dedicated customers, but that is nonetheless struggling to meet its capital needs. Meanwhile, the very people who want to see that local business thrive are poring money in “socially conscious investment vehicles” of various sorts that generally are several steps removed from what I regard as reality. Those investors are doing that because they are being told that there is no alternative. TINA – where have I heard that before?
hint: http://en.wikipedia.org/wiki/There_is_no_alternative
Neo-liberalism crashed before alternative models of international trade could be successfully promulgated, but RSF is providing those of us in the SRI space real alternatives that can be replicated. Yes, there are currently barriers to entry and obstacles to widespread adoption of these emergent models, but that just means we need to work harder to transcend those. We have the “responsibility” to transcend those because we all bear fiduciary responsibilities to the next generation.
Comment by Jack Ucciferri — November 16, 2009 @ 8:57 pm
I think that some of the dispersions cast upon the SRI community are at a minimum misconstrued. Isn’t it better to educate those on the “dark side” than to ignore them. For a long time the SRI world thought we should ignore the Wal-Mart’s of the world. However, the impact they have on others and the planet is too great to ignore. I believe we ignore it at our own peril. We do share the same air, water and planet.
We don’t all have to agree on everything, but convincing others that Environmental, Social and Governmental (ESG) are important to the bottom line and for people and planet, and is crucial to the survival of our species. We’ve also discovered the hard way, that engagement is more effective than drawing a line in the sand when doing stakeholder activism. It’s easier to have a dialog with someone if you’re engaged with them and on the same side of the line.
How many of us are willing to give up our cars and other luxuries that aren’t all that green or sustainable or responsible?
Of course it is important to support community based investment with high social and environmental impact, such as the RSF Funds, but isn’t it wise to also try to change bad actors for the better and for the commnon good? It doesn’t have to be either/or does it?
We do need to change capitalism so that it is more favorable to the common good than just those at the top.
How fair are the returns on community investments (CI)? I believe the RSF Fund and others could do a better job in the intereste of full disclosure and educating the public as well on cost/benefit analysis of their loan funds than they’ve done in the past too. I was surpised to find out at the SRI conference that some CI’s charge what we would consider usurious rates at times, though maybe necessary in remote areas that are difficult to serve.
It may be easier to just blame the “other”, but it’s not as easy and takes more character and responsibility to look within before we cast dispersions.
Comment by allan moskowitz — December 1, 2009 @ 4:27 pm