Equities.com CEO Paula DeLaurentis sat down with Green Century Funds President Leslie Samuelrich ahead of a webinar later this month on “Transforming Giants: The Investor’s Role in Shaping Sustainable Changes at Microsoft and Coca-Cola.”
[Register here for the Oct. 29 webinar hosted by Equities.com and featuring Samuelrich and Green Century Funds Director of Shareholder Advocacy Annie Sanders].
Green Century is a mutual fund company and the only one in the U.S. entirely owned by environmental and public health nonprofit organizations. The unique ownership structure means that 100% of the profits Green Century earns can go back into the work of an organization that invests in the fund.
Leslie and her team help investors align their investments with their values, while also leading change-making environmental advocacy. In the last year, Green Century has secured major wins for the environment, including a policy shift on “right to repair” at Microsoft. Paula and Leslie dive into how Green Century secured that win, the motivations of next generation investors, the environmental stakes in the upcoming election, and more in their in-depth conversation.
This interview has been edited for length and clarity.
Paula DeLaurentis: How has your background in economics and not-for-profit advocacy shaped your approach to leading an environmentally focused investment firm?
Leslie Samuelrich: When I was graduating with a degree in economics, I also wanted to do something positive in the world. But the field of socially responsible investing didn’t exist.
I went directly to work in the nonprofit world, and ended up running a series of different organizing and advocacy groups, the last one of which concentrated on getting corporations to change their social and environmental practices, so around tobacco, water and food. That is where I became really exposed to shareholder advocacy.
To me, raising funds for Green Century is the same as the fundraising I had done for nonprofits, but in many ways even easier, because people are not handing over their money permanently to us.
DeLaurentis: What can you share about Green Century’s philosophy on sustainable and responsible investing?
Samuelrich: The first building block of it is to keep people’s money out of the most environmentally dangerous companies. That’s the moral value alignment that I think really is what brings people to want to invest this way.
We do not call what we do ESG investing. I don’t think there’s such a thing, I should say. There’s ESG data that you can use to make your investments and, you know, all the mainstream firms are doing it. We use it, and have used it forever to evaluate risk and potentially enhance performance. But it starts there, then it goes to the screenings. Through the 80s, we added nuclear power, nuclear weapons. We haven’t had coal or major oil in the balanced funds since 2005. But we did have gas. And then, once it became clear there’s not very much natural about fracking, we got rid of that too.
The other part of the investment strategy is in our bonds. We have over 70% of our fixed income holdings in green bonds. So really looking for solutions to environmental problems as part of the fixed income.
DeLaurentis: You mentioned earlier that you look at the ESG data and the screening to help with financial returns. How do you deliver your returns, while also meeting your impact requirements?
Samuelrich: We always want to deliver competitive returns for our investors. We use the ESG data plus fundamental analysis in our active funds to pick the companies that we think are going to deliver value over the long term for the investors.
The screening is about personal value alignment. I don’t think the impact comes from investing, period. I think the impact comes from if and what kind of shareholder engagement you do.
DeLaurentis: That’s my next question. You’re known for shareholder advocacy work. Share some recent successes in engaging companies on environmental issues.
Samuelrich: So we targeted 54 companies last year, and we got 26 actual policy changes. We tend to do things in industry clumps, because then you can assess a whole industry at a time and figure out really who’s lagging, and then use that to help push other companies along.
With Disney, Hasbro and Mattel we got shareholder policies to both assess and then make steps to reduce their plastics. With Marriott, Hilton and Choice Hotels, they’re first measuring their plastic footprints and setting goals to cut plastic use.
DeLaurentis: What’s an example of another policy change at a company that Green Century targeted this year?
Samuelrich: One of the ones that we also have been working on this year is “right to repair” – to extend the lifespan of Microsoft computers.
We filed a shareholder resolution with them. As a result of that, and negotiating with the company, they announced that they would extend the protections for Windows 10 security updates. It particularly applies to schools, hospitals, you know, and everyday people who otherwise were going to have to throw away their computers because they weren’t security safe to use anymore. They’re perfectly functioning otherwise.
That agreement is estimated to keep 400 million computers from becoming electronic waste.
DeLaurentis: That’s huge.
Samuelrich: It’s huge. And it really resonates. It resonates with people who care about the environment, but it also resonates just with people who are just starting to think about what sustainable investing can do.
DeLaurentis: Are the wins because of the amount of money you invest in these companies?
Samuelrich: No. I think the wins come because we do the research, we know the risks, and we are tough negotiators. We’re driven to make real world change, and that comes both from the people who work at Green century, and that mission is sort of in our DNA because of the ownership.
DeLaurentis: How has the sustainable investing landscape evolved since you joined Green Century?
Samuelrich: It has changed dramatically. I joined when it still was dominated by the pioneers and long term firms in the field, and as the idea of sustainable investing got out and the relevance of using ESG data, the mainstream companies came in to offer products to both keep their current investors and attract new ones.
Now, with ESG under attack, you see these firms who didn’t have a commitment to it being anything deeper than a method to draw in more profits, they’re backing away. They’re scrubbing their websites of ESG. There’s not very many of us left standing who are primarily driven by serving our investors, both on the returns and on the impact.
DeLaurentis: With the election coming and a new presidential administration, what will be threats or opportunities for environmental or responsible investing?
Samuelrich: On the one hand, if there are changes at the SEC and then the regulatory landscape, any investor, whether they’re Green Century or not, is going to have a harder time retaining their rights to engage with companies.
I do think if it is a Trump administration, that more people are going to have a reaction to being like, “I need to do something more now.” That’s what we saw when Trump was first elected. We saw a flood of people wanting to learn more and invest because they felt that there was a lot less room for them to see progress through the legislative or regulatory pathways.
DeLaurentis: At the end of the day, what it really is is an individual wanting to invest for good, and they define good however they want to define it, right?
Samuelrich: Yes. This generation and the next generation, they expect to be able to do this with their money. They expect to have choices. They expect to be able to make an impact.
You know, the companies that they buy shoes from and coffee from source things sustainably, They have just a different baseline where they start from. The trick is to explain to this whole next coming generation what investments using ESG data do and what they don’t do. Because if you’re just using ESG data, you’re not necessarily investing in companies that are making a positive impact.
DeLaurentis: What is an example of a company reducing its ESG rating in a way that doesn’t positively impact the environment?
Samuelrich: Say you’re a textile company, and one of your top five ESG risks is around water, because usually making textiles requires a tremendous amount of water.
Maybe you’ve installed some water conservation methods, or change the way you produce your textiles. But you can also do it by just buying up more water rights. And so one is a positive impact, and one is actually negative.
DeLaurentis: What advice would you give to an investor who wants to align their portfolios with their environmental values?
Samuelrich: I’d have them find an advisor that asks them about [ESG] and is excited about it explicitly, explicitly talks about doing that investing.
DeLaurentis: What are Green Century’s goals for the next three to five years?
Samuelrich: To offer a fuller family of funds. To expand our shareholder engagement into the fixed income market. To educate more financial advisors on the different kinds of sustainable investing to help them find the ones that match best for their practice, because it is, I think, very confusing for financial professionals to even wade through this stuff.
And to funnel more money to our nonprofit owners so they can make an impact. Over the last two years, we’ve given $2 million to their environmental and public health campaigns.
DeLaurentis: Have you seen growth in the number of FAAs investing in Green Century?
Samuelrich: We have. And it’s so easy to tell clients how their investments are [making an impact]. Here’s a story about how Mattel is now going to make their products with 25% of recycled plastic. We’re the real deal in an evolving landscape where there’s a lot of murkiness.
Don’t forget to register here for the Oct. 29 webinar featuring Samuelrich and Green Century Funds Director of Shareholder Advocacy Annie Sanders. Watch this video to learn more from Sanders about the work Green Century is doing to fundamentally change how companies do business and impact the environment.
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