Social Investment Forum Foundation

Transcription

1 Social Investment Forum The Mission in the Marketplace How Responsible Investing Can Strengthen the Fiduciary Oversight of Endowments and Enhance Philanthropic Missions 2007

2 A Brief Introduction This PowerPoint is based on a booklet produced by the Social Investment Forum entitled, The Mission in the Marketplace: How Responsible Investing Can Strengthen the Fiduciary Oversight of Endowments & Enhance Philanthropic Missions. This booklet can be found online at Marketplace.pdf. Acknowledgements: J.A. & H.G. Woodruff, Jr. Charitable Trust Partnership on Corporate Responsibility (

3 An Invitation to s & Endowments Responsible Investing Strategies Social and Environmental Screening Shareowner Advocacy Community Investing Social Venture Capital

4 Creating Value [F]oundations are not simply vehicles for distribution of charitable gifts, but rather investors in value creation. Jed Emerson Generation

5 What is Responsible Investing? Responsible investing is an investment process that considers the social and environmental consequences of investments, both positive and negative, within the context of rigorous financial analysis.

6 Terminology The incorporation of environmental, social, & governance (ESG) factors into investment management has been described in a variety of ways: social investing, mission-related investing, values-based investing, socially responsible investing (SRI), ethical investing, double- or triple-bottom-line investing, and responsible investing. This report will use a number of these terms.

7 Socially Responsible Investing (SRI) SRI incorporates issues of Corporate Social Responsibility (CSR), ranging from environmental concerns to human rights and supply-chain management, from workplace health and safety to equal employment opportunity and human resources policies.

8 Responsible Investing s Scope and Scale Over $3.6 trillion: Global SRI Assets by Institutional Investors Over $2.29 trillion: U.S. SRI Assets under professional management Over $4 trillion: Assets of institutional investors backing UN Principles for Responsible Investment Over $6 trillion: Assets of UN Global Compact endorsers Over 26% Annual Growth in US SRI Assets

9 Fiduciary Prudence, Performance & Mission- Based Investing Consideration of sustainability as an element of prudent trusteeship Recognition of extra-financial benefits Added economic value of environmental performance Competitive long-term performance Variety of options across investment styles, instruments, and asset classes

10 Social and Environmental Screening The Incorporation of Environmental, Social and Governance (ESG) Criteria into Investment Analysis Negative Screening Avoids Poor CSR Performers Positive Screening Identifies Strong CSR Performers Best-of-Class Screening Identifies Sector Leaders

11 Largest s Employing Social or Environmental Screening* Bill & Melinda Gates Ford David and Lucile Packard California Endowment Annie E. Casey Rockefeller Carnegie Corporation of New York *May include a single screen, such as tobacco California Wellness Robert Wood Johnson Charles Stewart Mott Carnegie Corporation of New York Heinz Endowments William Penn Among 50 Largest Private s Source: Chronicle of Philanthropy, 2006

12 Shareowner Advocacy Active Proxy Voting Filing and Co-filing Resolutions Direct Dialogue with Management Participation in Shareowner Coalitions and Networks

13 Recent Shareowner Successes Climate Change and Carbon Disclosure HIV/AIDS Policies at Coca-Cola and PepsiCo in Africa Labor Conditions at Taco Bell and Yum! Brands Fair Trade at Procter & Gamble

14 Shareowner Engagement Networks Council of Institutional Investors Partnership for Corporate Responsibility Interfaith Center on Corporate Responsibility (ICCR) International Corporate Governance Network Investor Network on Climate Risk (INCR) Jewish Shareholder Engagement Network Social Investment Forum

15 Recent Social Shareholder Resolution Proponents Among s As You Sow Camilla Madden Charitable Trust Conservation Land Trust Edward W. Hazen Funding Exchange Haymarket People s Fund Jessie Smith Noyes Lemmon Max and Anna Levinson Nathan Cummings Needmor Fund Pride Tides United Church Wisdom Charitable Trust

16 Community Investing (CI) Provides capital to traditionally underserved communities Generates high-impact social returns Supports affordable housing, child care, and sustainable economic development Provides diverse investment opportunities, from below-market deposits to riskadjusted, market-rate returns through debt, equity and venture capital

17 Community Investing Institutions Community Development Banks Credit Unions Loan Funds Venture Capital International Microfinance Funds Grown from $4 billion in 1995 to nearly $20 billion in 2005

18 Sample Leaders in CI F. B. Heron Jewish FundS for Justice (JFSJ) A. J. Muste Memorial Institute Rose for Communities and the Environment

19 Social Venture Capital Double-bottom-line: both financial and social returns Alternative Investment opportunities in early-stage private equity Debt financing to support non-profit social enterprises Over $600 million in capital from Angel Investors and Institutions alike