Evolution in Investing

Written by: Terry Link

Primary Source: Possibilitator

With the renewed interest in looking at investments from more than a short-term financial gain for shareholders, to the some of the costs of playing this rigged game, the Fossil Free movement, like the anti-Apartheid movement that preceded it has stirred the brou-ha-ha. For individual investors looking for fossil free funds to put their surplus capital in the options are pretty limited.

One of those firms who have been in the SRI game for as long as any is Pax World Mutual Funds. Pax, as you might guess was formulated as a response to screening out military contractors who were profiting from the Vietnamese Conflict (It was never a declared war, tell that to the 55,000 US dead and the 1 million or more Vietnamese who perished, plus uncountable others who were wounded mentally and physically from the ‘conflict”.)

Pax has continued to hone its investing principles. An early supporter and signatory to the Principles for Responsible Investment, 

The six Principles

The 6 PrinciplesAs institutional investors, we have a duty to act in the best long-term interests of our beneficiaries. In this fiduciary role, we believe that environmental, social, and corporate governance (ESG) issues can affect the performance of investment portfolios (to varying degrees across companies, sectors, regions, asset classes and through time). We also recognise that applying these Principles may better align investors with broader objectives of society. Therefore, where consistent with our fiduciary responsibilities, we commit to the following:

Principle 1: We will incorporate ESG issues into investment analysis and decision-making processes.+

Principle 2: We will be active owners and incorporate ESG issues into our ownership policies and practices.+

Principle 3: We will seek appropriate disclosure on ESG issues by the entities in which we invest.+

Principle 4: We will promote acceptance and implementation of the Principles within the investment industry.+

Principle 5: We will work together to enhance our effectiveness in implementing the Principles.+

Principle 6: We will each report on our activities and progress towards implementing the Principles.+

     The Principles for Responsible Investment were developed by an international group of institutional investors reflecting the increasing relevance of environmental, social and corporate governance issues to investment practices. The process was convened by the United Nations Secretary-General.

In signing the Principles, we as investors publicly commit to adopt and implement them, where consistent with our fiduciary responsibilities. We also commit to evaluate the effectiveness and improve the content of the Principles over time. We believe this will improve our ability to meet commitments to beneficiaries as well as better align our investment activities with the broader interests of society.
We encourage other investors to adopt the Principles. 

Pax has moved from simply imposing investing screens – no military, no nuclear, no apartheid, etc. to offer more positive focused options, e.g. Global Environmental Markets Fund (fossil free), Global Women’s Equality Fund, etc. along with it’s more traditional screened funds. Even those screened funds allow some fossil fuels so that Pax can be active in bringing ‘shareholder resolutions’ to push the companies towards more socially and environmentally responsible behaviors.

Now they have taken a step to lower their own responsibility to mitigate global warming. They have benchmarked their funds with respect to their carbon emissions. Their plan is “to announce quantitative goals for the carbon intensity of our portfolios and publicly report on progress toward those goals.”

In addition they have taken their Global Environmental Markets Fund, which was already fossil free to the next step- carbon neutrality.

“That means that we have apportioned the emissions of every company in the portfolio according the percentage of the company’s share owned in the fund. Using that data, we calculated the percentage of each company’s emissions that the fund “owns”. Then we purchased verified carbon reduction offsets to reduce the GHGs being emitted into the atmosphere by an equivalent amount. (Semi-Annual Report, June 30, 2013, pp.37-8)

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Terry Link
Terry Link is a retired MSU librarian, former founding director of the MSU Office of Campus Sustainability, and co-founder and former chair of the American Library Association’s Task Force on the Environment. He recently served as associate editor for the two-volume encyclopedia, Achieving Sustainability: Visions, Principles, and Practices(Gale/Cengage 2014). He has also served as executive director of a regional food bank and as a county commissioner. Currently he is president of Starting Now, LLC, a sustainability consulting firm, a Senior Fellow for the U.S. Partnership for Education for Sustainable Development and serves on numerous non-profit organization boards.
Terry Link

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