The positive effect of Sustainable, Responsible Impact Investing (SRI) is borne out more with each year. The information age has brought with it unprecedented visibility into the values a company holds (or doesn't), meaning investors have more criteria with which to make choices that balance long-term financial return with policies that can help shape the future.
For years, Kay Kramer, CFP®, Principal – Financial Advisor at Birchwood, has used SRI to help balance clients' convictions with their financial goals. "Birchwood works with individuals and families to choose investments that will make a difference in the world," Kay says. "Investments that reflect their values."
SRI has created positive change at a corporate level across industries in three main areas of impact: Environmental, Social, and Governance (ESG). A mutual SRI fund can support one or a number of causes, ranging from climate change to racial diversity and gender equity and beyond. Here are a few examples of companies for which SRI has promoted change and pleased shareholders.
When shareholder advocacy organization As You Sow called on snack food company Mondelez International in 2013 to improve its record on package waste, the Parnassus Core Equity Fund voted in support of the resolution, which gained support year after year. By 2018, the resolution had 31% of the shareholder vote and Parnassus had engaged executives to raise the issue once more1.
As of 2020, the company (which owns snack brands including Oreo, Ritz, and Cadbury, among others) reported that 94% of its total packaging output is designed to be recyclable2.
"[Companies like Mondelez] are working on doing these things that take a while," Kay says – changes that likely wouldn't have begun without SRI investment championing change among shareholders.
After SRI mutual fund company, Green Century Funds filed a shareholder resolution with the company, Aramark, one of the world’s largest food service providers, agreed to develop and fully implement a no-deforestation commitment within six years. Aramark serves two billion meals a year in schools, hospitals, sports stadiums and more, meaning their commitment had the potential for significant impact.
Aramark pledged to:
In response to growing expectations of diversity on boards, investment firm Domini Impact Equity adopted a new proxy voting standard for its boards. Based on the conviction that gender and racial diversity promotes a more equitable and inclusive workplace while mitigating governance risks, the Domini board pledged to oppose the election of some or all directors where women or members of historically underrepresented ethnic and racial groups make up less than 40% or at least three members of the board (whichever is greater)3.
Domini also pledged to vote against an entire slate of nominees if there are no female directors or persons from historically underrepresented groups on the board. Aligned with its new standards, the company voted against nearly two-thirds of directors that were considered in its 2019 annual meetings4.
In the end, choosing an SRI is about measuring how important certain issues are to you and balancing their long-term financial advantage. Kay says, "Our job is to talk to clients – is this particular cause or effort something they're concerned about? – and help them choose mutual funds that will provide investment return and societal return, in a sense."
1Source: Parnassus Investments, https://www.parnassus.com/esg/engagements/mondelez_agrees_to_recyclable_packaging, 10/15/2019
2Source: Mondelo International, https://ir.mondelezinternational.com/news-releases/news-release-details/mondelez-international-supports-global-harmonization-plastics, 11/4/2020
3Source: Domini Funds, https://www.domini.com/insights/domini-2019-impact-report-release, 6/2/2020
4Source: Domini Funds, 2019 Impact Report, pg 118