Interest in sustainable, responsible, impactful (SRI) investments continues to rise in the U.S., and globally, according to the Global Sustainable Investment Alliance. The expansion of SRI consciousness has led Natural Investments to grow as well with $1.11 billion of responsibly managed assets now, a 41% increase from the previous year. The firm directs our clients’ assets toward managers that incorporate environmental, social, or governance factors (ESG) into investment decision-making. The purpose is to avoid investments that are involved in resource-depleting activities that contribute to ecosystem harm or wealth inequities. At the same time, advisors at Natural Investments seek opportunities in enterprises that promote solutions to societal problems and support communities.
Within the publicly traded market, we invested a significant proportion of our client investments ($785 million) in responsibly managed mutual funds and separately managed accounts that incorporate ESG integration strategies. Although screening on environmental, social and governance helps to identify and avoid the worst corporate actors, thereby minimizing poor returns, Natural Investments also seeks fund managers who engage in shareholder advocacy. Approximately $463 million of assets factored into corporate dialogue or ESG resolutions at annual meetings to influence better corporate policies and practices. However, not all clients want to invest in corporations with questionable ethical practices and encourage better behavior. In some circumstances, clients wish to avoid certain sectors at all costs. The most common exclusionary screens include fossil fuels, tobacco, military/ defense and private prisons.
ALIGNMENT WITH THE U.N. SDGs
Natural Investments invests 61% of assets in responsible mutual funds and separately managed accounts that utilize ESG strategies. In addition to mutual funds, exchange-traded funds (ETFs) and managed accounts, Natural Investments sources opportunities in municipal bonds, community investment notes and other economic development tools that support resilient cities and rural communities. As of last year, the firm stewards $385 million intentionally into community infrastructure, affordable housing, financial inclusion, and renewable energy into low-income communities. This is apparent when comparing our assets with the top five categories of United Nations Development Goals (SDGs): sustainable cities, decent work, affordable clean energy, responsible consumption and reduced inequality.