Investors continue to pursue sustainable and socially responsible investing (SRI) in 2023, despite attacks on ESG policies from conservative spheres and the Federal Reserve’s efforts to shrink the economy. Natural Investments has more than doubled its holdings in the last five years. In the last year alone, Natural Investments grew 22% to $1.44 billion in SRI assets under management due to market recovery and an influx of new clients seeking SRI investments. The firm seeks to invest client assets with integrity, meaning Natural Investment’s advisors evaluate all products and services with an impact-oriented lens and channel clients into the best available investments to satisfy financial and sustainabiliWhile prioritizing stewardship instills a sense of responsibility toward creating a prosperous planet and transparency helps socially minded investors understand the process, integrity is essential to maintain the investment principles needed to create a replenishable system that works for all. Integrity differentiates good investments from what is just good marketing.
Natural Investments upholds its integrity in several ways. The firm avoids investments involved in wealth- and resource-depleting activities; works with managers that incorporate environmental, social, and governance factors into investment decision making; and funds social enterprises that contribute to solutions and support our communities.
Approximately half of the firm’s assets under management, $731 million in the publicly traded market, are spread across responsibly managed mutual funds, exchange-traded funds, and separately managed accounts that incorporate ESG strategies. Natural Investments chooses fund managers that apply ESG principles to identify and avoid the worst corporate actors, as well as connect with those who engage in shareholder advocacy to encourage change. The majority of these managers, whose funds amount to approximately $446 million, actively practice shareholder engagement via corporate dialogue or by filing ESG resolutions at annual meetings to inspire better corporate policies and practices. For the most harmful sectors to people and the planet, where clients do not want to engage in advocacy, common exclusionary screens include fossil fuel, tobacco, military/defense, and private prison industries.
Natural Investments stewards capital away from industries and business practices that are wealth- and resource-depleting activities.
ALIGNMENT WITH THE UNITED NATIONS SUSTAINABLE DEVELOPMENT GOALS
The United Nations Sustainable Development Goals were created to facilitate the end of poverty, protect the planet, and safeguard prosperity for all. Approximately 72% of Natural Investments’ SRI assets, both in the public and private markets, were pegged to at least one of 17 UN SDGs. goals. Of the $1.04 billion assets Natural Investments managed, the top five categories of those goals our investments targeted include: sustainable cities and communities; decent work and economic growth; climate action; affordable clean energy; and responsible consumption and production.
The majority of funds, spread across a variety of asset classes and product types, are held in one of five investment vehicles: responsible mutual funds and ETFs; separately managed accounts that utilize ESG strategies; municipal bonds; community investment notes; and sustainable private infrastructure products.
COMMUNITY INVESTMENTS
Natural Investments believes supporting community investment is one of the most beneficial ways to address economic and social issues by providing capital at the local level. Targeting “on the ground” investors gives more control to people who are the most capable of identifying solutions to poverty, infrastructure needs, and overall societal well- being in their communities. Natural Investments has nearly tripled investment into local communities and small business enterprises across public and private markets over the last five years.
The firm held approximately $773 million in community investments at the end of 2023. In the public markets, this means investing in municipal bonds and mortgage-backed securities, in which capital flows directly toward community infrastructure. In the private markets, this means investing in social enterprises, community development financial institutions, and fund managers contributing to solutions in investor communities.
RACIAL EQUITY & JUSTICE INVESTMENTS
In line with its commitment to justice, equity, diversity, and inclusionary (JEDI) finance, Natural Investments over the last several years has made a concerted effort to seek and support diverse managers in the impact investment space. The firm’s private market holdings invested $376.4 million in either women-led organizations or organizations led by a person of color. This represents 26% of Natural Investments’ overall SRI assets under management.
Natural Investments is working towards stewarding captial more equitably.
