Sustainability crept into mainstream consciousness in the late ‘80s, and while it started as an offshoot of the environmental movement, it migrated into business, finance, and government policy soon thereafter.
In 1990, there were about a dozen socially responsible mutual funds, and today, there are over 500. Since it launched nearly 20 years ago, the UN Principles for Responsible Investment have now been adopted by approximately 5,300 institutional investors worldwide representing $128 trillion in assets under management.
When Natural Investments became one of the first handful of Certified B Corps in the world in 2007, we affirmed our longstanding commitment to walking our talk as a socially responsible business. Today, there are over 9,500 Certified B Corps. The concept of stakeholder capitalism—where the needs of employees, customers, communities, and the environment are held equally to those of owners—has taken hold, shifting from a fringe ideal to an effective core business practice and a potent foundation for systemic economic development.
On one hand, this growth in popularity in a relatively short period of time is encouraging, as within a generation, the basic tenets of capitalism have shifted significantly. And yet, given the lack of consensus on humanity’s priorities, many acknowledge that the pace of conscious capitalism’s adoption is too slow, and the widening class gap, ongoing gender and racial discrimination, and the impacts of climate change require more robust commitments and regulatory vigor.
When we published The Resilient Investor in 2015, we’d already sensed the limits of sustainability as an organizing principle, and in suggesting resilience as a new clarion call for investing, we surely didn’t know how an increasingly volatile and uncertain world would indeed require us to cultivate adaptability, inner fortitude, patience, and persistence.
SUSTAINABLE INVESTING IS MAINSTREAM INVESTING
The popularity of sustainable, responsible, and impact investing in recent years has illustrated the business case for integrating values into our financial choices. Power in this country may seem to swing on a political pendulum, but when it comes to investment approach, the multi-decade trend is clear: The great majority of investors, companies, and investment professionals recognize that environmental, social, and governance (ESG) factors are material to financial performance and should be thoughtfully analyzed in making investment decisions.
Morgan Stanley’s most recent annual survey—Sustainable Signals, a diverse sampling of over 1,700 individual investors ages 18 to 80 worldwide—found that 88 percent of people expressed interest in sustainable investing, which is nearly unchanged from 2023. Interest is highest among Gen Z (99 percent) and Millennials (97 percent), with their rationale being a desire to make a difference while obtaining competitive returns. Over 80 percent of investors in the study believe companies should address environmental issues, with clean energy being the top investment priority.
Similarly, a 2024 survey by the Capital Group found that 90 percent of 1,130 institutional investors consider ESG factors in their investment decision-making. Investment professionals pay attention to this data as well, integrating it into their research. According to the CFA Institute, whose Chartered Financial Analysts are certified to provide the highest standard of financial recommendations at investment firms, 85 percent of them take ESG factors into consideration. These are financial analysts, not woke activists with a political agenda. They simply understand that company finances are directly affected by policies and practices regarding employees, customers, boards of directors, communities, and the environment. As such, assessing these variables has become a well-established norm for industry professionals to make investment decisions.
THE EMPIRE STRIKES BACK
Those involved in the obsolete exploitative and extractive economy want to keep doing what they’ve been doing, unabated, and lately, they’ve enlisted fear-based conservative politicians to try to save them and punish those who are leading the charge to a healthier economic reality.
As civilization evolves its consciousness, those who feel that they are being left behind are increasingly aware of the power they’re losing. This explains the global proliferation of blaming their difficulties on others: the under-resourced, the highly educated, immigrants, the so-called “deep state” within our own government, certain other countries, and now socially responsible investors. But the simple truth is that laggards who believe there’s a legitimate path to the conditions of yesteryear will not thrive in the new economy.
As sustainable investing has grown from a marginal niche market to a common mainstream way to assess investment risk, its overwhelming success has made it a target. People often seem to hate winners if it indirectly characterizes them as losers. Those of us who have been creating solutions to our problems and discovering more humane and ecologically wise ways to live, work, and profit are anathema to those who are ill-prepared to adapt to a changing reality and who express a sense of angry entitlement as their priorities are deemphasized.
Surely the conservative backlash against responsible investing comes in part from ignorance regarding its research-proven positive correlation to financial performance, but the businesses and sectors that don’t meet the definition of responsible are also experiencing a legitimate existential crisis. Economic theory teaches that companies must adapt or die (remember Kodak?), and what we’ve been seeing with certain businesses and anti-ESG legislation from Republicans are the last gasps of a dying portion of the economy based on exploitation and degradation.
Investors are divesting from these businesses and industries because they are paying attention to the risks pertaining to their money and assessing the long-term viability of companies that don’t acknowledge the impact of these risks on the bottom line. As such, they are wisely aligning their money with ESG factors because they know the truth: Diversity creates more financially competitive and valuable companies, and there is no long-term profitability without a healthy environment.
We are motivated by leadership rather than anger. We use financial leverage to peacefully engage in the battle of consciousness that in some corners has frothed into a culture war. The misplaced concerns that ESG considerations or government regulations reduce profit have been repeatedly debunked by research, as businesses around the world that have voluntarily adapted their practices are thriving and financially outpacing their peers.
A recently released annual study, MSCI Transition Finance Tracker, which monitors the carbon practices of all global public companies, found that 60 percent of them have published climate-related commitments, which is more than double the number from 2020. In addition, 29 percent of public companies already have net-zero carbon emissions targets, which is six times higher than five years ago. The report also indicated that revenue at these companies has increased by nearly 50 percent between 2015 and 2023 while their emissions declined by almost 25 percent over the same period, illustrating the positive correlation between environmental practices and financial performance.
Conservatives can rile up their base with distractions about who is destroying their way of life, but the fact is that companies, investors, and investment professionals have already accepted the premise of the financial materiality of ESG factors. Decades of research have proven a clear positive connection between financial success and ESG factors. It’s embedded into the very notion of fiduciary responsibility. Tantrums in the halls of conservative legislative chambers might limit its practice with the public pension plans they control, but it won’t change the macroeconomic trajectory of civilization.
THE SIX PILLARS OF OUR IMPACT WORK
Natural Investments is committed to advancing justice and equity through our work in six interconnected pillars. Together, these pillars reflect our firm’s holistic, principled approach to creating systemic change.
Pillar No. 1: Capital Deployment for Racial Justice and Equity
We remain committed to using capital to invest in people and communities of color. Reflecting a deepening commitment among our clients, Natural Investments recently made private debt and equity racial justice investments in 20 firms totaling $80 million. Investment categories include global farming and agriculture; BIPOC-owned businesses and conversions to employee ownership; credit unions serving communities of color; cooperative housing trusts; and community-owned real estate development.
Pillar No. 2: Influencing Companies through Shareholder Advocacy
We co-signed a letter with Green Century Capital Management, whose mutual funds many of our clients own, to the Securities and Exchange Commission (SEC) requesting that it not accept JBS’ registration on the New York Stock Exchange due to its pattern of misleading disclosures to investors regarding its climate-related targets and impacts. Brazil-based JBS, the largest meat processing company in the world, has exaggerated its environmental track record and minimized its environmental risks. In a first in our decades of advocacy, we were one of many firms that received a cease-and-desist letter from an attorney representing an investment firm shareholder in JBS, claiming we were causing tortious interference to cause economic harm. We responded with these other entities that advocating to a public agency is protected First Amendment speech and didn’t hear from the attorney again. Nevertheless, despite our and many environmental groups’ objections, the SEC approved the company’s listing.
We co-signed a letter led by SOC Investment Group to Hyundai regarding serious supply chain issues alleged to be occurring at the company, including the use of prison and child labor and health and safety issues at its plants that have led to work deaths and serious injuries. The company’s response indicated it had taken meaningful steps to curtail prison and child labor among its suppliers and was considerably improving its worker health and safety program.
We co-signed a letter to Walmart requesting reconsideration of its decision to cut back many of its diversity, equity, and inclusion initiatives and commitments. The reversal contradicts the company’s 2024 regulatory filing, in which “belonging, diversity, equity, and inclusion” was stated as one of four priority ESG issues that “offer the greatest potential for Walmart to create shared value.” A coalition of investors was able to get a meeting with management and continued to have constructive engagement for several months, with the company demonstrating thoughtfulness in its plans to prioritize associate well-being and belonging and acknowledging some of our disclosure recommendations. During this process, the company disclosed that 60 percent of its U.S. suppliers are small businesses, many of them diverse-owned, and that women comprised 38 percent of senior management and Black/African American people at 8.5 percent. The company is also conducting a racial equity impact study.
We co-signed a letter from UNI Global Union to Amazon regarding its announcement to close all seven warehouses in Quebec during active collective bargaining contract negotiations and unionization efforts—moves clearly designed to prevent worker freedom of association and collective bargaining. The closures affect more than 4,000 people, and the company is facing a federal review of the company’s public contracts and a lawsuit by the Canadian government alleging violations of its labor code, further sullying the company’s reputation due to unfavorable media coverage and boycotts. Amazon did respond in writing, but seemed unwilling to engage investors on these issues, failed to address any of the letter’s salient points, and defended its practices as being in alignment with international standards and legal requirements. The company was also successful in its petition to the SEC asking that a shareholder resolution calling for a third-party assessment of its adherence to its commitment to workers’ freedom of association and collective bargaining rights be removed from the ballot.
We co-signed a letter by Rhia Ventures to 30 major companies (including Coca-Cola, Lowe’s, Microsoft, Target, American Airlines, and Bank of America) to protect employees’ reproductive and maternal health care benefits given state laws restricting such access. While the companies generally responded that they are “doing what they can” to support their employees, details of how over 200 companies are addressing these issues can be found in the Rhia Ventures database. In addition, over 1,000 businesses, including Natural Investments, Levi’s, Etsy, Nordstrom, Lyft, and Fenty, have signed the Don’t Ban Equality Statement, which objects to any government restrictions on reproductive health care because it’s a core business issue that impacts company operations, benefits, culture, and health and safety.
We co-signed a letter with Green Century Capital Management to Chemours (formerly Dupont) asking the company to make permanent its existing, near-term commitment not to engage in titanium mining, nor to purchase titanium mined by others, at the ecologically sensitive Okefenokee Swamp, the largest blackwater wetland in North America and home to a 90-yearold wildlife refuge. Such economic activity would pose undue financial risk to the company given the environmental, regulatory, legal, and reputational risks to the company. Chemours has indicated it will operate in an ecologically sound manner, and as such, a resolution requesting that the company adopt a policy to assess biodiversity impacts before mining in ecologically sensitive areas received only 6.4 percent support from shareholders.
We co-signed a letter with Domini Social Investments and Trillium Asset Management to the CEO of Nike regarding the company’s persistent systemic labor rights abuses amid weak enforcement and anti-union activities in Southeast Asia factories. We asked that the company move beyond voluntary mechanisms and audits to impactful interventions that protect workers’ rights. At a meeting with management, the company essentially defended its approach and didn’t seem amenable to change, but one of its supplier factories recently joined a new binding agreement in Indonesia called Central Java Agreement for Gender Justice, which covers 6,250 workers. The company also finally agreed to a remediation plan for the outstanding wages for 3,300 Thai workers in China who were coerced into accepting unpaid leave during a suspension of work due to COVID-19. Meanwhile, Pro Publica reports that workers at Nike factories in Cambodia still describe low wages, unfavorable conditions, and abuses the company promised to eradicate long ago.
Pillar No. 3: Proxy Voting
We vote corporate proxies at the firm level and cast ballots uniformly for clients who have given advisors permission. In the past year, there were 860 company meetings and a total of 26,110 proposals voted. While most proposals pertained to electing board members, approving executive compensation and auditors, and authorizing the issuance and repurchase of stock shares, there were also 527 shareholder proposals on a variety of ESG issues. More than half the shareholder proposals submitted were in four categories: climate change (20 percent), political contributions disclosure (17 percent), human rights (14 percent), and environmental management (13 percent). There were also proposals addressing living wages, racial and gender pay gaps, diverse boards of directors, executive pay and termination conditions, ethical use of artificial intelligence, board chair independence, the impacts of reproductive rights policies on employees, labor organizing rights, data center energy use, biodiversity loss, medical information security, child safety, and the relationship between diversity, equity, and inclusion policies and profitability.
To assist our analysis of the issues, we subscribe to As You Sow’s proxy service that features recommendations on most ballot items. These are listed side by side with management’s recommendations on our proxy voting platform, so we can analyze their respective rationales. We examine shareholder proposals in detail, as these typically address risks that management may not yet be acknowledging (typically, an issue only ends up on the ballot if management does not agree with a shareholder’s concern). About 7 percent of the time, As You Sow labels the ballot item “case by case,” for which we must conduct our own research.
While we tend to share a similar perspective to As You Sow on many issues, our firms do not share unanimity, and last year we voted in alignment with their recommendations 91 percent of the time. We voted in support of ESG proposals 92 percent of the time (about 8 percent of these types of proposals are now anti-ESG; they didn’t succeed). Generally, company management recommends voting for all board slates and against all shareholder proposals, particularly on ESG issues. As such, we voted against management’s recommendations 44 percent of the time. While some of these votes pertained to ESG issues, most anti-management votes addressed board candidates, executive compensation, and auditor selection.
Pillar No. 4: Influencing Policy through Advocacy
SEC: Republicans appointed to and forming a majority at the Securities and Exchange Commission (SEC) abandoned the previous Commission’s legal defense of the recently adopted climate disclosure rule, which was being battled in court.
This is a surprise to nobody, but even so, this remains a pivotal moment in the evolution of corporate sustainability reporting. The progress made over the past four years has fundamentally reshaped how companies and investors approach climate-related disclosures. Today, businesses aren’t starting from scratch. Instead, they’re building on harmonized global standards, emerging national regulations built on those standards, and state-level laws like those in California that align with global standards. Together, these requirements provide a clearer path forward for climate reporting, despite what is likely a temporary commitment setback by the federal government. Nevertheless, we’ll always continue to advocate for climate-related disclosures.
As a member of the Shareholder Rights Group (SRG), we wrote to the Investor Advisory Committee of the SEC, an expert group of industry, academic, and investor constituencies that make recommendations to the Commission, requesting that it preserve the existing process for shareholders to file resolutions and not heed the calls from a few disgruntled companies that face a large number of such proposals to limit shareholder rights.
We also contributed to and supported an SRG report, published in conjunction with US SIF and the Interfaith Center for Corporate Responsibility, titled “Shareholder Proposals: An Essential Investor Right.” The report explains how shareholder engagement and proposals occur and how they effectively make corporations accountable to shareholders by helping them assess material risks to financial performance.
Congress: We joined 80 other investors in signing the Interfaith Center on Corporate Responsibility’s “Investor Statement in Support of Just Immigration Reform,” which was sent to all members of Congress. We requested that Congress end the authorization of government funds to expand detention and deportation until legislation is in place establishing a legal pathway for the estimated 11 million undocumented immigrants who are critical contributing members of our society and economy. We also requested that the body restrict funding for mass deportations while assuring proper funding for refugee resettlement, Deferred Action for Childhood Arrivals, and Temporary Protected Status to ensure economic growth. Millions of undocumented workers are employed in critical industries in this country, including agriculture, construction, housekeeping, cooking, janitorial, groundskeeping, carpentry, truck driving, painting, cashiering, food service, equipment operations, and packaging. In agriculture alone, according to the USDA, 44 percent of farm laborers are not U.S. citizens.
States: California, if it were a country, would be the fourth-largest economy in the world. As such, in the absence of federal action, it’s filled the regulatory void. Its Climate Corporate Data Accountability Act and Climate-Related Financial Risk Act, if passed into law, would require entities doing business in California with revenues exceeding $1 billion to report their Scope 1, Scope 2, and eventually Scope 3 emissions annually. It also requires disclosures of climate-related financial risks. We support these laws—and similar bills currently pending in New York, New Jersey, Colorado, and Illinois.
Conservative state Attorneys General and legislatures have continued anti-business efforts to stop consideration of systemic risks. Last year laws were passed in Florida, Georgia, Idaho, Louisiana, South Carolina, and Tennessee that essentially forbid state universities and governmental entities from considering ESG or DEI in investment and proxy voting decisions. Thus far in 2025, Arkansas, Kentucky, Oklahoma, West Virginia, and Wyoming have passed similar laws. There’s a lot of activity at the state level, and you can track the status of these bills.
Global: In conjunction with the United Nations Environment Programme, the UN Principles for Responsible Investment, and the Carbon Disclosure Project, of which we have been a member for many years, we co-signed with over 500 institutional investors and investment professionals the Global Investor Statement to Governments on the Climate Crisis. The statement aims to reduce carbon emissions by 30 percent before 2030 and reduce global temperature rise by 1.5 percent per the Paris Agreement. It requests that all governments remove fossil fuel subsidies and enact policies, incentives, taxes, carbon pricing mechanisms, and scaled programs to require companies to disclose their emissions while expanding investments in forests, alternative energy, clean water, and biodiversity.
We will continue to ask public companies to disclose climate-related risks so that investors can make informed decisions about what they own. In the past year, the International Sustainability Standards Board standards—particularly its general sustainability-related and climate-related disclosures—have started to become the global sustainability reporting standard, requiring companies to disclose material climate-related risks and emissions. Canada, Japan, Singapore, Australia, Mexico, Brazil, Nigeria, Pakistan, Costa Rica, Malaysia, Tanzania, and Turkey have already begun to align their sustainability disclosure requirements with these standards, so it won’t be long before we have a global consensus on how to measure progress toward a better future.
We signed a letter with think tank Planet Tracker that was sent to 50 global petrochemical manufacturers encouraging them to transition to the production of safe, environmentally sound, and sustainable plastic while supporting a legally binding international treaty to end plastic pollution. The Global Plastic Treaty meeting last fall was attended by 3,300 delegates from 170 nations, and prior to the event, we signed an op-ed published in major global newspapers that addressed the treaty’s importance in mitigating the whole lifecycle of plastics, from polymer production to disposal, given its proven negative health, ecological, and financial impacts. The treaty negotiations failed to create universal agreement given the resistance from oil-producing countries that advocated recovery and recycling rather than production limitations.
Pillar No. 5: Influencing the Field—Thought Leadership and Education
In the past year, we shared thought leadership via public speaking, writing, webinars, podcasts, and event sponsorships. We sponsored the SER Summit of Latin@ investment professionals in support of inclusion in the financial services industry, and the US SIF Forum in Chicago, the preeminent gathering of sustainable and impact investment professionals in the nation.
Trust Stewards Nicole Middleton Holloway, Malaika Maphalala, and I presented a webinar to the Racial Justice Investing coalition regarding Natural Investments ownership transition to a purpose trust. Malaika and I were also joined by Greg Curtis of Patagonia/Holdfast Collective and Natalie Reitman-White of Purpose Owned in a Croatan Institute webinar that discussed perpetual purpose trust ownership as a racial and gender equity strategy that preserves company culture and independence and provides for democratically elected leadership and equal profit-sharing.
I also presented Natural Investments trust ownership transition with Ryan Honeyman on the Next Economy Now podcast and with Michael Kitces on the Financial Advisor Success podcast. These podcasts and webinars can be found on our website’s Media page.
Pillar No. 6: Charitable Contributions
Last year Natural Investments and its advisors contributed over $151,000 to non-profit organizations, which is 1.2 percent of our gross revenue, via 76 gifts—58 percent of which supported organizations devoted to racial equity and 59 percent of which focused on creating an equitable workforce.
Some of these organizations include One Acre Fund, Project Equity, the Council for Native Hawaiian Advancement, and Resource Generation. In addition, 47 percent of our donations supported efforts to address the impacts of climate change. A list of some of the national organizations we have contributed to can be found on our Charitable Contributions page.
Please read Diana Yañez’s article in this report that highlights the internal racial equity work we’ve been doing at the firm to deepen our awareness and cultivate a culture of belonging.
A TIME OF RESISTANCE
The recent politicization of investment decision-making criteria is not coming from fiduciaries concerned about poor financial return. It’s been engulfed by a culture war to protect specific interests (e.g. fossil fuels) that have been harmed by the global transition towards a greener and more regenerative economy. Make no mistake, though once the party of freedom from government intervention, conservative politicians in government today act as if they know better than the citizens and financial experts of this country and have the right to dictate the terms of their lives.
Whether it’s restricting reproductive rights or telling investors and investment professionals what they’re allowed to own, the party of Lincoln is now interested in micromanaging the American way of life in ways that limit our freedoms. It’s an outright assault on the founding principles of this country and an outrageous attempt to line the pockets of the white owner class of the extractive economy that’s lost favor with the public in recent decades. We will actively fight against these undemocratic efforts
Conservatives falsely articulate the idea that impact investors are using their investments to accelerate a political agenda when in fact many are also interested in maximizing return. In drafting legislation, Republicans have chosen to focus on their own interpretation of what is essentially an arbitrary distinction between “pecuniary” (purely financial) risk factors and “non-pecuniary” ESG risk factors, declaring the former acceptable to consider in making investment decisions and the latter not, as if revenue and profit are earned in some sort of corporate vacuum insulated from workers, society, and the environment. There is no universally accepted definition of what distinguishes a pecuniary consideration from a non-pecuniary issue in investing. Fiduciaries are required to seek maximum financial return, but there are many ways to achieve this, and there’s nothing codified regarding how it should be done beyond being “prudent” per securities law.
Legislators who think they know what should be excluded from investment methodology are using authoritarian tactics to impose their views instead of honoring the longstanding tradition of allowing investors and investment professionals the freedom to choose investments based on a standard of prudence. We will actively fight against this tyrannical, anti-freedom behavior.
While we can also repudiate the Supreme Court for the majority’s interpretation of the relevance of race in deciphering the intent of the slave-owning founders of this country, it truly doesn’t matter, as surely times have changed since the Constitution was drafted. We’re aware that historically, People of Color, women, and non-conforming genders have been subjected to various forms of discrimination and deprived of equal opportunity, and we will actively fight to stop this form of institutional prejudice that violates the spirit of equality articulated in the Constitution. As such, we will continue to actively invest in ways that provide equal opportunity for historically under-resourced and marginalized people and communities.