Many people who embrace sustainable, socially responsible, and impact investing are feeling surprise, disbelief, and despair since the election. It confirmed that tens of millions of people have different values from ours, and it remains baffling that tens of millions of registered voters didn’t think it was important enough to vote.
It is too early to tell how the forthcoming political changes in Washington might affect the economy—and investments specifically. Historically, the six months after a presidential election have been a bit more volatile than normal, but not as much as one might imagine. Markets are often buoyed by the prospect of lower corporate taxes and reduced regulation that some believe will yield higher profitability. In the days after the election, the stock market was up considerably, but as of mid-December, it is only up 6.7 percent since election day.
Markets and politics are cyclical, which is why we advise a patient approach based on a long-term vision rather than reacting to short-term circumstances. We have seen much back and forth in federal priorities and policies in the past 40 years, so we are clear-eyed about how government regulations may soon shift again.
We expect efforts to limit the freedom of investors to invest in accordance with their assessment of material environmental, social, and governance risks to continue, and exploitive and extractive businesses to seek protection from their allies in Congress to postpone their eventual demise as civilization moves further towards a more just and sustainable economy.
Our ongoing work to change corporate behavior and to fight for policies that allow investors the freedom to invest according to their values is undaunted. This is the time to remain steadfast and stand firmly for what we believe. We are all co-creators of an emergent society based on an ethic of care for people and the environment, one that reconnects humanity to compassion, justice, equality, and our relationship to nature. As such, our light will continue to shine even in the presence of darkness, for the current blowback against mainstreaming social and environmental responsibility, racial equity and justice, and reproductive rights is happening because the societal trend reflects more tolerance, an appreciation of difference, and a commitment to justice, equality, and a more regenerative way of life. These values influence our financial, career, and lifestyle choices—particularly for younger people who mostly support liberal government policies. The fact that socially responsible investing has essentially mainstreamed in one generation shows this. And the fact that there are more women and people of color in positions of power in Congress, local government, and the economy than ever before in our history also reflects this shift.
SOCIAL CHANGE IS INCREMENTAL
When we wrote The Resilient Investor 10 years ago, “resilience is the new sustainability” was one of our messages. We sensed that sustainability wasn’t going far enough to prepare people for massive disruptions. The pandemic, misinformation, and divisive political climate have indeed illustrated the essentiality of resilience as a core organizing principle.
We are now required to dig deep into our psyche and cultivate the internal fortitude, emotional centeredness, and skills, relationships, and resources necessary to engage our time, energy, and money in strategies that help us cope with an ever-shifting reality. We also want to focus on how to thrive—in our communities and as global citizens, consumers, and humans on a living planet with finite resources and significant inequality, racism, misogyny, and xenophobia.
In times like these where we appear to be going backwards, we must remember that we are actually progressing forward on many levels. Yes, some people are having a hard time adapting to an emerging reality where women, nonbinary people, and people of color are cultivating personal and societal power. This is why social change is often incremental—it can take generations—and why the process is rarely linear in its trajectory. The changes that are a threat to those who want to go back to the way things were are here to stay, but this election reminds us yet again that we can’t take progress for granted; we need to participate and fight for what matters. Our commitment to our values and our resolve to be impactful where we have influence and leverage is paramount for us all. At Natural Investments, we remain firmly committed to transforming capitalism to make it work for everyone and the natural systems upon which our survival depends.
The seeds we’ve been planting for four decades have taken root and are bearing fruit, so it’s not surprising that invasive pests have shown up in the garden. So, we’ll keep doing what we’re doing, not only because it’s more popular than ever, but because it’s already been proven that ethical, just, and regenerative practices that are good for all people are also good for business. We will continue to reward those that take this seriously with capital. And we will continue to invest in people and communities of color and all marginalized, low-income, and disenfranchised populations who deserve access to the resources necessary to build economic power. The election reminds us that we have much further to go to create the type of society we want, but this journey is vital and meaningful, so we will continue to work hard to manifest the change we wish to see in the world.
SIDEBAR: NATURAL INVESTMENTS’ RECENT ADVOCACY
The Shareholder Rights Group, of which we are a member, submitted a report for the 23 Democratic state Attorneys General (AGs) at their request, detailing the legislative, regulatory, and judicial threats to the shareholder proposal process and options for the AGs to respond.
The central thesis is that attacks on this process threaten the foundation of our capital markets, in which corporate boards and management owe a duty of care to investors as providers of capital and the owners of the corporation. We specifically requested that the AGs mobilize and testify against bills like H.R. 5339 (Protecting Americans’ Investments from Woke Policies Act), and H.R. 4790 (Prioritizing Economic Growth Over Woke Policies Act) that would prohibit retirement plans from integrating non-pecuniary factors into investment decisions and allow companies to exclude any ESG-related shareholder proposal from proxy statements.
Ahead of the recent session of the United Nations Environment Program’s Intergovernmental Negotiating Committee to develop an international legally binding instrument on plastic pollution, we signed an op-ed with Planet Tracker calling for countries to sign an ambitious plastics treaty covering the whole lifecycle of plastics to end plastic pollution. This includes polymer production to end-of-life disposal and addresses emissions, chemicals of concern, and the social, environmental, and health impacts associated with producing and using plastic.
We joined the FAIRR Initiatives’ Biodiversity, Waste & Pollution engagement that encourages meat producers and agrochemical companies—including Tyson, Darling Ingredients, and Yara International— to conduct thorough assessments of biodiversity and water quality risks and develop strategies to mitigate them. Such strategies include promoting circular practices, which require reparable designs that can be reused, recycled, and remanufactured. We also joined the organization’s Climate and Protein Diversification engagement with 20 food retailers and manufacturers—including Walmart, Mondelez, and Amazon—to encourage them to increase offerings with sustainable and nutritious protein sources and strengthen supply chain resilience while reducing emissions to improve financial outcomes.
We signed onto a Heartland Initiative engagement letter to global energy company Baker Hughes addressing the human rights, conflict, and material risks associated with the company’s operations. The letter also addressed the use of its technology, goods, and services in conflict-affected and high-risk areas, including Azerbaijan, Iraq, Mozambique, Myanmar, Saudi Arabia, the South China Sea, and Sudan.
On the heels of President Biden’s recent apology to all Native American boarding school survivors and their families on behalf of the U.S. Government, we signed an NDN Collective letter to the President and Congress requesting that they:
1. Pass the U.S. Truth and Healing Commission on Indian Boarding School Policies Act to ensure continued funding and support for the relatives who survived boarding schools;
2. Grant Executive Clemency for boarding school survivor Leonard Peltier, freeing him from his 50-year incarceration;
3. Invest in Indigenous language and cultural revitalization programs;
4. Rescind all medals of honor awarded to U.S. soldiers for the massacre at Wounded Knee, in which 300 unarmed Lakota people—mostly women and children—were slaughtered;
5. Instruct the Bureau of Indian Education to conduct a full-scale investigation into the failure of the Tuba City Boarding School system to address egregious misconduct, and support the nationwide reforms being demanded by parents and students to keep children safe at BIE-run schools.
We supported the Hip Hop Caucus Bank Black and Green Investor Sign On letter to mobilize impact investors to move $180 million in capital to the banks that take the Bank Black and Green pledge. The pledge encourages Black-owned banks to commit against funding the fossil fuel industry and mass incarceration, and to deploy capital to frontline communities of color.
In response to recent headlines promoting a false narrative that investor and corporate support for diversity, equity, and inclusion is waning and that efforts to ensure diverse and equitable workplaces have been stymied, we signed the Investor Statement, authored by As You Sow, calling for hundreds of public companies to ensure meritocratic workplaces. The statement also reminds companies that their investors want them to remain committed to ensuring diverse, equitable, and inclusive workplaces; having clear oversight and monitoring systems of their workplace culture, including executive management and the board; and publishing data showing the diversity of their workforce alongside their hiring, promotion, and retention rates.
We endorsed a Shareholder Rights Group letter to the Securities and Exchange Commission Investor Advisory Committee defending the shareholder proposal process and refuting false notions that there are too many shareholder proposals filed by a small group of activists that are not relevant or concerned with financial materiality.
We signed a coalition comment letter with Americans for Financial Reform and 35 labor unions, investors, and advocacy organizations to the FDIC regarding its proposed rulemaking about the role large asset managers play in the governance of public companies, particularly when they hold at least 10 percent of their shares. We recommend the FDIC work with the Financial Stability Oversight Council (FSOC) to address risks from asset manager concentration by designating nonbank financial institutions as systemically important, enabling Federal Reserve oversight and enhanced regulatory safeguards. Asset managers are increasingly prioritizing their private, short-term interests—like gaining and retaining assets under management, influencing proxy ballots, and avoiding government regulation—over the long-term interests of their clients and the public, including mitigating risks to individual companies and the financial system.
We signed Adasina Social Capital’s Investor Statement in Support of Ending Extractive Agriculture given the harms, risks, and unpriced costs in these practices. This public campaign encourages investors to only support companies that are aligned with climate disclosure and sustainability goals, support a just transition to an inclusive low-carbon economy based on fairness for workers and communities, and improve biodiversity, all of which could increase share value.