Sustainable, Responsible, Impact Investing Hits the Big Time

We’ve reached the big time. When every major media outlet, Congress, the Department of Labor, and Securities and Exchange Commission (SEC) are all focused on issues pertaining to sustainable, responsible, and impact (SRI) investing, it’s clear that this segment of the financial services industry has hit its stride in terms of popularity, impact, and yes, controversy.

Indeed, this once-marginalized investment approach is now facing an ideological battle for the soul of finance given its widespread application across the conventional financial services industry. Conservative politicians clearly aren’t inspired by notions of corporate citizenship and responsibility, characterizing such efforts as extraneous to the purpose of business, and even anti-capitalist – particularly when they refuse to hold toxic industries like fossil fuel accountable for their harms.

While industry and academic research prove a strong correlation between responsible business practices and investment returns, some politicians have placed environmental, social, and governance (ESG) investing into the “culture wars.”

They are politicizing ESG as if it were part of a radical liberal plot to destroy America.

Unfortunately, their ignorance regarding ESG has led them to false justifications for policy changes.

In March, both the House of Representatives and the Senate used the 1996 Congressional Review Act to vote, and to nullify the Department of Labor’s approved 2022 rule, “Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights.” This guidance, for which Natural Investments advocated in 2021, clearly stated that considering ESG criteria in retirement investments is material, prudent, and in accordance with the longstanding practice of fiduciary responsibility.

On March 20, 2023, President Biden vetoed the anti-ESG legislation.

“The veto will allow retirement marketplace actors to continue fulfilling their fiduciary duty to plan participants and meet the growing demand for sustainable offerings,” said Bryan McGannon, acting CEO and managing director of The Forum for Sustainable and Responsible Investment (US SIF). “The Department of Labor’s ESG rule is a sensible policy allowing retirement plan fiduciaries to consider all financially relevant information when making investment decisions. This is good for plan participants and beneficiaries.”

While Congress does not likely have the votes to override this veto, the legislative battle over what investing is, and should be, has only just begun.


The SEC is finally and appropriately seeing itself as an essential regulator and enforcer of securities law, and last year it took significant steps toward establishing regulations on how the financial services industry practices SRI investing in this country. The agency issued drafts of three rules in 2022 that address corporate disclosure of climate change risks and opportunities, how ESG funds are named, and how ESG products and advisors will need to justify their process of selecting suitable investments.

These efforts could codify the relationship between business and environmental impact by requiring companies to measure and disclose to investors their carbon footprint. While some major companies already do, many refuse to, and as such, we requested the SEC require companies to disclose all categories of emissions, including their supply chains. These are risks investors need to assess when making investment decisions. Standardizing this disclosure requirement so investors can have accurate, consistent information available to make investment decisions is an essential form of regulation.

The other two rules relate to investment products and services. Given the “greenwashing” in the investment industry, where firms may use names like “sustainable” and “impact” and produce glossy materials claiming they integrate social and environmental factors but then fail to support the words with actionable policies, the Commission is trying to establish standards for how firms name their ESG products and apply investment methodologies accordingly. This is long overdue, and we are pleased that the Commission has already engaged in enforcement actions against firms involved in misleading investors (e.g., Goldman Sachs, UBS).

Though the SEC has yet to release its final rules on these issues, we have been very vocal about them in the past year, not just in our company materials, but in other ways:

  • Speaking at industry conferences like ESG for Impact and USSIF Forum
  • Attending meetings with SEC staff
  • Submitting letters during the rulemaking comment period


In response to many of the recent attacks on our industry by conservative politicians, we assisted our trade association, USSIF, in endorsing the launch of the House of Representatives’ Congressional Sustainable Investment Caucus in January. The Caucus, co-chaired by Reps. Juan Vargas, D-Calif., and Sean Casten, D-Ill., will focus on educating members of Congress about sustainable investing, advancing sensible policies to ensure that sustainable investing continues to flourish in the U.S., and acting as a counterweight against recent attacks aimed at limiting investor access to ESG information.

We similarly helped USSIF to develop, which sets the record straight on sustainable and responsible investing, in particular highlighting its primary focus on long-term competitive financial return. Refuting the notion that sustainable investing is irresponsible, ineffective, or partisan in nature, the site shares the results of a Morgan Stanley poll that illustrates the overwhelming majority of investor support for sustainable and responsible investing. The numbers show the public wants companies to
be good actors.


We signed the Global Investor Statement to Governments on the Climate Crisis developed by The Investor Agenda, which demands that governments enforce existing and new investments in clean energy and reduce carbon emissions rapidly and with greater intensity. This will ensure that global average temperature rise is limited in the next 20 years.

We signed a letter created by the American Sustainable Business Network and Trillium Asset Management in support of the Protect America’s Children from Toxic Pesticides Act, which would significantly strengthen current regulations, create incentives to transition away from toxic pesticide use, protect the health of communities, and reduce public health care costs.


It’s one thing to oppose Russia’s war against Ukraine, but we also joined other SRI firms in further calling on companies across all sectors with business activities or business relationships in Ukraine, Russia, and Belarus to map their business activities, relationships, and/or investments across their value chain. The purpose is to identify, assess, prevent, and mitigate any human rights harms they are causing, contributing to, or linked with, including Russian and Belarusian states or any of their agencies, state-owned and state-affiliated entities, business oligarchs, or Russian separatists in occupied eastern Ukraine.

Companies that derive any revenues from such business relationships and activities that may enrich military-owned, controlled, or affiliated business and/or provide funding or support to the Russian or Belarusian military made before or after the February 2022 invasion were requested to terminate those business activities. More than one thousand companies like American Airlines, Amway, Garmin, and McDonald’s have left these countries, but some American companies are still there: Carl’s Jr, Hard Rock Café, Sbarro Pizza, TGI Friday’s, Tom Ford, and Tupperware are some recognizable brands.

We also filed a letter to the SEC in support of a petition requesting the Commission enact a rule requiring issuers to disclose their business dealings with the Russian Federation and the Republic of Belarus. They have not yet done so.

We further supported Heartland Initiative’s letter to Analog Devices International, whose chips are used by the Russian military in weapons that are being used in Ukraine. The letter requests engagement to discuss the company’s due diligence process. The purpose is to assess and address the use of its products by customers in ways that may contribute to violations of international humanitarian and human rights law.


We formally supported Senator Van Hollen’s introduction of the Disclosure of Tax Havens and Offshoring Act, a bill that, if enacted, would require companies to publicly report overseas tax and operations data on a country-by-country basis. The goal is to illustrate the abuse of offshore tax havens and provide much-needed information to investors.
We signed letters initiated by our friends at Corporate Accountability to PepsiCo, McDonald’s, and Coca-Cola asking them to assess and prioritize disclosure of both their domestic and foreign political spending wherever they operate.


We signed the Don’t Ban Equality pledge, a coalition of 700 businesses making the case that public policies restricting reproductive health care are bad for business. A recent poll revealed that 68% of Republican, 86% of Democratic, and 74% of Independent workers think their employer should take concrete steps to protect abortion access.

We signed a letter with Trillium Asset Management to Apple regarding its commitment to conduct a civil rights audit. At Apple’s last annual meeting, 53% of Apple’s shareholders supported a proposal requesting that the board oversee a third-party civil rights audit. The company is facing multiple unfair labor practices charges alleging captive audience meetings, a mandatory meeting during working hours, organized by an employer with the purpose of discouraging employees from organizing or joining a labor union. It is considered a union busting tactic. Concerns continue that the company may be hindering employees’ freedom of association.

We signed letters generated by Interfaith Center on Corporate Responsibility and sent to railway companies Union Pacific Corp., Norfolk Southern Corp., and CSX Corp., as well as Petco, Olive Garden, FedEx, Cracker Barrel, Disney, Starbucks, and Walgreens, to make the case for offering paid sick leave to their employees.

We signed letters generated by the Farm Animal Investment Risk & Return (FAIRR) initiative to Sanderson Farms, Tyson, and other meat producers to enforce internationally recognized labor standards at their processing facilities, to include worker representation on boards, and to address the impacts of climate change on workers.

We signed a letter generated by Shareholder Association for Research and Education to Amazon related to a 2022 shareholder proposal. The letter requests a report analyzing how Amazon’s current human rights policies and practices protect the rightful application of the fundamental rights of freedom of association and collective bargaining. Shareholders voted on the proposal at Amazon’s annual general meeting, and it received support from 39% of the overall vote and 47% of independent shareholders.


We signed a letter by Americans for Financial Reform to foster climate and racial justice in the Community Reinvestment Act. This was in response to the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corp. (FDIC), and the Federal Reserve Board of Governors releasing a Notice of Proposed Rulemaking to strengthen the Community Reinvestment Act. We advised that the act be changed to specifically consider the community-level impacts of climate change on BIPOC communities, since climate change is a risk multiplier that exacerbates racial and economic inequality.

As part of our involvement with Investor Circle Toward Decarceration, we signed a letter to Wells Fargo, Raymond James, Frazier Lanier, and Stephens Bank regarding their involvement in the latest Alabama bond issuance deal to expand their prisons. Alabama had issued these bonds to complement its use of American Rescue Plan Act funds, even though the Treasury Department’s final rules prohibit states from using COVID-relief funds to construct new prisons and/or expand existing facilities.

Our engagement with Mondelēz, which owns many global snack food brands like Oreo, Ritz, and Wheat Thins, resulted in an agreement to conduct a third-party racial equity audit that will address diversity, equity, and inclusion goals and initiatives, marketing strategies, political contributions, and environmental and sustainability programs.

As a member of the Investors and Indigenous Peoples Working Group, we signed its letter to the SEC requesting that any climate change disclosure rule it develops include specific disclosures regarding Indigenous Peoples’ rights risks where Indigenous Peoples are directly or indirectly impacted by listed companies’ operations, business models, transition risk mitigation plans, and emissions.

We signed the Statement of Investor Expectations for Job Standards & Community Impacts in the Just Transition, which establishes investor expectations for job standards and community impacts to ensure a racially and economically equitable, decarbonized economy by prioritizing high-road jobs, respect for human rights, positive community impacts, and the remediation of harms.

We signed Adasina Social Capital’s letter to Dine Brands (Applebee’s, IHOP) to raise the wages of tipped workers to a full minimum wage. The current subminimum wage is less than $3 per hour in 36 states and less than the minimum wage in all but four states. Dine has been accused of wage theft and racial discrimination partially in relation to this subminimum wage.

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