Impact Investing WHAT IS IMPACT INVESTING? Socially Responsible Impact Investing (SRI) is a way of investing with the intention to create a measurable, beneficial social or environmental impact alongside competitive financial returns. By pooling your investments with those of other socially conscious investors, you can affect positive change. NOTE: Others use SRI to refer to Sustainable, Responsible, Impact Investing. The terms are used interchangeably along with “Impact Investing.” The SRI acronym (Sustainable, Responsible, Impact) reflects the common threads that weave the motivations of many socially conscious investors together: Putting investment capital to work toward creating a truly sustainable future; owning shares of the most responsible companies; while making money and having a positive impact—all at the same time. SOURCE: http://www.sriconference.com/about/what-is-sri/history-of-sri.html HOW DOES IT WORK? SRI’s goal is to generate long-term competitive financial returns for investors while influencing and creating positive societal impact. SRI investing spans a wide range of products and asset classes, including stocks, cash, fixed income and alternative investments. SRI evaluates companies based on a combination of environmental, social and corporate governance (ESG) criteria to screen investments for socially conscious investors. Strategies include negative screening, positive screening and divesting. Other increasingly important strategies are shareholder activism and direct community impact investments. HOW MUCH IS INVESTED IN SRI? According to the US SIF Foundation’s 2014 Trends Report Report on Sustainable and Responsible Investing Trends in the United States more than $1 out of every $6 under professional management in the U.S. —$6.57 trillion or more—was invested using one or more sustainable, responsible and impact investing strategies. From 2012 to 2014, sustainable, responsible and impact investing enjoyed a growth rate of more than 76%, increasing from $3.74 trillion in 2012. According to Forbes, the number of funds incorporating ESG factors grew by nearly 1,600% from just 55 in 1995 to 925 in 2014. SRI investing continues to grow, both in the U.S. and internationally. HOW DO SRI FUNDS PERFORM? Several well-documented studies and reports indicate that SRI investments have performed as well as, or in many cases, better than market averages and traditional investments. A 2015 report by the Morgan Stanley Institute for Sustainable Investing found that "investing in sustainability has usually met, and often exceeded, the performance of comparable traditional investments." Deutsche Asset & Wealth Management and Hamburg University published an article in 2015 titled ESG and Financial Performance: Aggregated Evidence From More Than 2,000 Empirical Studies. This comprehensive review found that the majority of studies show positive findings between ESG and corporate financial performance (CFP) – roughly 90% of studies have positive outcomes. A 2015 study by Oxford University and Arabesque Partners concluded: "80 percent of the reviewed studies demonstrate that prudent sustainability practices have a positive influence on investment performance." Source: http://www.ussif.org/performance WHAT ARE IMPACTS / RESULTS? A primary goal of impact investing is to change corporate behavior. Investors can bring shareholder resolutions to a corporation to exert pressure to stop or change non-sustainable or unjust labor practices. Often, management will make concessions to avoid a public vote or bad publicity. Big employee retirement plans, such as CALPERS and the New York State Retirement System, and other large portfolios have committed to ESG investor activism. Over 4,000 socially responsible shareholder resolutions have been presented to companies between 2005 and 2015. In one example, palm oil production has caused massive deforestation and destruction of habitats. As a result of shareholder activism, Unilever, Nestle and other large companies have agreed to purchase sustainable palm oil. Further, Colgate-Palmolive, Wilmar, Cargill, and other agri-businesses have all pledged to cut the loss of forests in half by 2020. OUT OF MANY, ONE As individual investors, our voices do not carry much weight. But, when we aggregate our investments and unite our voices as a group using Socially Responsible Impact Investing, we can influence corporate decisions and behavior. By aligning your investments with your personal values along with other socially conscious investors, you can make a difference. Examples In another example, Hershey announced (in 2012) a move towards Fair Trade Certified Chocolate by 2020. For years, environmental and social justice groups have pressured Hershey to clean up its supply chain and eliminate the use of child labor in its cocoa production operations. Estimates were that 70% of its chocolate was coming from the in the West African countries of Guinea and Ivory Coast, which relied on child labor and abusive conditions. Following the campaign by activist human rights and environmental groups, Hershey set aggressive benchmarks to source cocoa from certified sustainable farmers. The expectation is that 50% of its production in 2016 will be certified.Examples portrayed are presented for historical perspective and educational purposes only. This communication shall not constitute an offer to sell or the solicitation of an offer to buy securities. The information presented should not be used as the primary basis for an investment decision as a variety of factors should be considered. Please consult an advisor to discuss your individual situation prior to making any investment decisions. Investing Involves risk. Depending on the different types of investments there may be varying degrees of risk. Socially responsible investing does not guarantee any amount of success. Clients and prospective clients should be prepared to bear investment loss including loss of original principal.