Our Industry Needs To Do Better.

Bob and I are about to head out to the SRI Conference in Colorado Springs, and we both wanted to take this opportunity to discuss the state of our industry, and highlight an issue that’s become more and more prominent in the past few years: The way our colleagues are treated, both in general, and specifically at conferences.

First, some background: a few weeks ago, a fairly major figure in our industry made a number of morally reprehensible comments about women at a major financial services conference. In the wake of this event, major investors, including pension funds and others, have pulled almost 3 Billion dollars in assets out of his firm. This is the first time we’ve seen real consequences for behavior like this, and we hope that the industry will stand up and take notice.

But more needs to be done. Our friend Sonya Dreizler, who runs a consulting service for advisers that are trying to incorporate Sustainable, Responsible and Impact Investing into their practices, was at the conference in question, and has taken a leadership role to try to change our industry. We’ve been reading and following her “Do Better” series, where she’s been collecting stories from women in the financial services industry. These stories can be difficult to read, but we believe it’s important for us to confront the reality of the industry we work in.

Yesterday (as of this writing), Sonya put out a call on Linkedin:

We’re proud to answer this call. This blog is our firm’s public facing voice, and I can think of no better way to use our platform than to boost the stories that Sonya is telling. So I’ll stop now, and let her words speak for themselves:

In the wake of the #MeToo movement, we’ve seen many articles about why there are so few women in financial services, as well as surveys and statistics about sexual harassment and discrimination. While statistics and surveys are helpful for measuring the issue, I want to share real stories from real women about their experiences with sexual harassment and gender discrimination.

Please click here to visit her website and read the stories there

Sonya also gave a great keynote at last year’s SRI Conference where she touched on these topics. Here’s what she said on the topic:

I’m proud to serve with Sonya on the Advisory Board for the InvestmentNews ESG & Impact Forum. If you’re a financial professional, I hope you’ll join us there. We’re trying to make this an open and inclusive event.

My Wonderful New Car Is Powered By Wind (mostly)!

That is actually a true statement!  My Prius Plug-In Hybrid gets charged nightly when I plug it into my garage outlet.  However, the power to my house is generated by Wind Power, thanks to my supplier Arcadia Power. So, I can truthfully say that, for the first 20-25 miles each day, it is a Wind Powered vehicle!  As a Financial Advisor, I’m always looking for little tricks to keep my costs down.  In this case,  I’ve set the charging cycle to start at 10:00pm, so I receive the ‘Off Peak’ electrical rates which are close to 50% of the ‘Peak’ rates; roughly $ 0.15 per KWH!

However, this is only the beginning of this car’s economics…it gets even better!  The car has essentially two batteries; a smallish one that is charged manually, and powers the first 20-25 miles, and then the big battery that is used by the Hybrid System. Following the ‘driven by wind power’ theme, my daily commute is roughly 10 miles each way.  Therefore, my daily commute is done USING NO GASOLINE – “wind” electricity only!  

Here are some important numbers to consider.  I last filled the tank on 9/21/2019.  In that time I have driven 651 miles, used ⅛ of the tank of gas, so by-the-numbers, I have an average of 330 miles per gallon!  These numbers make me a happy man!

Think Hybrid

It gets even better than that!  Consider the “Full Hybrid” part of the equation. Full Hybrid means that there is an engine and a battery and they work together to make the car go. At times the engine makes the wheels go around, at other times the battery makes the wheels go around, and at still other times they both work at making the wheels go.  Basically, this all happens as needed. In the middle of all of this the engine will also keep the big battery charged so it will never run out. This means tremendous efficiency! On our first long trip we drove over 600 miles on one tank of gas! Check out this interactive graphic to learn more about how the systems play together while I’m driving, and compare my Full Hybrid to other “hybrids”:

Global climate change is a very serious issue as evidenced by some very dangerous scientific studies and the rapid rate of the changes happening. I am a strong proponent of Sustainability.  My car is an important player in my desire to do my part to fix this problem. Wind Power from Arcadia provides electricity to both my office and home, and I have contracted to add solar panels on my home roof. I hope to have them installed sometime this month.

Actions Matter

My car is a symbol, as is the wind power at the office and the solar power at the house. I care about our planet and the people who live on it and these steps are part of my commitment to the UN Sustainable Development Goals. I am proud that my personal and professional work is aligned, as my firm is a signatory of the Principles for Responsible Investing, and is a Certified B Corp. This means we use our business to make positive change in the world.  Please join me, and my firm, in making our world a better place for future generations. We are in fact now a “Global Village!” Let’s make it work!

Climate Risk in Passive Investing

We’ve been seeing a lot of articles recently about a “bubble” in passive (index) investing. We haven’t commented much on this trend, as we’re big fans of low cost index funds in our portfolios. However, an article came out yesterday in Forbes that makes a point connected with this debate that we agree with wholeheartedly. Jeff McMahon writes in his article “Index Funds Face Heightened Risk From Climate Change” that Index funds are uniquely exposed to the systematic risks faced by climate change, and specifically to the inevitable policy response to climate change.

The Principles For Responsible Investing (PRI) (of which we are a signatory) has been doing a lot of research on this (see here for more information, or click here to view the slides from a recent event we attended with the PRI). We have incorporated this viewpoint into our portfolios, and the way we’ve done it speaks directly to McMahon’s article from yesterday.

McMahon points to the recent testimony before Congress from Alicia Seiger, the Managing Director of Stanford’s Sustainable Finance Initiative, who argues that investors are less able to manage climate risk because they are less able to monitor it (you can read her entire testimony here). We completely agree with this for the vast majority of index funds on the market today, but in our practice we have discovered that there are a number of ESG approaches that can be used to manage this risk (see this blog post from earlier this year for more information). Further, by looking at the PRI’s research, we believe we can identify the most likely policy responses and manage these risks within our portfolios.

The most likely policy levers to secure an accelerated and just transition Source: UNPRI (https://www.unpri.org/climate-change/what-is-the-inevitable-policy-response/4787.article)

By mindfully choosing investments that incorporate Environmental, Social and Governance data in their investment process, we believe we can manage these risks. However, there are a number of different approaches emerging within the investment community, and they do not all have the same results! If you are interested in what we’re doing to manage these risks in our portfolios, or if you would like us to analyze your investments to see how exposed you are to these risks, click here to schedule an appointment!

President Macron of France addresses PRI In Person 2019

This week marked PRI In Person, the United Nations-Supported Principles for Responsible Investing’s (PRI) annual meeting. We weren’t able to attend since it’s hard to justify a Paris trip, but we wanted to share the remarks that President Macron made to open the meeting. We’re proud to be a signatory of the PRI, and to help our clients align their investments with the issues they want to work on.

If his remarks speak to you, and you want to get involved to add your voice and investments to the global effort to combat climate change, we’re here to help.

Common Interests recognized as a “Best For The World” B Corp for exceptional impact on our customers

Common Interests, a Certified B Corporation, has been named a Best For The World honoree for the fourth year in a row in recognition of our work to improve the lives of our customers through the use of our services. Ranking in the top 10 percent of all 3,000 B Corps for our positive impact on our customers, Common Interests earned this honor because our investments promote public benefits, and are designed to solve social and environmental issues. Through our recent Impact Report, we have shown the real impact our clients’ investments have made on the world. We are leading by example in the financial services industry to inspire other firms to enable their clients to align their investments with their values. Through our impact targeting project, we have focused our investments on improving health, preserving the environment, creating economic opportunity for individuals and communities, and increasing the flow of capital to purpose-driven enterprises. Our firm was also recognized for our innovative fee structure which enables us to serve underserved populations. Through this award, B Lab shows how companies like Common Interests set a gold standard for how business can be a force for good for people around the world.

Best For The World recognition is administered by B Lab, the global nonprofit that certifies and supports Certified B Corporations, which are for-profit companies dedicated to using business as a force for good. Today there are 3,000 Certified B Corporations across 64 countries and 150 industries, unified by one common goal: to redefine success in business.

“We are proud to be honored as Best For The World for the Fourth year in a row” said Bob Goellner, managing partner of Common Interests, “This award is evidence of our efforts to mindfully design the impact of our investments and not turn people away. I founded this firm to empower the financial wellness of our community, and this recognition is confirmation that we are serving this purpose.”

B Corps meet the highest standards of verified social and environmental performance, public transparency, and legal accountability to balance profit and purpose. B Corp Certification doesn’t just evaluate a product or service, it assesses the overall positive impact of the company that stands behind it—like Common Interests. Using the B Impact Assessment, B Lab evaluates how a company’s operations and business model impact its workers, community, environment, and customers. To achieve the B Corp Certification, a company must achieve a score of at least 80 points on the assessment.

“We’re incredibly proud of this year’s Best For The World honorees,” says Anthea Kelsick, Chief Marketing Officer of B Lab. “These inspiring companies represent the kinds of business models and impact-driven business strategies that are building a new economy—one that is inclusive, regenerative, and delivers value to all stakeholders, not just shareholders. To that end, B Corps like Common Interests are redefining capitalism and showing that it actually can work for everyone.”

1,000 B Corps from 44 countries were named to the 2019 Best For The World lists, including Patagonia, Beautycounter, Dr. Bronner’s, TOMS, Seventh Generation, and Greyston Bakery. The 2019 Best For The World honorees are determined based on the verified B Impact Assessments of Certified B Corporations. The full lists are available on https://bcorporation.net/.

Listen to Bob Goellner on the Changing The Rules Podcast!

Bob was interviewed by an old friend on a new podcast, Changing the Rules, which was started with the understanding that “stress caused by changing life situations can be reduced if you have a plan.” Bob tells the story of how and why Common Interests was founded, how and why he picked our name, and the values our firm was founded on. The interview covers how we work with our clients, the type of work we do, and how we think about Financial Planning (among many other topics).

Bob’s interview starts at 11:17 in! Give it a listen below, or on Apple Podcasts.

And check out the rest of the Changing The Rules Podcast here. 

The role of Business in our society

The sustainable investing world has been on fire this week, after the Business Roundtable made a groundbreaking statement on the Purpose of the Corporation in modern society. For the first time, corporate leaders at the highest level are changing how they think, replacing the mantra of “maximize profits at all costs” (you’ll see the words ‘shareholder supremacy’ thrown around a lot) with ideals that acknowledge the impact businesses have on more of their stakeholders: customers, employees, suppliers, the communities they work in, and their shareholders. Read more

Igniting Impact

The new trailer for the film Igniting Impact debuted last week at the United Nations! If you would like to screen the full version of the film at an event, click here for the Igniting Impact Screening Info, or visit http://impactu.film/ to learn more.

Common Interests Supports the Investor Agenda on Climate Change

Common Interests is proud to be a part of the global investor network, including Amundi, California State Teachers’ Retirement System (CalSTRS), Legal & General Investment Management, Natixis Investment Managers, Mitsubishi UFJ Financial Group, and Sumitomo Trust Mitsui Asset Management, making up a record number of signatories to the Global Investor Statement to Governments on Climate Change.

Today, we are joining with investors from around the globe to urge world government leaders to step up their ambition on climate change and enact strong policies by 2020 to achieve the goals of the Paris Agreement, including phasing out thermal coal power and pricing carbon. 477 investors with $34 trillion (USD) in assets, a record number of signatories, are behind the urgent call-to-action to limit average global temperature rise to no more than 1.5-degrees Celsius.

“As institutional investors with millions of beneficiaries around the world, we reiterate our full support for the Paris Agreement and strongly urge all governments to implement the actions that are needed to achieve the goals of the Agreement, with the utmost urgency,” the investors wrote in a Global Investor Statement to Governments on Climate Change.

The statement comes as world government leaders gather at the Group of Twenty (G20) Summit in Osaka, Japan and as the United Nations Secretary-General António Guterres calls on “countries to build no new coal power plants after 2020.”

“Climate change affects all sectors of the economy and all countries,” said Christiana Figueres, Convener of Mission 2020 and former Executive Secretary of the United Nations Framework Convention on Climate Change (UNFCCC). “It is the biggest and most urgent challenge currently facing the world. As we face a true climate emergency, limiting temperature increase to 1.5-degrees Celsius is necessary for survival, and achievable!”

Figueres added, “Investors have a vital role to play in providing the trillions in capital required to support the transition to a low-carbon and climate-resilient future. It is therefore hugely encouraging to see so many investors unite around such a clear and powerful statement to governments. They are showing a sentiment shared across the global community: exponential scale-up and acceleration of climate action is not a choice but a requirement, and represents our best opportunities for financial stability and economic prosperity.”

“As an investor in global markets, we are exposed to the increasing risks and opportunities that climate change presents to our portfolios, especially in Asia where the physical impacts of extreme weather events will be the harshest and of the greatest cost,” said Seiji Kawazoe, Senior Stewardship Officer, Sumitomo Mitsui Trust Asset Management. “To enable us to effectively invest in the necessary transition to net-zero carbon economies around the world, we have signed this statement to urge governments to take the actions needed to set us on the course to limiting global warming to 1.5-degrees Celsius.”

In particular, investors are asking world government leaders to:

Achieve the Paris Agreement’s goals

  • Update and strengthen nationally-determined contributions to meet the emissions reduction goal of the Paris Agreement, starting the process now and completing it no later than 2020, and focusing swiftly on implementation
  • Formulate and communicate long-term emission reduction strategies
  • Align all climate- related policy frameworks holistically with the goals of the Paris Agreement
  • Support a just transition to a low carbon economy.

Accelerate private sector investment into the low carbon transition

  • Incorporate Paris-aligned climate scenarios into all relevant policy frameworks and energy transition pathways
  • Phase out thermal coal power worldwide by set deadlines.
  • Put a meaningful price on carbon
  • Phase out fossil fuel subsidies by set deadlines

Commit to improve climate-related financial reporting

  • Publicly support the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) recommendations and the extension of its term
  • Commit to implement the TCFD recommendations in their jurisdictions, no later than 2020
  • Request the FSB incorporate the TCFD recommendations into its guidelines
  • Request international standard-setting bodies incorporate the TCFD recommendations into their standards.

“As shareholders, we are engaging with companies about their emissions, and how their Boards and their business plans are preparing them for a carbon constrained future,” said the California State Teachers’ Retirement System (CalSTRS) CEO Jack Ehnes. “We need the governments of the world to implement the Paris Agreement and regulate emissions on a clear timeline so that businesses know what the interim targets are and the timeline for their action.”

“Renewables are the cheapest energy source across more than two-thirds of the world today. The direction of travel is clear: the economics of wind and solar will continue improving,” adds Carola van Lamoen, Head of Active Ownership, Robeco, a global asset manager with $203 billion in assets under management. “Renewables are expected to outcompete new coal-fired power plants by 2030 almost everywhere. As investors, in our view the development of new coal power plants after 2020 puts at risk both the return on investment and the world’s chance of limiting global warming in line with the goals of the Paris Agreement.”

“As one of Australia’s largest industry superannuation funds, and a major institutional investor, we believe we have an important role to play in bringing about positive action on climate change to protect the retirement savings of our members,” said Deanne Stewart, Chief Executive Officer, First State Super. “This aligns with the view of regulators in Australia, and internationally, who have identified climate change as a significant material and foreseeable risk and have called for immediate action. While we are responding on behalf of our members, this issue will require a coordinated, collective and collaborate response from governments, business and investors to ensure that critical changes are made now for the long-term interests of our members and the community.”

The Investor Agenda Founding Partners strongly welcomed the Intergovernmental Panel on Climate Change’s (IPCC) Special Report on 1.5-degrees Celsius which emphasised the urgency for average annual sustainable energy investments of up to USD $830 billion to transition to a zero-carbon and climate resilient global economy. The report also said that in order to achieve a 1.5-degree Celsius pathway, global net emissions need to decline by 45 percent by 2030 and reach net zero emissions around 2050.

The statement was drafted through a collaboration among seven partner organisations – AIGCC, CDP, Ceres, IGCC, IIGCC, PRI and UNEP-FI – that are the Founding Partners of The Investor Agenda. Launched in 2018, The Investor Agenda calls on investors to step up action on climate change in four key focus areas: Investment, Corporate Engagement, Investor Disclosure and Policy Advocacy. Signing the statement is one of the actions investors can take in line with the policy focus areas of the agenda. The statement is published at www.theinvestoragenda.org.

About The Investor Agenda

The Investor Agenda has been developed for investors to accelerate and scale up the actions that are critical to tackling climate change and achieving the goals of the Paris Agreement with the aim of keeping average global temperature rise to no more than 1.5-degrees Celsius. It provides investors with a set of actions that they can take in four key focus areas: Investment, Corporate Engagement, Investor Disclosure and Policy Advocacy. It has been developed by seven Founding Partners: Asia Investor Group on Climate Change,CDP, Ceres, Investor Group on Climate Change, Institutional Investors Group on Climate Change, Principles for Responsible Investment and UNEP Finance Initiative. Visit www.TheInvestorAgenda.org for more information.

Celebrating Pride Month 2019

Reflections for Pride Month

I joined Common Interests full time on January 1, 2013, after walking what I call ‘the zig-zag path’ to financial services. As part of my early training with Bob, I was working with a LGBTQIA+ couple that had planning needs unique to this community. As a newcomer to the team, I was driven to learn how to plan and protect for all our clients but those from marginalized communities were especially important to me. Working closely with an LGBTQIA+ couple highlighted that basic rights that allies like Bob and myself take for granted are seemingly out of reach for millions of Americans.

I remember sharing my background with these clients. In high school, I was an editor for Sex, Etc., a resource for teens that aims to educate them about sex, drugs and alcohol. I saw first-hand the struggles that LGBTQIA+ youth experience and empathy drove me to want to solve these problems. As I grew, so did my understanding of the challenges faced by the LGBTQIA+ community both through a personal and professional circles. As a firm that values solving tough problems in creative ways, Common Interests deepened my appreciation for the sometimes nuanced and often blatant struggles this community faces daily.

Given this background, I was closely following the landmark civil rights case Windsor v. United States as the United States Supreme Court considered the federal interpretation of “marriage”.  So, imagine how happy I was when I woke up on June 26, 2013, only 6 months in my new role, and found the announcement that the Court had overturned The Defense of Marriage Act (DOMA). The Court held that restricting U.S. federal interpretation of “marriage” and “spouse” to apply only to opposite-sex unions is unconstitutional under the Due Process Clause of the Fifth Amendment.  Finally, our clients could get married and enjoy the same protections and tax advantages as “everyone else” without jumping through the legal hoops we were recommending at the time.

As I think back to that moment and reflect on how it impacted our practice, I am actually glad I entered the industry before Windsor. The skills and techniques I learned then still serve our clients well now. We work with “non-traditional” relationships on a regular basis, from people in long term stable partnerships to families that don’t have children but care deeply about their legacy and who will take care of them as they age, to relationships that are defined fluidly by their members.

In the post-Windsor world, we have continued to advocate on behalf of our clients. Recently, we signed the Investor Statement on Gender Equality, joining with investors representing a total of over $1.61 trillion in Assets Under Management to ask that companies increase investors’ accessibility to information related to their workplace equity policies and practices across gender, race, ethnicity, sexual orientation, and other federally protected classes. In 2017, we joined with other investors to put pressure on Verisk Analytics (which, full disclosure, was my first professional employer after college), to explicitly prohibit discrimination based on gender identity or gender expression. This was one of our first engagements, and as a former employee of that firm, I was excited to see how their management worked with our partners to reform their policies. We continue to search for opportunities to use the power of our investments to create change in corporate behavior, and to empower our clients to engage with the companies they own and band together with other investors to magnify the impact of their dollars.

This is not to say that this is where the story ends. As an ally to the community, I know I will never truly “get it.” I still work to empathize with a life different than my own just as the LGBTQIA+ community still has to work to enjoy rights and liberties given freely to cisgender Americans. I know that the work might not even end during my lifetime. But I am proud to help. I am proud of my LGBTQIA+ friends and family for having the strength to be who they are. I am proud of my LGBTQIA+ clients for not laying down and letting themselves be treated anything less than equal. And I am proud of Common Interests for committing to deliver the same level of protection and planning to all communities.

We are proud to serve all of our clients no matter how they define their race, sex, gender, and orientation. Our aim is to reduce anxiety and provide coaching and strategies to help our clients in their desire to achieve their goals. Windsor v. United States changed the planning landscape, but we take pride in following the lessons we learned in the pre-Windsor world, and keeping those skills fresh to help those who still need them. If this speaks to you, I hope we’ll be hearing from you soon as we are here to help.