Posers vs. Prophets

Photograph: Getty Images, Accompanies Article on CityWire USA website

With the possible exception of Amazon, trying to be all things to all people is less and less a winning strategy. Consumers increasingly pick products and services on more narrowly defined, and more personal, criteria. Companies are responding by picking more narrowly defined customer groups to serve. What this demonstrates is an alignment of social or environmental purpose with good business strategy. Customers and companies get into a virtuous and self-reinforcing cycle of positive change and deeper market penetration as companies respond to customers’ ESG expectations and customers respond to companies that proactively work to reflect their interests.

This article discusses distinguishing between the posers and the prophets using an ESG lens. (In)authenticity is a powerful factor in determining depth of commitment and quality of execution that has profound consequences for both financial and ESG performance. It is posted to CityWire USA’s website here, or can be downloaded as a PDF here.

Small batch capitalism

I have been doing a lot of work on how to relate what and how we consume everything else around us with how we consume financial services. The great divide has been rooted in equal parts in a lack of understanding that the same rules could apply, and in a belief, misguided I will assert, that the sole objective of investing should be financial return.

Maybe this is a byproduct of well-intentioned but heavy-handed regulation, and maybe some of it is the cowardice of investment professionals and fiduciaries who do not want to take a single step outside of the lines inside which they are protected when delivering ¬†mediocre or even inferior results. “Here is food. It is nutritious and diversified and portioned according to the US recommended daily allowances. I understand it doesn’t taste good, but my responsibility wasn’t to make sure you enjoyed it. It was to make sure you don’t die of starvation.” We don’t consume anything else where the bare minimum is also the maximum expectation.

There is no reason, even in a well regulated environment, that consumer behaviors that apply elsewhere shouldn’t apply to investing. A movement back to the way we used to make and consume, local and artisanal, is afoot. We want to see the supply chain. We want to know where things came from, that those things were sustainably and responsibly obtained, that they are healthful and mindful, and that they support our local communities. That small-batch mentality, from arts and crafts to food to beer to clothing, has taken hold particularly with Millennial consumers. A local, sustainable, community-oriented focus is available in investment products as well. Read my latest article in CityWire USA pro buyer magazine on how investing small helps to foster sustainability and serve consumer demands while still delivering on core investment mandates.

Necessary narrative

Thistle in the Colorado Rockies

Everything that exists has a story. It might not be an interesting story, but there is a narrative for what was before, what is, and what will be. It might have been the case in the early days of SRI that the investment case was built too much around storytelling and not enough around economic fundamentals. We have now overcorrected in an attempt to be included and inclusive, and lost the motivational hook for why individuals and institutions commit to this type of investing over “traditional” options. This is not philanthropy, but there is a lot to learn from charities about how to motivate people to allocate capital with a purpose. This article in CityWire found in our Library touches on the goals beyond total return that inspire investors of all stripes to make their portfolios reflect their values and behaviors in the rest of their lives.

Is Israeli divestiture an ESG prerequisite?

I am apparently very fond of standing on the third rail, and not because of any particular affinity for public transit. Many of the big ideas in ESG and impact investing are based on almost universally-accepted principles for sustainable business, from access to nutrition and healthcare to clean waterways and shrinking carbon footprints. I attempted in this month’s CityWire pro buyer magazine to look into what happens when some of those universal principles cross into grey areas where stakeholders do not agree, in some cases at all. South African apartheid divestiture was a signature moment in socially responsible investing and one that reaped profound social returns. My question was what are managers doing with the BDS (Boycott, Divestiture, Sanctions) movement in the Israeli occupied territories since BDS is drawing from the South African apartheid playbook but is far more polarizing? What is attributed as good or bad is very different depending on the perspective of the stakeholder. Are managers even looking at BDS, and if so how does it integrate with a sustainable investment process designed to appeal to as broad a universe of investors as possible? You can find the article here or in the Library.


Can’t say this is surprising. From a policy point of view Scott Pruitt is antithetical to everything for which a good environmental steward stands. But, cabinet appointments are the province of the President with the advice and consent of Congress. We are getting the environmental policies for which the people voted. That is how it works. Pruitt took governance to new lows though, befitting regimes we (used to) laugh at in less developed parts of the world.

Nothing is won here though except a glimmer of hope that, even if we vehemently disagree with their policies, civil servants act with honor and honesty in service of their country. However, environmental vigilance is still critical on the part of all stakeholders even with Pruitt’s departure from the EPA. He is gone but the people who put him in that position, and will replace him, are still in power.

Embattled EPA Chief Scott Pruitt resigns (Washington Post)

Scott Pruitt, Trump’s EPA Chief, Resigns Under Cloud of Ethics Scandals (NY Times)

Embattled Scott Pruitt Resigns as EPA Administrator (Wall St. Journal)

The wheel keeps returning us to Standing Rock

The news cycle has certainly spoken for itself in the last few months and the last few years. So, from the great Lakota leader Sitting Bull, who coincidentally was killed at Standing Rock: “They claim this mother of ours, the earth, for their own and fence their neighbors away; they deface her with their buildings and their refuse. The nation is like a spring freshet; it overruns its banks and destroys all who are in its path.”

My latest article in CityWire USA Professional Buyer magazine takes a brief look at how an informed and aware investment process, regardless of asset class, can begin to address in a small but significant way the historical and ongoing injustices of racism, disenfranchisement and genocide perpetrated right here in the US of A.

“Righting Wrongs”, found in the RIS Library.

The modern era of mass shootings

Somerville, NJ #MarchForOurLives rally, March 24, 2018

I was a little surprised I could get this article published in a financial services journal but extremely gratified that it was. Props to the editorial staff of CityWire USA for being bold and willing to up the ante from #MeToo a couple issues ago to #MarchForOurLives this month. I attempted to (and I hope largely succeeded) build a case away from the 2nd Amendment and politics for why a truly free and fair market has a demonstrated capacity to deal with products and companies that pose a threat to the health and welfare of the public. The market is a surprisingly democratic institution in that regard, and the view of the majority, as expressed in terms of consumer dollars and investment capital, carries a lot of power that requires no law, no legislation and no abridgment of rights to express. Consumer assault weapons, WMDs for all intents and purposes, are not just bad for society, they are bad business. Market data seems to pretty strongly back that assertion. You can find the article, “Loaded Issue”, in the Library, or you can open it directly here.

Somerville, NJ #MarchForOurLives rally, March 24, 2018

A few media updates on RIS

The latest piece to appear in CityWire USA’s March 26, 2018 issue can be found in the Library or behind this link. Had to take a breather from the heavy stuff to talk about how to measure… the heavy stuff.

Speaking of heavy stuff — also from CityWire USA, this news item quoting me discusses the selective introduction of firearms screens into portfolio construction. The short version of my perspective is that selective news-driven adjustments to an investment process are gimmickry. There should be an overarching philosophy behind the process that addresses the reasoning for a particular screen. In the case of consumerized military weaponry, Julie Gorte of PAX World (now Impax) put it to me best — removing companies whose products kill when used as directed. Yes, now addressing firearms discretely is absolutely important, but a strong philosophical grounding could have reduced or eliminated the exposure ahead of time, and certainly would be influential in what comes next in the realm of things that are bad for people and the planet. You can see the quote here, and stay tuned, because the next article to appear in CityWire takes on why our children need to #marchforourlives and where stakeholder responsibility resides.

Where are our blog manners?

Apologies to our readership. This has been an extraordinary time and there is almost too much to talk about. We have some new articles that will be going up in the Library shortly. And, much to say on the blog about everything that has happened in the last month or so that shows the frailty of our planet and civil society and where responsible investment capital can be a bulwark against the things that threaten both. But for now, just miscellany.

Happy Equal Pay Day.

No, not really. Until that day is January 1st, there is nothing happy about it. Also, look at the data underlying this catch-all symbol for pay inequity. There are those who discount the significance of the difference by pointing out that women take many of the lower paying jobs in our economy like food service workers and domestic employees, and therefore that amplifies the difference when looking at men vs. women in aggregate. We would argue that is actually exactly the point. Women, who are the majority of the population and the majority of college graduates, are as a group underrepresented in high paying white collar positions and overrepresented in positions that may be essential to the economy, but grossly underpay. Inclusion riders in Hollywood are definitely a highly visible step, but in a very constrained industry vertical. The best and most investable companies are the ones that strive for not just equal pay but also fair pay — a truly livable minimum wage — for all.

Happy Earth Day.

No, not really. We live on this planet, the only one we have until Elon Musk and Jeff Bezos are drag racing space convertibles to the stars, and we pat ourselves on the back for throwing Gaia a nice party and turning off some lights for a day before returning to prior behaviors. We all love New Year, lenten, and other resolutions. Give up chocolate. Exercise more. Swear less. So maybe those three are near impossible, but what is possible is to take each Earth Day and pick a personal behavior or a corporate behavior that reflects social, environmental and economic justice priorities you can affect and change it. Permanently. Even if they are small changes, the cumulative effect could be profound. Maybe this year go down the hall to HR and ask for sustainable investment options in your retirement plan, and then go buy that Starbucks travel mug.

Wait. What?

Wells Fargo. They do so love to be above the fold. After rampant borderline fraudulent behavior with their consumer banking clients preceded and followed by campaigning for the dismantling of Dodd-Frank, they manage to further distinguish themselves from other money center banks by coming down on the wrong side of the gun issue. They definitely want a lighter governmental hand when it comes to regulating banking activities, but are all for government taking the reins on high capacity consumer weaponry (Reuters). As we are very fond of pointing out at RIS, ignore your stakeholders at your own peril. The bank’s customers, shareholders, and communities are making themselves heard. Watch that share price if they become a target for divestiture from individuals, families, charities, pensions, etc. as clients and investors.

Stay tuned. Articles, blog posts, and some interesting papers from our industry friends yet to come.

#Listen. Silence is golden.


We have been quiet for a serious stretch of time here because there has been a lot of listening to do. This has been an extraordinary moment for social justice and environmental stewardship. I said extraordinary — which is not always the same as good. So many issues of profound importance, from DACA and Dreamers to #MeToo to Bears Ears, have swirled around us. It was the first anniversary of the Women’s March and now it is Black History Month again.

This is still a time to do more listening than talking. But, we also need to selectively raise our voices to address inequity and injustice, particularly when the tools for effecting change are within our means and grasp. On this return to the RIS blog, I call attention to two articles just added to our Library. The first discusses how the stakeholders in market indexing can effect change on the matter of corporate exposure to or involvement in genocidal activities. The second examines the shortcomings of current investment practices when it comes to hierarchy and accountability for sexual assault and harassment in the corporate environment and how investors can hold executives and fiduciary stakeholders to a more exacting performance standard with consequences for failure.

As an alternative to the PDFs in our library, here are live links to the publisher’s website:

How to fight for genocide-free funds

#TooMany: How should investors respond to #MeToo?