Inevitable

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?

I’m sorry… What?

I must admit I was unprepared to write this post. I had fully expected the Climate Science Special Report – Fourth National Climate Assessment to get buried. At best I was expecting it to be edited to de-fact it and bury the lede on climate change. RIS had gone as far as archiving the draft version of the report that was circulating earlier this year to post now in lieu of a final report, or to draw attention to where the science got trumped by politics and faith-based conclusions in a revised report. Just in the last couple weeks, the EPA benched its own scientists, Autumn Oczkowski, Rose Martin and Emily Schumchenia at a major workshop in Rhode Island where they were featured presenters of their own work. There really was no reason to believe the climate report would reach the daylight.

Continue reading “I’m sorry… What?”

Is there any hope in the death of the Clean Power Plan?

The veneer is cracking. In more and more corporate and industry settings, we have moved past the incontrovertible regarding fossil fuels and climate change. This morning, Steve Inskeep of NPR interviewed Jeff Holmstead, partner at Bracewell LLP, who represented the American Coalition for Clean Coal Electricity in litigation regarding the Clean Power Plan. At one time Mr. Holmstead was a deputy administrator in the EPA under President George W. Bush. He may have grown up in Boulder, CO, but he is clearly not a champion of liberal doctrine on industry and climate.

It is profound if we can collectively move beyond debating causality and consequences and discuss the mechanisms of commerce and law to address the environmental and societal risks. If we can pit solutions based on markets against solutions based on regulation rather than arguing the climate change premise, there is hope because we are all at least acknowledging and then talking about solving the same problem.

Inskeep:  “Just to be clear and get this on the record, because the President has, at different times, called climate change a Chinese hoax — does your industry group accept the science that climate change is real, significantly caused by people… dangerous enough to respond to?”

Holmstead:  “Yes. I think that most everybody in the industry does accept that fact and the real question is what’s the best way to go about resolving it. And that’s really what this proposal yesterday is all about.”

The full interview can be heard here:

Men behaving badly

The disrespect, diminishment and abuse of women in the workplace is cultural. In a corporate environment culture starts at the top. It slowly seems to be getting rooted out of certain industries, but in others, like tech, private finance and entertainment, it is still endemic. We need to have the pay parity conversation, but that should not be a substitute for or a higher priority than human decency.

From an ESG perspective this is every stakeholder’s responsibility regardless of role, gender, political or religious affiliation. The first step is to stop being apologists. Then it is time to effect change. And, from an investor’s point of view, this should not only become a priority when it hurts a business’ value. Changing a culture of discrimination and abuse of any sort is always a priority. Do it because it is the right thing and bank a little psychic alpha as compensation. The economic returns will take care of themselves.

The New York Times presented two op-ed’s from women at the opposite ends of the political spectrum that, no surprise, arrive in the same place. NYT is behind a paywall, but if you are not a subscriber, it is still worth spending two of your ten freebies for the month on this editorial by Lena Dunham and this editorial by Gretchen Carlson.

Does this need to be discussed again?

How many people need to be shot by how many gunmen with semi-automatic and automatic weapons before there is, dare we say, supply chain accountability? After today’s mass-shooting in Las Vegas, where the casualty count as of this writing is still rising, there will be talk of mental health care, better venue security, good guys with guns vs. bad guys with guns, and even background checks and gun licenses. It will inevitably devolve into a 2nd Amendment debate rather than looking at how every citizen’s rights can be honored, including certain unalienable rights including life, liberty and the pursuit of happiness, something just deprived of hundreds of individuals in Nevada by one man.

The argument that a well regulated militia requires high-powered repeating weaponry is specious. The 2nd Amendment does not specify the nature of the arms to be kept. Where should the line be drawn? RPGs? Bombs? Why is the US military venerated without reserve when we are arguing about who sits and stands for the National Anthem but not trustworthy enough to defend the populace such that individuals and groups need to arm themselves similarly?

As with so many societal and environmental issues, government and regulation is one avenue of address. Commerce is another. These weapons are made by for-profit corporations, public and private. It is possible to accept that the manufacture of these weapons is legitimate and necessary for law enforcement and the military and not absolve these companies of responsibility for inappropriate distribution and use. I cannot sell a mutual fund without a background check, a license, extensive documentation and disclosure, and an examination of suitability for the purchaser. Much of the burden for this falls to the manufacturers (the fund sponsors) and the rest on the sales organizations (broker/dealers). The worst that can happen is the investment goes to zero. The client and the public still walk away, frustrated yes, but very alive.

Various stakeholders must increase pressure on these weapons manufacturers to restrict and control distribution. Just because something is legal does not mean it must be done. Self-regulate. Make a decision as a company that your product is suitable only for use by trained professionals in military and law enforcement scenarios. Control your distribution channels. Do not sell the weapons and do not sell the ammunition outside of these professionals. Terminate distribution agreements with any merchant that violates company rules. Do it because you care about your company, your employees, your communities and your customers.