If you’ve noticed more opportunities lately to invest in companies and funds that promote a positive social or environmental impact, Jackie VanderBrug, 49, is one of the forces behind those opportunities. And at last count, the growth was real: The Forum for Sustainable and Responsible Investment, which is currently researching its 2018 report on what’s collectively known as social, responsible, and impact investing (SRI), found that SRI assets in the U.S. reached nearly $9 trillion as of early 2016, a 33 percent increase from two years before.
VanderBrug, a managing director and investment strategist at Bank of America Global Wealth & Investment Management (serving U.S. Trust and Merrill Lynch clients) based in Boston, has the job of defining and executing investment strategies with an SRI focus. She has devoted most of her career to finding market-based answers to problems in society, advising individuals and nonprofits on impact investment strategies, and helping get gender-lens investing onto the global radar. In their book Gender Lens Investing: Uncovering Opportunities for Growth, Returns, and Impact (2016), VanderBrug and coauthor Joseph Quinlan wrote about zeitgeist as a force that influences events. She spoke with Muse about the growing presence of social impact returns in zeitgeist of the investment world.
Putting your money into companies that have a positive impact or embrace environmental, social, and corporate governance (ESG) factors is a noble goal, but what do you say to investors who are concerned that they’ll sacrifice returns?
Historically, investors were afraid these factors limited their universe, but Savita Subramanian at Bank of America Merrill Lynch Global Research has found that ESG metrics are strong indicators of less volatility, earnings risk, and price decline. She’s even calculated that an investor with holdings only in stocks with above-average ranks on environmental and social scores would have avoided 15 of the 17 corporate bankruptcies that occurred between 2008 and 2016.
Is there a difference in the way women and men approach this kind of investing?
We’ve just come out with a new survey on that. We found that eight of 10 investors overall said they expect a company to make a profit but also take responsibility for its social impact. But when you get to the question of whether the company’s ESG track record is important to their investment decisions, all of a sudden 64 percent of women but only 46 percent of men agree with that statement. I think you could say that women are multitaskers and are looking at this from multiple angles; from my years of working with women investors I know that they’re motivated by a wish for authenticity and consistency in terms of their values and the world they want to live in.
The survey also found, by the way, that 70 percent of high-net-worth investors who invest in ESG and impact investments say the return on their investment has met or exceeded their expectations.
There are any number of ways to move money into impact/ESG investing. How do you recommend getting started?
It should start with having a conversation with your advisor about your own values and passions, along with your economic beliefs. Are you concerned about lower carbon emissions? Healthier lifestyles? More opportunities for women and girls? Social justice? Affordable housing? How can you play that out in your portfolio?
What if your answer is “all of the above”?
My other piece of advice is—start. Sometimes we see folks who want to wait for that absolutely perfect investment that hits all of their passions. Don’t let the perfect be the enemy of the good. Many of our clients might say I have a lot of different interests. All of them can be investible opportunities in some way. Some investors starting with a U.S. large cap equity fund that is broadly aligned with their values, then over time they might move to some more specifically targeted investments, for example, allocating to a fixed-income fund that supports affordable housing in your region. We’re at a remarkable place in the world where what’s good for your portfolio is also good for the planet and its people, so it’s the opportune time to ask questions and also to act. Overall, I’m super excited about the opportunities ahead of us.