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  1. 1. Social Investment How Responsible Investing Can Strengthen the Fiduciary Oversight of Foundation Endowments and Enhance Philanthropic Missions 2009
  2. 2. A Brief Introduction <ul><li>This PowerPoint is based on a booklet produced by the Social Investment Forum Foundation entitled, “The Mission in the Marketplace: How Responsible Investing Can Strengthen the Fiduciary Oversight of Foundation Endowments & Enhance Philanthropic Missions.” </li></ul><ul><li>This booklet can be found online at http:// www.socialinvest.org/pdf/research/Missioninthe </li></ul><ul><li>Marketplace.pdf . </li></ul><ul><li>Acknowledgements: </li></ul><ul><li>J.A. & H.G. Woodruff, Jr. Charitable Trust </li></ul><ul><li>Foundation Partnership on Corporate Responsibility ( www.foundationpartnership.org ) </li></ul><ul><li>The Rose Foundation ( www.rosefdn.org ) </li></ul><ul><li>Triple EEE Foundation </li></ul>
  3. 3. An Invitation to Foundations & Endowments <ul><li>Responsible Investing Strategies </li></ul><ul><li>Social and Environmental Screening </li></ul><ul><li>Shareowner Advocacy </li></ul><ul><li>Community Investing </li></ul><ul><li>Social Venture Capital </li></ul>
  4. 4. Creating Value <ul><li>“ [F]oundations are not simply vehicles for distribution of charitable gifts, but rather investors in value creation.” </li></ul><ul><li>— Jed Emerson </li></ul><ul><li>Generation Foundation </li></ul>
  5. 5. What is Responsible Investing? <ul><li>Responsible investing is an investment process that considers the social and environmental consequences of investments , both positive and negative, within the context of rigorous financial analysis. </li></ul>
  6. 6. Terminology <ul><li>The incorporation of environmental, social, & governance (ESG) factors into investment management has been described in a variety of ways: social investing, mission-related investing, values-based investing, socially responsible investing (SRI), ethical investing, double- or triple-bottom-line investing, and responsible investing. This report will use a number of these terms. </li></ul>
  7. 7. Socially Responsible Investing (SRI) <ul><li>SRI incorporates issues of </li></ul><ul><li>Corporate Social Responsibility (CSR) , ranging from environmental concerns to human rights and supply-chain management, from workplace health and safety to equal employment opportunity and human resources policies. </li></ul>
  8. 8. Responsible Investing’s Scope and Scale <ul><li>Over $2.7 trillion : U.S. SRI Assets under professional management </li></ul><ul><li>Over $15 trillion : Assets of institutional investors backing UN Principles for Responsible Investment </li></ul><ul><li>Over $6 trillion : Assets of UN Global Compact endorsers </li></ul><ul><li>Over 27% Annual Growth in US SRI Assets 1995-2007 </li></ul>
  9. 9. Fiduciary Prudence, Performance & Mission-Based Investing <ul><li>Consideration of sustainability as an element of prudent trusteeship </li></ul><ul><li>Recognition of “extra-financial” benefits </li></ul><ul><li>Added economic value of environmental performance </li></ul><ul><li>Competitive long-term performance </li></ul><ul><li>Variety of options across investment styles, instruments, and asset classes </li></ul>
  10. 10. Social and Environmental Screening <ul><li>The Incorporation of Environmental, </li></ul><ul><li>Social and Governance (ESG) Criteria </li></ul><ul><li>into Investment Analysis </li></ul><ul><li>Negative Screening Avoids Poor CSR Performers </li></ul><ul><li>Positive Screening Identifies Strong CSR Performers </li></ul><ul><li>“ Best-of-Class” Screening Identifies Sector Leaders </li></ul>
  11. 11. Largest Foundations Employing Social or Environmental Screening* <ul><li>Bill & Melinda Gates Foundation </li></ul><ul><li>Ford Foundation </li></ul><ul><li>David and Lucile Packard Foundation </li></ul><ul><li>California Endowment </li></ul><ul><li>Annie E. Casey Foundation </li></ul><ul><li>Rockefeller Foundation </li></ul><ul><li>Carnegie Corporation of New York </li></ul><ul><li>California Wellness Foundation </li></ul><ul><li>Robert Wood Johnson Foundation </li></ul><ul><li>Charles Stewart Mott Foundation </li></ul><ul><li>Carnegie Corporation of New York </li></ul><ul><li>Heinz Endowments </li></ul><ul><li>William Penn Foundation </li></ul><ul><li>Among 50 Largest Private Foundations </li></ul><ul><li>Source: Chronicle of Philanthropy, 2006 </li></ul>*May include a single screen, such as tobacco
  12. 12. Shareowner Advocacy <ul><li>Active Proxy Voting </li></ul><ul><li>Filing and Co-filing Resolutions </li></ul><ul><li>Direct Dialogue with Management </li></ul><ul><li>Participation in Shareowner Coalitions and Networks </li></ul>
  13. 13. Recent Shareowner Successes <ul><li>Climate Change and Carbon Disclosure </li></ul><ul><li>HIV/AIDS Policies at Coca-Cola and PepsiCo in Africa </li></ul><ul><li>Labor Conditions at Taco Bell and Yum! Brands </li></ul><ul><li>Fair Trade at Procter & Gamble </li></ul>
  14. 14. Shareowner Engagement Networks <ul><li>Council of Institutional Investors </li></ul><ul><li>Foundation Partnership for Corporate Responsibility </li></ul><ul><li>Interfaith Center on Corporate Responsibility (ICCR) </li></ul><ul><li>International Corporate Governance Network </li></ul><ul><li>Investor Network on Climate Risk (INCR) </li></ul><ul><li>Jewish Shareholder Engagement Network </li></ul><ul><li>Social Investment Forum </li></ul>
  15. 15. Recent Social Shareholder Resolution Proponents Among Foundations <ul><li>As You Sow Foundation </li></ul><ul><li>Camilla Madden Charitable Trust </li></ul><ul><li>Conservation Land Trust </li></ul><ul><li>Edward W. Hazen Foundation </li></ul><ul><li>Funding Exchange </li></ul><ul><li>Haymarket People’s Fund </li></ul><ul><li>Jessie Smith Noyes Foundation </li></ul><ul><li>Lemmon Foundation </li></ul><ul><li>Max and Anna Levinson Foundation </li></ul><ul><li>Nathan Cummings Foundation </li></ul><ul><li>Needmor Fund </li></ul><ul><li>Pride Foundation </li></ul><ul><li>Tides Foundation </li></ul><ul><li>United Church Foundation </li></ul><ul><li>Wisdom Charitable Trust </li></ul>
  16. 16. Community Investing (CI) <ul><li>Provides capital to traditionally underserved communities </li></ul><ul><li>Generates high-impact social returns </li></ul><ul><li>Supports affordable housing, child care, and sustainable economic development </li></ul><ul><li>Provides diverse investment opportunities, from below-market deposits to risk-adjusted, market-rate returns through debt, equity and venture capital </li></ul>
  17. 17. Community Investing Institutions <ul><li>Community Development Banks </li></ul><ul><li>Credit Unions </li></ul><ul><li>Loan Funds </li></ul><ul><li>Venture Capital </li></ul><ul><li>International Microfinance Funds </li></ul><ul><li>Grown from $4 billion in 1995 to over $25 billion in 2007 </li></ul>
  18. 18. Sample Foundation Leaders in CI <ul><li>F. B. Heron Foundation </li></ul><ul><li>Jewish FundS for Justice (JFSJ) </li></ul><ul><li>A. J. Muste Memorial Institute </li></ul><ul><li>Rose Foundation for Communities and the Environment </li></ul>
  19. 19. Social Venture Capital <ul><li>“ Double-bottom-line:” both financial and social returns </li></ul><ul><li>Alternative Investment opportunities in early-stage private equity </li></ul><ul><li>Debt financing to support non-profit social enterprises </li></ul><ul><li>Over $600 million in capital from “Angel Investors” and Institutions alike </li></ul>
  20. 20. Getting Started <ul><li>Conduct Research and Gather Resources </li></ul><ul><li>Ask Whether Your Existing Managers and Consultants Have the Necessary Expertise </li></ul><ul><li>Consult a Financial Advisor with Expertise in Mission-Related Investing </li></ul><ul><li>Have a Strategic Conversation within Your Organization on Your Investment Policies </li></ul><ul><li>Present Findings to Your Foundation Board or Investment Committee </li></ul>continued
  21. 21. Getting Started <ul><li>Develop Active Proxy Voting Guidelines </li></ul><ul><li>Draft a New Responsible Investing Policy </li></ul><ul><li>Explore Community Investing Opportunities </li></ul><ul><li>Lead by Example: Share Knowledge & Best Practices </li></ul><ul><li>Join Responsible Investor Networks </li></ul>
  22. 22. The Social Investment Forum <ul><li>Dedicated to advancing the concept, practice, and growth of socially and environmentally responsible investing </li></ul><ul><li>www.socialinvest.org </li></ul><ul><li>The Social Investment Forum 910 17 th Street NW, Suite 1000 Washington, DC 20006 phone (202) 872-5361 fax (202) 775-8686 </li></ul><ul><li>Join online today! </li></ul>
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