SUSTAINABLE INVESTING STRATEGIES: WHY INVESTOR INTEREST CONTINUES - Michael Lent, VERIS WEALTH PARTNERS

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Michael Lent, VERIS WEALTH PARTNERS - Speaker at the 2013 IFG Wealth Management Forum held in Phoenix, AZ, April 22-23, delivered his presentation entitled SUSTAINABLE INVESTING STRATEGIES: WHY …

Michael Lent, VERIS WEALTH PARTNERS - Speaker at the 2013 IFG Wealth Management Forum held in Phoenix, AZ, April 22-23, delivered his presentation entitled SUSTAINABLE INVESTING STRATEGIES: WHY INVESTOR INTEREST CONTINUES

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  • 1. Sustainable Investing StragWhy Investor Interest ConPresented by:Presented by:Michael Lent, Chief Investment Officer, VerisApril 22, 2013ategies:gntinues to GrowWealth Partners, LLC
  • 2. Firm OverviewVeris Wealth Partners, LLC is a sustainadedicated to aligning families’ and foundaand missions. Veris believes that superiorpositive impact are complementary parts• Founded in July of 2007Founded in July of 2007• Best for the World Certified B Corp 2• Independent, employee-owned, SEC• Offices in NYC, San Francisco, and P• Veris’ Partners have been providingWe believe that Sustainable Investing is aperformance-driven investing that aligns ymost important innovation to investing in op gable wealth management firmations’ financial goals with their valuesr investment performance andof a holistic investment strategy.2013C-registered RIAPortsmouth, NHImpact Investing to clients since 1992a smarter way to invest, and thatyour wealth with your worldview is theour lifetime.
  • 3. “We see sustainability, both soy,powerful path to innovation, anstrategies.”gocial and environmental, as a,nd crucial to our growth- Mark Parker, CEO, Nike, ,
  • 4. ABCs of Sustainable Inve• Ethical Investing• Socially Responsible Investing (“SRI”E i t l S i l d G• Environmental, Social, and Governan• Sustainable Investing• Impact InvestingImpact Investing• Mission Related Investing (“MRI”) : Foestingg)C it i (“ESG”)ce Criteria (“ESG”)oundation
  • 5. Sustainability: What DoesSustainability focuses on meeting the needs osocial economic and environmental needs ofysocial, economic, and environmental needs ofSustainabilitissues must• Corporat• Climate CGlobal Tr• Global Tr• Natural R• Health &• Human C• Pandemi• Poverty/Dy• Water &• Human C• Demogra• Demogras It Mean?of the present without compromising thef the futuref the future.ty Issues: When investing in companies, thesebe a factor in fundamental equity analysis:q y yte GovernanceChangeransition: Abundance to Scarcityransition: Abundance to ScarcityResource PreservationWellbeingCapital, Empowerment & Creativitycs: HIV/AIDSDevelopment NeedspEnergyCapitalaphy/Urbanizationaphy/Urbanization
  • 6. Developments in Sustainap• Family Alignment – Values / Financi• Expanded Investment Options Acros• Quality Managers & Funds Entering• Performance & Risk Mitigation• Financial Advisors & Investment Conable Investinggal Objectivesss Asset ClassesFieldnsultants With Expertisep
  • 7. US SIF Trends Report 20p$3.74 Trillion: U.S. Sustainable & Respon12nsible Assets in 2012• 1 in 9 dollars is invested• 1 in 9 dollars is investedusing a sustainableinvesting approachO f th f t t• One of the fastestgrowing segments ofinvesting
  • 8. US SIF Trends Report 20p“In cumulative terms the SRI Universe hawhile the broader universe of assets undewhile the broader universe of assets undeStates, according to estimates from Thomfrom $7 Trillion in 1995 to $33 3 Trillion infrom $7 Trillion in 1995 to $33.3 Trillion in12as increased 486% from 1995 to 2012,er professional management in the Uniteder professional management in the Unitedmson Reuters Nelson, has grown 376%n 2012 ”n 2012.- US SIF 2012 Trends Report
  • 9. THE OPPORTUNITY IN AALTERNATIVES
  • 10. Sustainable Investing Acrg ross All Asset Classes
  • 11. Strong Investment Perforg250KLD 400 Cumulative Rtn200S&P 500 Cumulative Rtn15050100050manceRisk andReturn(6/1992-MSCIKLD400S&P5003/2013)40020-yearAnnualizedReturn8.70 8.53StandardDeviation17.29 16.92Alpha 0.09 --p a 0 09R-Squared 98.05 100InformationRatio0.7 --TrackingError2.43 --Source: Zephyr Analysis, MSCIand Standard & Poor’s.and Standard & Poor s.
  • 12. Academic Research on POver 300 studies conducted on performaincorporate “Environmental, Social and Gp ,portfolio construction• Vast majority show no negative imparesultsresults• Some studies show companies with(CSR) or ESG scores have a lowerk t b d d ti b dmarket-based and accounting-basedResearch Reviews:• Fulton Mark et al “Sustainable Inv• Fulton, Mark, et al., Sustainable Invand Performance,” Deutsche Bank C• Gladman, Kimberly, “Ten Things toP f ” G M t iPerformance,” Governance Metrics• Statman, Meir, “Socially ResponsiblConsulting, Vol. 8, No. 2, pp. 17-37,Performanceance of indices and funds thatGovernance” (ESG) factors in equity( ) q yact on performance: neutral or mixedhigh “Corporate Social Responsibility”cost of capital and are correlated withd t fd outperformance.vesting: Establishing Long Term Valuevesting: Establishing Long Term ValueClimate Change Advisors, June 2012.Know about Responsible Investment &I t ti l I M h 2011International, Inc., March 2011.e Investments,” Journal of InvestmentSummer 2007.
  • 13. Academic Research on POutperformance found in firms with b• El Ghoul Sadok et al “Does corpo• El Ghoul, Sadok, et al., Does corpoof capital?“ Journal of Banking & Fin2406, September 2011. (2011 winne“ fi d h fi i h b CSR“…we find that firms with better CSRIn particular, our findings suggest tresponsible employee relations, et t i t ib t b t ti lstrategies contributes substantialPerformanceetter CSR scoresorate social responsibility affect the costorate social responsibility affect the costnance, Volume 35, Issue 9, p. 2388-er of the Moskowitz Prize)R hibi h i fi iR scores exhibit cheaper equity financing.that investment in improvingnvironmental policies, and productl t d i fi ’ t f it ”ly to reducing firms’ cost of equity.”
  • 14. Academic Research on POutperformance found in high sustain• Eccles Robert et al “The Impact o• Eccles, Robert, et al., The Impact oCorporate Behavior and PerformancNovember 2011.“U i h d l f 180“Using a matched sample of 180 comvoluntarily adopted environmental andtermed as High Sustainability companh t i ti f t h d lcharacteristics from a matched samplthese policies – termed as Low Sustaevidence that firms in the High Sussignificantly outperform their counsignificantly outperform their coungroup.”Performancenability companiesof Corporate Culture of Sustainability onof Corporate Culture of Sustainability once,” HBS Working Paper Series 12-035,i fi d h i hmpanies, we find that corporations thatd social policies many years ago –nies – exhibit fundamentally differentl f fi th t d t d l t fle of firms that adopted almost none ofainability companies…Overall, we findstainability group are able tonterparts in the Low Sustainabilitynterparts in the Low Sustainability
  • 15. Veris Portfolio ConstructioFinancialG l &Develop F+Impact IGoals &ObjectivesImpact IPolicy StaC T IDefine TargetAConductScan of InvestmentsCreate TargetImSelectFinalists, CompleteConductScan of InvestmentsMonitor and Evaluate FinancOngoon ProcessArticulateMi i /FinancialnvestingMission /ValuesnvestingatementThAssetAllocationsAddressing ImpactThemesmpact ThemesDue Diligence & AnalysissAddressing ImpactThemescial and Impact Performanceoing
  • 16. ResourcesUS SIF The For m for S stainable a• US SIF: The Forum for Sustainable ahttp://ussif.org/• FSInsight http://fsinsight.org/• Bloomberg Sustainability http://www.• Global Impact Investing Network (GII• Global Impact Investing Rating Syste• ImpactBase: a project of GIIN http://w• ImpactAssets 50 http://www impactas• ImpactAssets 50 http://www.impactas• CARS http://www.carsratingsystem.nand Responsible In estmentand Responsible Investmentbloomberg.com/sustainability/IN) http://thegiin.orgem (GIIRS) http://giirs.orgwww.impactbase.org/ssets org/impactassets 50ssets.org/impactassets-50net
  • 17. BiographyMichael Lent, Partner & Chief Investment OMichael is a founding principal and the CIO of Verisg p yg p pdelivering financial planning and investment consultfoundations. Michael has been recognized by the Cvalue community investing and is regularly cited bymatters pertaining to sustainable investing. Prior to Vp g gProgressive Asset Management, the first national furesponsible investing.Earlier in his career, while working on economic dev, grealized that, for his work to achieve its full impact, haccess to new financial resources. So he began to fwho also recognized the important link between captheir resources to achieve personal financial goals wtheir resources to achieve personal financial goals wthem.Michael is the Treasurer and a Trustee of the Edwathe Board of Directors of US SIF, The Forum for Suthe Board of Directors of US SIF, The Forum for Sua member of the Investment Management ConsultaManagement Analyst (CIMA®). Michael graduated fwith a B.A. in Biology. He lives with his wife in BrookOfficerWealth Partners,LLC. For 19 years, he’s been, y ,ting services to families, family offices, andalvert Foundation for his advocacy of blended-major media outlets such as AP and Reuters onVeris, he co-founded the New York office of,ull-service broker/dealer to focus on sociallyvelopment issues in Central America, Michaelp ,he and his colleagues would need sustainedfocus his efforts on outreach, educating otherspital and social change. He now helps others usewhile having a positive impact on the world aroundwhile having a positive impact on the world aroundrd W. Hazen Foundation, and serves as Chair ofstainable and Responsible Investment. He is alsostainable and Responsible Investment. He is alsoants Association (IMCA) and a Certified Investmentfrom the University of California at Santa Cruzklyn, NY.
  • 18. Important Consumer DiscThis presentation contains general information thatguarantee of future results. There is no guarantee tpresentation will come to pass Investing in the stocppresentation will come to pass. Investing in the stocsuitable for all investors. Information presented herbe considered as a solicitation to buy or sell any secV i W lth P t LLC (“V i ”) i SEC iVeris Wealth Partners, LLC (“Veris”) is an SEC regisbusiness in the State of California. Veris and its repregistration requirements imposed upon registered imaintains clients. Veris may only transact businessf ffor an exemption or exclusion from registration requdissemination of general information pertaining to itssubsequent, direct communication by Veris with a prepresentative that is either registered or qualifies fostate where the prospective client resides. For inforplease contact Veris or refer to the Investment Advis(www.adviserinfo.sec.gov).For additional information about Veris, including feeset forth on Form ADV Part 2A from Veris using thedisclosure statement carefully before you invest or sclosureis not suitable for everyone. Past performance is nothat the views and opinions expressed in thisck market involves gains and losses and may not beck market involves gains and losses and may not berein is subject to change without notice and should notcurity.t d i t t d i ith it i i l l fstered investment adviser with its principal place ofpresentatives are in compliance with the currentinvestment advisers by those states in which Veriss in those states in which it is registered, or qualifiesuirements. This presentation is limited to thes investment advisory/management services. Anyrospective client shall be conducted by aor an exemption or exclusion from registration in thermation pertaining to the registration status of Veris,ser Public Disclosure web sites and services, send for our disclosure statement ascontact information herein. Please read thesend money.
  • 19. Thank YouFor more information:Michael Lentwww.veriswp.commlent@veriswp.com(212) 349-4172