REC sat down with Steve Schueth of First Affirmative Financial Network – who was interested in sharing his feelings about responsible investment and his story about how he got involved.
REC: How did you get involved with responsible investment?
I went to school at Marquette where basketball was the big thing, and we didn’t have anything like the Responsible Endowments Coalition. I had a gradual awakening, but I wish that he had woken up earlier when I was in college, it was 14 years before I got into socially responsible investment.
I joined Calvert in 1989. Previously I had been the director of development at the University of Pennsylvania Wharton School of Business and then was working in the financial services industry. While I was there I met Wayne Silby and John Guffey who founded Calvert in 1981 and were integrating values into investment and learning about the Buddhist tradition and philosophy of ‘right livelihood’, which was a big aha! moment for them. I had been in financial services since 1976 and when I began to learn about the emerging field of socially responsible investing, doing good with money, it was a coming home, it just felt right for me.
For me there are two kinds of people in the world. The majority of folks feel very comfortable having their money disconnected from the rest of their lives. They are okay making as much money as they can and giving a little bit away to solve some of the world’s problems. They aren’t as socially conscious.
The other group of folks is people that are doing good work with their money. We want our money doing good things and making money at the same time. We’re conscious how our money is working in the world and know that it has an impact if we realize it or not. I would have been very grateful if I had realized this in college.
REC: It’s the same way now for a lot of people.
In college most people are thinking about sports and boys and girls. It’s hard to break through the excitement that is happening and the process of leaving home. REC has an important role to play bringing these insights and ideas to students.
REC: Why do you think colleges and universities should be involved in responsible investment?
Think Sustainability. It can be applied to just about everything, companies, colleges, countries, planet. This idea of being sustainable so that everyone lives well for a long time—forever, hopefully—built into that concept is long-term thinking. Schools are places for cultivating long-term thinking. Institutions are long-term investors. Colleges and universities have a really important role shifting the paradigm from short-termism to long-termism. If you look back at the genesis of most of the problems in most of the markets, most of it can be traced to short-term thinking. Even if a college doesn’t get to the point to invest in a more socially conscious way—it needs to spread the message about long-term.
I’ve been involved in some efforts of the last 20 years on responsible investment campaigns on campus. In all cases a small group of committed students was lobbying the university with professional support, and the university successfully stalled and the passion died. REC plays an important role in keeping that flame alive.
Changing policies at schools is challenging: there are many interests. I would not approach them with exclusionary concepts. Encourage them to approach investing by weighting their portfolios with the most responsible corporations.
If you happen to be where, say, Altria is located, you don’t want to totally exclude that stock, but can own less of them. Sustainability in investing is not only very doable, but frankly is necessary.
REC: What message would you send to students advocating for positive changes to investment policies on their campuses?
SS: Students are thinking long-term. Socially conscious investors are very long-term. Investors tend to be there every year. That discipline is important. If you can establish institutional memory, that’s incredibly helpful. You need to be smart about identifying pressure points. Understand the climate and players, and who has influence. If you understand the situation you can be much more effective and efficient in the way you are advocating for change. Maintain information for and educate the next group of students.
REC: How would you convince a university to make community investments?
SS: I think the best is working with a local organization. You can also use an organization like the Calvert Foundation, which can focus on your local area, but get important diversification. Some mutual funds do community investment like Community Capital Management’s CRA Fund and Access Capital Strategies. Pretty much all of our clients get some exposure and don’t even know it. Fixed income in community investments is very competitive.
Also, understand the culture of the situation and the politics. Be positive with trustees and talk about how admirable it is that they are for working with the university. Talk about how from an investment perspective you need to think about the future of the world your students are graduating into, a conversation that can lead to a more conscious set of decisions.
Also, students might remind them of the LA Times investigative report on the Bill and Melinda Gates Foundation where they were invested in companies causing the diseases where they were building clinics. There was such a cognitive dissonance.
REC: Anything you’d like to add?
SS: More and more clients are interested in the advocacy that we are doing. They are interested in what we’re doing to poke and nudge companies to be better corporate citizens and to identify companies embracing sustainability. From a client perspective there does seem to be a shift towards a social improvement type of strategy and there is more recognition that companies have a huge impact on quality of life.
I see a massive erosion of trust in both government and companies. People have turned to us to manage money in a different way. If you have board members and people who are mistrustful, you can use that approach. You can also look at qualitative analysis of impacts, behaviors, and culture. Sometimes research is a way to open eyes and open minds.
