When your day job is distributing food to people in war-torn or disaster-affected areas, implementing projects that lift communities out of poverty or denouncing human rights violations, the last thing on your mind is where your retirement money is going. Yet without knowing this, your pension might be supporting corporations that perpetuate the wrongs you are fighting.
There’s growing recognition that if you truly want to build a more sustainable and equitable world, you need to know how you invest your money. But are staff in the international development and advocacy sectors aware of this?
“In my 25-plus years of experience, no employer has ever explained retirement investment options,” says Janet Riessman, a global health and women’s rights advocate. “They simply hand me a folder with complicated information in it about my choices and have me fill out a form. I was not made aware of any responsible investment options.”
Kassie McIlvane, an NGO worker based in Nairobi, says: “I was once asked about the level of investment risk I was willing to take but never about corporate responsibility or ethics. Yet, if an organisation is truly to be rights-based, they should pay attention to this.”
A UN worker now based in east Africa says he “always assumed” that the UN pension fund was considering socially responsible investing but never inquired, adding, “shame on me”. The UN launched the Principles for Responsible Investment Initiative in 2006, but anecdotal evidence suggests that not many employees know about it.
While it is safe to assume that most aid workers and social activists want to do the right thing when it comes to their own investments, many do not have all the information they need to make smart financial choices that also have positive societal impact.
“Teaching employees about their 401K [US pension plan] is like teaching pigs how to fly,” says Rob Thomas, president of SocialK, a US investment firm specialising in bringing environment, social and governance (ESG) criteria to retirement plans. “Getting the average employee to pay attention to their retirement funds and to ask the right questions remains a challenge because of an overall lack of financial education and the perception that the process is overly complex, when it is actually not.”
Yet sustainable, responsible and impact (SRI) investing is a rapidly growing discipline. Data released by the Global Sustainable Investment Alliance found that the global sustainable investment market has continued to grow both in absolute and relative terms, rising from $13.3tn (£8.7tn) at the start of 2012 to $21.4tn at the start of 2014.
The recent decision by Guardian Media Group to sell all the fossil fuels assets in its £800m investment fund has sent a signal to many corporate entities to pull out of oil, coal and gas companies. And the Guardian’s Keep in the Ground campaign is putting pressure on some of the world’s largest charitable funds to divest.
“There is now ample opportunity for any mission-based institutions to align their investments with their missions,” says Lisa Woll, chief executive of US SIF: The Forum for Sustainable and Responsible Investment. “Most employers respond to demand so employees who want to see sustainable investment options in their retirement plans should make that known and must educate themselves.”
Generally speaking, campaigning organisations such as Greenpeace, Oxfam, Amnesty International and Friends of the Earth are the most forward thinking when it comes to managing their institutional assets and employee retirement plans. Friends of the Earth US not only provides multiple SRI pension fund options to its employees, it pre-screens the fund holdings, thus ensuring that the company retirement match is invested in funds aligned with its values.
“And we go even further with our organisational investment strategy,” says Erich Pica, president of Friends of the Earth US, “by building our own index and knocking off any company that is not aligned with our mission.”
Interestingly, even when SRI fund options are made available to NGO staff, only a fraction seem to choose them. At Human Rights Watch US, only 26% of employees opt for one of the three SRI funds available to them. At Amnesty International US and Care UK, only about 19% of employees invest in the one SRI fund available to them.
The scenario is different if the default retirement option is an SRI fund such as at ActionAid UK. “Less than 5% of our employees opt out of the SRI fund,” says its head of media relations, Jane Moyo. “Internationally, we operate an ethical investment policy and our red lines extend to tobacco, armaments, pharmaceuticals with a research and development function, extractives, tropical timber and pornography.”
Some NGOs engage in shareholder activism, a tactic where campaigners buy shares to influence change in the corporation. Amnesty International US, for example, has bought stock in ExonMobile, Chevron and Dow Chemical. “As an organisation we have been at the forefront of shareholder activism to promote human rights and corporate accountability,” says Simon Billenness, co-chair of the business and human rights group. “We find this to be an additional tool for moving forward the rights agenda within the private sector.”
Aid workers and social activists may also fail to choose SRI funds due to the lingering perception that fees are high and performance is low. “But this view is wrong,” says Adam Kanzer, managing director of Domini Social Investments, an SRI investment firm whose motto is “we believe it is possible to make money and make a difference at the same time”.
According to Rick Perera of Care US, the aid community can help propel the responsible investing by demanding that the firms offer ethical options to their employees. “But sometimes the choices we confront are more subtle and the impact more cloaked. We need to dig deeper to find out the true cost of investment choices that are being made on our behalf,” says Pereira. “It means reading more fine print, making more demands, and sometimes being willing to accept apparently smaller returns, at least over the short term, in order to live with our consciences.”
But NGOs should also question putting all the responsibility in their employees’ hands.
“A future option for mission-driven NGOs would be an employer-directed retirement plan versus an employee directed retirement plan,” says G Benjamin Bingham, founder of 3Sisters Sustainable Management. “This would allow for a more customised and professionally managed portfolio aligned with the values of the organisation and those of its own employees.”
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