Nearly 10 years ago, 360 was chosen by Pax World, a mutual fund company that was instrumental in the emergence of socially responsible investing in the 1970’s, to help them draw attention to how they’d rather be known – as a skilled practitioner of a little used category name at the time, “sustainable investing.”
Back then, no one was a more outspoken champion of the practice than Joe Keefe, Pax World’s President, CEO and charismatic leader. At an annual gathering of the SRI clan at a trade conference that was then known as SRI in the Rockies, Joe chastised his counterparts for drawing attention to what they didn’t invest in – e.g., tobacco, liquor and firearms – rather than what they did invest in – companies that meet strict environmental, social and governance (ESG) standards. He believed the future of progressive asset managers like Pax World lay in their ability to recast their approach so that it was seen as contributing positively to investment performance, and he was outspoken about it.
360 partner Nick de Sherbinin wrote about this in a blog three years ago, From SRI to SI: changing a mutual fund category by losing a letter.
One of the first things we created for Pax World was an ad aimed at financial advisors with the headline, “Who’s going to bring up sustainable investing first, you or your clients?” I think it’s fair to say that “sustainable investing” hadn’t appeared in many ads before that one ran. For years after that, everything we built for Pax – advertising, collateral, sales aids, webinar decks, emails, etc – sought to convey why sustainable investing was, as Joe liked to say, “a better, smarter way to invest.”
Fast forward to this week’s Barron’s (10/10/16), which in its quarterly Mutual Fund section features its first annual performance ranking of the “Best 200 Sustainable Funds.”
What’s surprising to me is how few of the 200 large caps funds on the list are run by companies, like Pax World, that explicitly claim to be sustainable managers. In fact, just 19, or fewer than 10%, qualify as that (and none, by the way, are Pax World funds). Most of the rest are managed by companies you won’t find on the website of US SIF, the Forum for Sustainable and Responsible Investing.
Recognize any of these names – Fidelity, American Funds, Vanguard, T. Rowe Price, Franklin, Pioneer, Columbia, Dodge & Cox, MFS, JP Morgan, John Hancock, Invesco, BlackRock, Wells Fargo, Goldman Sachs, Natixis and Nationwide? Of course you do. What investor doesn’t? Those are the kinds of names that appear on the Barron’s list.
What does it mean?
Well, as Barron’s writes, “What is perhaps most interesting is how mainstream sustainable investing is becoming – so much so that many funds that don’t wear that label still embrace the practice. Major fund purveyors…are already using environmental, social, and governance factors in creating their portfolios.”
This is good news for both investors and all of us generally. For investors, it means we now have access to a larger roster of mutual funds informed by the principles of sustainable investing. For all of us, it means publicly traded companies are being held to higher standards, and that can’t help but affect business practices that directly impact things like the environment, employee diversity and empowerment, and management activities.
Thank you, Joe.