Every where I look these days, it seems I'm reading something about "high impact" this or "high impact" that, the true way to invest for impact, and "not to be confused with socially responsible investing." I must say, I am beginning to feel steamed. I'm here to set the record straight.
What makes a manager a specialist in socially responsible investing? It's three things. One, they select investments by applying standards that include impacts on people and the planet. Two, they are activist owners and engage in issues either directly through filing shareholder resolutions or less directly through policy work. Three, they add investments into highly impactful entities such as community development loan funds for farmers, micro-credit funds and start-ups in positive change fields.
This has been the definition of the socially responsible investing field since 1986, when I wrote Ethical Investing. It is obvious who is doing what when applying this lens. Mutual funds like Domini, Pax, and Calvert, for example, all do these three things. Vanguard FTSE Social Index Fund, though it does select investments by applying standards that include impact on people and the planet, it does not do the other two, and thus not what I would consider adequate.
So, I have to ask, what then is so preciously special about the new "high impact" school of investing?
For socially responsible investors, impact starts by changing the dialog. That's what is accomplished by setting standards to what you buy. There was no such thing as a corporate social responsibility report until responsible investors demanded them. Now there are over 4,000 published each year, according to the Corporate Register. There was no pressure on the Securities Exchange Commission for greater disclosure until socially responsible investors raised the issue. There was no baseline ongoing corporate social impact being studied until the research needed by my field created it. Applying standards to what we buy has literally changed laws; it has changed corporate behavior; and it has done this globally. And that's only the first standard.
On the activist owner front, Domini Social Investments has filed over 200 shareholder resolutions at companies, resulting in improved conditions for hundreds of thousands, perhaps millions of persons. We led the charge on sweatshop monitoring, spending five years in meetings with leading retailers to come to a set of powerful guidelines to protect the voiceless. We led the charge on persuading top coffee importers to give preference to fair trade coffee and chocolate, lifting farmers from poverty. It's a long list, and I'm proud of the impact, but that's just from the second standard.
As to the third standard, most similar to what today is being called "high impact investing," we invest directly in communities by purchasing certificates of deposit from credit unions working with rural poverty in the Mississippi delta, with immigrant populations in our cities and with cooperatively owned day care centers run by women. As an individual and as a money manager and private trustee, I have driven more into these sorts of investments than all but a handful of larger institutions.
So please, "high impact investors" who are so eager to distance yourselves from us socially responsible invertors, don't just presume that you are doing more than we all have for the last 30+ years. At least, not until you have a case to make. I don't mind that you have ambitions to be helpful, but if you want to have a high social impact in the world, join us. We have been working for sustainability and economic justice since our inception. We believe that every investment has a moral implication. We are not, "high impact" lite. Rather, doing just "high impact" is half-impact.