Atlanta Mayor Kasim Reed led a presentation on his city's initiative to retrofit a wide range of commercial, public and residential buildings in a 400-block area of downtown that proved the highlight of a gathering of investors, pension fund managers, business, labor and community leaders at Heartland Capital Strategies' first Responsible Investment Forum.
The forum, sponsored in collaboration with the Blue Green Alliance, addressed the need for greater alternative investments to sustain the real economy, an investment arena largely abandoned by Wall Street.
In contrast, the responsible investment specialists attending the forum were characterized by Heartland Managing Director Thomas Croft as "a community interested in forging a new alternative path for responsible investment in manufacturing, community development and clean economy growth," an approach that Heartland brands as "doing well by doing good."
Mayor Reed urged forum attendees to consider investing in the Better Buildings Challenge, the city's retrofitting initiative to create a more sustainable economy, improved air and water quality and job growth.
"Capital goes where it is needed and stays where it is well cared for," he told the gathering. Aided by staff of the Better Buildings Challenge and the Emerald Cities Collaborative, the Mayor provided a comprehensive presentation on how investments in the project would be managed to minimize risk.
Many of the participants in Heartland's one-day forum committed to further conversations to discuss possible investments in the Atlanta project, which hopes to put many of city's 57,000 unemployed union tradesmen to work in the massive undertaking.
Financing a Sustainable Economy
The Atlanta forum was the first of four being sponsored by Heartland Capital Strategies in conjunction with the Blue Green Alliance's Good Jobs, Green Jobs regional conferences. Inspired by the United Nations Principles for Responsible Investment (PRI), Heartland promotes investments and projects essential for revitalizing America's productive economy and community prosperity.
Heartland's commitment to responsible investment is based on the United Nations ESG principles, which call for investors' attention to environmental concerns, social well being, including respect for labor rights, and the character of corporate governance, as well in addition to rates of return.
Throughout the day, forum presenters shared innovative ideas on how responsible pension investors and fund managers could maintain high rates of return while directing alternative investments toward domestic job creation in energy, manufacturing, housing and infrastructure, clear social benefits that derive from responsible investment.
Craig Overmyer, Managing Director of Hopewell Ventures, cited the complex challenges facing efforts to fund innovative alternative investments that stimulate job growth. He characterized sustainability as creating "an eco-system that keeps going," which requires the considerable task of identifying gaps in the market and finding solutions for that gap.
"You have to identify a problem and the constituents so that you cover all your bases before the decision on the investment arises. You have to match returns of competitors and then you must lead by finding other constituent leaders" willing to advocate for ESG principles.
To overcome the fits and starts in regulatory and tax policy that hinder alternative investment, he added, "We need a national energy policy to establish continuity and consistency in policy and regulation."
Jennifer Von Bismark, President of Towpath Renewables added that the current U.S. map of states with Renewable Portfolio Standards "looks like 29 different countries," which she said made it especially difficult for pension funds in particular to the long-term viability and return on potential investments.
Ups and Downs of Investing Responsibly
Landon Butler, who founded the $5 billion Multi-Employer Property Trust (MEPT) in 1982, offered a compelling overview of the explosive growth in construction investment trusts, financed by construction union pensions, since passage of the 1968 Fair Housing Act.
While working as President Carter's deputy chief of staff, Butler said he gained a great respect for collective bargaining's role in securing pension savings that represent a substantial source of investment capital for nourishing the nation's job growth and retirement security.
"Somehow the social component has gotten lost in the process over the years," he concluded, "at a time when there is a desperate need for jobs. We're not sensing that [pension] trustees are looking at job creation, despite the substantial record of pension fund investments in creating them." He allowed, however, that "trustees are shell shocked because of the downturn."
Scott Woolsey, Managing Director of the Labor-Management Fund Advisors, added that trustees are not even recognizing the ancillary jobs that projects governed by ESG principles create. "It's all 'returns, returns, returns.'"
Innovative Leadership Crucial
Ted Chandler, Chief Operating Officer of the AFL-CIO's Housing Investment Trust, noted that public funds have much less focus on targeted investment than in the 1990s, offering that "layers of gatekeepers" preempt focus on the ESG principles. Gatekeepers, such as investment consultants, "identify with the management perspective," he said. "The real issue is leadership by trustees of pension funds in setting the agenda for investments."
"Some consultants get it," explained Mark Austin, Managing Director of North Sky Capital, "though they're in the minority. Many consultants clearly don't understand all the specific concerns of trustees. They're focused on return without an understanding of all the other issues trustees have in their laps."
Dan Givens, a pension administrator for the Miami Firefighters union, asserted that "trustee education is the whole deal, getting our people to get comfortable with their decisions, " a daunting challenge, he averred, as the tenure of trustees in Florida is only three to five years, "so there's little continuity."
Trustee Training Crucial
The call for more substantial, ongoing training to strengthen trustees' leadership role in advocating for ESG principles was voiced repeatedly throughout the forum. "One of our missions [in the International Association of Firefighters] is to educate trustees," Givens said. "You have to have a platform for them to make the case for socially responsible investments. Build it and they will come."
Bob Eason, former Vice President of the Savannah, Georgia local of the International Longshoremen, added that "it all gets back to education, and trustee education is now entirely captured by Wall Street. "
Deborah Nisson, Vice President of ULLICO added that fund managers need to understand that "public-private partnerships is not a four-letter word." For the long-term nature of funds, she concluded, "we need to educate trustees on the value to their constituents and the real economyh of including ESG principles in their considerations. Unions need to make the investment in staff and training."