In honor of National Pet Day 2019, our Chief Morale Officer was featured in RIA Magazine! He gave a great interview, and we invite you to check him out! He’s a VERY good boy, and you can meet him any time by booking an appointment using the “Schedule an Appointment” link in the bottom right corner of this page.
Here’s to all the pets that brighten our days, with a special message to boost your morale on a dreary Monday:
The Federal Reserve bank of San Francisco recently published an extraordinary research paper acknowledging the impact of climate change. I encourage you to read the entire thing, but I’ve extracted a few points here for discussion.
Take this statement from the preamble to the paper:
“In coming decades, climate change—and efforts to limit that change and adapt to it—will have increasingly important effects on the U.S. economy. These effects and their associated risks are relevant considerations for the Federal Reserve in fulfilling its mandate for macroeconomic and financial stability.”
If you’ve been following the news around climate change, this will not come as a surprise. The facts of the matter are not in dispute. We have already seen record numbers of insurance claims due to climate instability, and we expect this trend to continue.
The more troubling aspect of the report is this:
“On top of these direct effects, climate adaptation—with spending on equipment such as air conditioners and resilient infrastructure including seawalls and fortified transportation systems—is expected to increasingly divert resources from productive capital accumulation”
This is why we use Environmental, Social, and Governance (ESG) analysis in our investment portfolios. We hope that by looking at the ways companies make decisions, and by avoiding investing in companies that score poorly on these metrics, we can build more resilient portfolios.
We must take climate action into our own hands, as policymakers’ hands are tied. The Fed is the most independent branch of the government when it comes to monetary policy, and now we know that they will not act because they can not. This leaves it up to us.
The fed closes the report by admitting that they are powerless to act:
“While the effects and risks of climate change are relevant factors for the Fed to consider, the Fed is not in a position to use monetary policy actively to foster a transition to a low-carbon economy. Supporting environmental sustainability and limiting climate change are not directly included in the Fed’s statutory mandate of price stability and full employment”
It is up to us as investors to understand the risks that climate change poses to our financial goals and the portfolios we build to meet them. How exposed are you to these risks? We’d love to help you find out.
My Partner and I are proud to be Social Entrepreneurs. Therefore, every day we talk about Sustainable, Responsible and Impact Investing (SRI). We also talk about Environmental, Social and Governance (ESG) screening and scoring. More importantly, we talk about managing risk, rates of return, portfolio growth and retirement planning. That’s our business! Making money for our clients in a Sustainable and Responsible way.
All of these subjects come from the same source – STEWARDSHIP! That’s ultimately the foundation of the discussion. We can ask ourselves: “Will future generations have what they need to live a full and productive life in the future?” The answer is evidenced by each of us, every day. The decisions we make in our daily lives tell our story; good or bad. We will follow this truth: If it is to be it is up to me!
How can we do this stewardship thing? First, we must learn about the Circular Economy where there is NO Waste! Second, we should examine the supply chain management of corporations we buy things from. This will uncover hidden problems or harmful behaviors along the chain. The United Nations gives us a very good road map. They created the Sustainable Development Goals. They speak directly to the subject of Stewardship and show us what needs to be solved!
We can also turn to Shareholder Advocacy. This actually FORCES Stewardship when needed! This involves posting resolutions for corporate shareholders to vote on, in terms of continuing or stopping various corporate behaviors. This is the ‘walk softly, but carry a Big Stick’ approach to stewardship. Believe it or not, aberrant corporate behavior can be, and IS, changed every year by shareholder vote, or the threat of a shareholder vote! We can make a difference!
There is definitely a need for an overwhelming theme of planetary stewardship. Fortunately it is built into the SRI/ESG world by definition. I think we should actually start taking credit for it! My first step is to start actually using the STEWARDSHIP word aloud in public.
