One of the biggest trends in investing today is socially responsible investing, whereby investors consider not only monetary return on their investment, but also the social return. With institutions from Wall Street firms to universities like Oxford and Cambridge engaging in socially conscious investment, and an increasing percentage of Americans expressing interest in supporting socially conscious companies, this trend is becoming increasingly important for nonprofits and for-profits alike.
On Tuesday, May 19th, the Center for Civic Innovation hosted a discussion on sustainable investing and social enterprise. The conversation was led by Scott Sadler, President and Chief Investment Officer of Boardwalk Capital Management, and Marjy Stagmeier, Managing Partner at TriStar Real Estate Investment.
Scott kicked off the discussion with a presentation about the work he does with Boardwalk, which helps investors maintain competitive, socially responsible portfolios. These portfolios take into account environmental, social and governance factors in determining which companies to invest in. As Scott pointed out, impact investing, as he called it, is about doing well while doing good. He argued that doing good, or having higher social returns on investments, doesn’t necessarily have to come at the cost of doing well, or having higher monetary returns. In fact, Scott showed that companies that care about their social impact actually outperform companies that don’t:
Many people don’t believe it's possible to get strong investment returns while focused on sustainability, but it’s actually proven to work. Through Boardwalk’s approach of not only investing in socially responsible mutual funds, portfolios, and bonds—the “dull stuff,” as Scott called it—but also sectors like organic farming and renewable energy—the “cool stuff”—the company is able to create individualized investment plans that not only reflect its clients’ values but also have a high return. Scott also encouraged investment in companies where women are better represented in the leadership team, since they tend to perform better. He said he hasn’t researched whether racial diversity in leadership has a similar positive impact on a company’s performance, but that there is also a demand for investing in companies that value racial diversity.
After Scott, Marjy Stagmeier made a presentation about the work she is doing with TriStar Real Estate Investment. A long-time real estate investor, Marjy began to do more research into the demographics of her tenants and was surprised to find that her average tenant was a single parent with 2-3 children working for less than $10/hour. Out of a desire to help, she began investing in after school programs for her tenants' children. She was surprised to find that not only did this help her tenants and boost test scores at the nearby schools, it also helped her bottom line.
In 2013, at one of her properties in Clarkston, Marjy began working with the after school program and started a community garden. Through the nonprofit Star-C, she also started a relationship with Emory’s School of Public Health to provide affordable healthcare to residents of the apartment complex. The effects were immediate: in an area with significant poverty and a high refugee population, local schools improved, crime went down, and the tenants’ health improved. She also received a return of 12 percent on the apartments. As an important component of her success, Marjy emphasized community ownership, with community members volunteering, overseeing, and investing in the apartment complex and the property manager and police living on site. Her ultimate goal is for tenants to move out and buy their own house, which some are already starting to do.
After Scott and Marjy finished their presentations, they participated in a fascinating panel discussion moderated by CCI Operations and Strategy Director Elyse Klova. During the discussion, both Scott and Marjy emphasized the value of using an organization’s board of directors effectively not just as resources but as advocates. Scott also stressed the importance of not dipping into your 401k as a source of capital in the early stages of one’s organizations, making the point that scarcity is a great teacher: if you have a lot of capital early on, you’ll most likely squander it.
One of the many important takeaways from this discussion was that for-profit companies face increasing pressure to demonstrate that they’re having a positive social impact, while nonprofit organizations face increasing pressure to demonstrate high return on investments and to professionalize. This could be addressed in a later event at the CCI, so stay tuned!
For more information on the work Scott and Marjy are doing, check out the websites of Boardwalk Capital Management and TriStar Real Estate Investment! For more information about impact investing, check out these articles:
- Complement Your Giving With Impact Investing (The Huffington Post)
- A New Inning For Impact Investing (Forbes)
- The Triumphs and Tribulations of Impact Investing (The Huffington Post)
- Impact Investing Grows, But There's Still A Dearth Of Deals (Forbes)
Thanks to everyone who came out and made this event a success!