This Week in ESG and Impact Investing

At the beginning of 2020, $16.6 trillion in US-domiciled ESG assets were held by 530 institutional investors, 384 money managers and 1,204 community investment institutions. Since 1995, the US SIF Foundation finds that sustainable investments have increased at a compound annual growth rate of 14 percent. This data proves that the financial landscape is rapidly moving toward impact investing. As a student of finance curious about the markets and how I can make a difference, I turned to the US SIF FORUM 2021 to learn more.  Over the week of June 14th - 18th, 2021, I attended the US SIF FORUM 2021 as a Peter DeSimone Scholar. The Forum for Sustainable and Responsible Investment conference brings together leaders of the sustainable and impact investing community to learn about approaches, trends and policy developments in the field.  This year’s conference featured 60+ speakers in 25+ sessions with topics ranging from racial justice to ESG disclosure. Additionally, the event included many

For many majority-owned institutions, the concepts of "monetary gain" and "social good" have long been regarded as mutually exclusive. We see this most directly in the recent attempt by the Labor Department to shut down Environmental, Social and Governance (ESG) investing : “Private employer-sponsored retirement plans are not vehicles for furthering social goals or policy objectives that are not in the financial interest of the plan,” said Secretary of Labor Eugene Scalia. But this ignores the facts: investing has always been used to further social goals. Claims that it is difficult to determine the worth of "ESG" or "Social Investments" have not prevented majority-owned institutions from using these factors while making decidedly "anti-social" investments. For example, on July 24, 2020, major "investment" bank Goldman Sachs was fined $3.9 billion by the country of Malaysia to settle criminal charges that the bank conducte

Citigroup operates a big foundation that focuses on philanthropic priorities such as workforce development, financial inclusion and sustainability. Now, the banking giant is building on these commitments by launching a venture capital fund that will invest in private-sector firms that are developing solutions to improve worker training, increase consumers' access to the financial system, improve access to transportation, health care and affordable housing, and address issues related to sustainable energy and water use. Citi is calling the impact fund the largest ever involving a bank using its own capital. Investments could be as large as $10 million in more established companies, said Ed Skyler, Citi's vice president for global public affairs. Citi is also setting a portion aside for earlier-stage seed investments. Seed funding will be allocated exclusively to investments in businesses led or owned by women and minorities. The bank plans to manage the fund largely in-

Black businesses with socially-driven concepts can now possibly attain some new capital from Citi. See:  https://www.blackenterprise.com/citi-launches-150-million-fund-to-support-minority-businesses-including-black-firms/

With the record levels of profits banks have made in 2019, Citigroup is responding by allocating a portion of this money for investments in companies with positive social impact. Citi announced they are starting a $150 million Citi Impact Fund , which will also help fund minority and women owned businesses. Businesses of this nature represent great potential economic growth for a number of reasons. First, minority and women owned businesses are underrepresented in overall business activity due to structural flaws in the banking system. I believe there is great demand for them. Given the reality that lack of access to credit is one of the biggest hurdles these entrepreneurs face, the Citi Impact Fund could help address this issue. Furthermore, investing in businesses that promote positive social impacts would likely be beneficial to the average citizen, considering these firms attempt to help provide better infrastructure, access to information, and sustainability. In conclusi

These days, it seems that sustainable investing is a global trend. In this context, Citigroup seems to want to join the trend of the times through impact funding. I think it is important to decide which business to invest in using criteria related to the positive impact on society such an investment may have. The question seems to be whether to place the selection and evaluation standards totally on the potential to succeed financially or on equality related factors such as status of the business owners as minority or women. From a purely economic point of view, it would seem to be much better to put full importance on the potential to succeed financially. But we should also take the global trend toward consideration of equality and sustainable growth into account. Though Citigroup plans to invest in minority and women-owned businesses, one concern is how can those business keep growing and move forward to the mid-long term. I think a good solution to this concern is to utili

As Citigroup establishes its $150 million  Impact Fund , it takes aim at the issue of funding minority-owned businesses. A fund like this one should look to create a successful equity financing vehicle in a sector with few sources of financial support. Banks have extended less credit to small firms than they did prior to the Great Recession. According to a Richmond Federal Reserve study, 51% of black-owned small businesses experienced challenges in the availability of credit, compared to 30% of white-owned small businesses. (1) This trend is also seen in the size of loans received. A smaller share of black, hispanic, and female-owned businesses tend to receive loans over $100,000 and they are also more likely to use owner loans than white and white-male owned businesses. (2) This points to the larger trend that, while black-owned businesses are the most likely to apply for bank financing, they are the least likely to receive full funding, with only 31% receiving the whole amo

Banking giant Citigroup recently announced the launch of the  $150 million Citi Impact Fund . (We have long been concerned with Citi, having filed an October 1998 petition in the US Court of Appeals for the DC Circuit (Case Number 98-1459) concerning the merger that created the bank. In our appeal, we noted that our economic models showed evidence that growing financial market malfeasance greatly exacerbated risks in financial markets, and that this would lead to a financial downturn.) Citi now claims it “will make equity investments in ‘double bottom line’ private sector companies that have a positive impact on society.” These investments in U.S.-based companies (not individuals) will be made using the bank’s own capital. Citi states that it is looking for innovative companies in workforce development, financial capability, physical and social infrastructure and sustainability. Citi has committed to providing seed funding for businesses that are led or owned by women and minor

The following is a review of a webinar on Environmental, Social and Governance (ESG) Investing presented by Franita Neuville, CFA.  To set the stage based on a Greenwich Associates 2018 Future of Investment Research Study, 50% of CEOs, portfolio managers and investment analysts surveyed expect to decrease reliance on traditional investment bank research and to rely more heavily on alternative (ESG and other) data in the future. In the Private Equity Responsible Investment Survey, 2019 , the top issues impacting investment decisions were business ethics, bribery and corruption, with 89 and 97% of surveyed private equity investors saying this is a concern when exploring and implementing investment approaches. The least important issues in the private equity survey were responsible marketing and volunteering, with survey responses of 29 and 13% respectively. Diversity and community investment were also low on the list of issues at 41% and 37%, respectively. Top Barriers t

September 2018 - 10 Questions William Michael Cunningham on Impact Investing, Blockchain, and Crowdfunding Interview by Carly Schulaka WHO: William Michael Cunningham WHAT: Economist, impact investing specialist, founder of Creative Investment Research WHAT'S ON HIS MIND: “Any finance professional in the U.S. should learn how to create a blockchain.” 1. You are an economist, an inventor, and an impact investing specialist. I’ve heard you say: “True innovation happens in a way that is independent of monetary returns.” How does this statement influence your work? It’s really about finding an interesting problem and applying financial technology to solving that problem or to dealing with that problem. You know, the people who invented the alphabet didn’t do so to make money. They had an interesting problem—communication on both a local and a grand scale—and if you were to calculate the social return for the invention of that technology or technique, it’s almost infinite. S

Journal of Financial Planning. September 2018 - 10 Questions ​William Michael Cunningham on Impact Investing, Blockchain, and Crowdfunding Interview by Carly Schulaka WHO: William Michael Cunningham WHAT: Economist, impact investing specialist, founder of Creative Investment Research WHAT'S ON HIS MIND: “Any finance professional in the U.S. should learn how to code in blockchain.” See:  https://www.onefpa.org/journal/Pages/September-2018%20-%2010-Questions.aspx

WASHINGTON - May 18, 2018 - PRLog -- William Michael Cunningham will moderate a panel on the Future of Impact Investing at the Blockchain for Social Impact Conference 2018, to be held on Friday, June 1, 2018. The United States Institute of Peace in Washington, DC will host the conference. The Conference is being organized by the ConsenSys Social Impact team, and will focus on "areas where blockchain technology could be instrumental in revolutionizing existing systems and making a significant impact." The Conference will focus on four major global challenge areas: Agriculture, Infrastructure, Democracy, and Refugees. Conference organizers noted, "As blockchain becomes the shared infrastructure for more and more people to collaborate with one another, participate in global marketplaces, access essential services, and protect their personal data and assets, it is the responsibility of the larger tech community and governments around the world to make sure this tec

Impact Investing Forum- Hilton West Palm Beach, West Palm Beach, FL- April 22-24, 2018 www.opalgroup.net/trk/iifb1825.html The Impact Investing Forum will look at many of the asset classes that encompass this space. We invite you to join us and meet top influencers, experienced investors, money managers, and service providers that are leading the charge in this ever growing space. Themes of defining impact investing, portfolio construction, asset class opportunities, and the role of the investor are just a few of the stimulating topics to be covered at this event. Exclusive discount for readers of this blog - get 15% off. Discount Code: CIIF2018

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