We recently held a video panel discussion with experts in the field of education and educational technology, to further explore the topic we first raised in our report Investing in the Future of Work. The Cornerstone team was joined by:
- Susan Cates: Susan is a partner at Leeds Equity Partners. Susan has over 25 years of experience in investment banking, private equity and education leadership. Prior to joining Leeds Equity, Susan was Chief Operating Officer at 2U, Inc., an educational technology company that contracts with universities to offer online degree programs, where she oversaw all product and service delivery operations.
- Sam Caucci: Sam is the CEO and Founder of 1HUDDLE, a workforce training platform using game technology to help organizations better prepare their people for work. 1HUDDLE has impacted people across organizations in a wide array of sectors. Applying an innovative approach to preparing people for the workforce, Sam oversaw the creation of the training game platform, the first game-based platform that transforms the way organizations onboard, train and develop their team members.
- Josh Cohen: Josh is the Founder of City Light, an early-stage investment firm committed to tackling education for underserved communities, the global climate crises, and keeping families safe. Before founding City Light, Josh led direct investments for a family office, worked in venture capital, was a partner in a private debt fund, and was the Director of Business Development for Mobility Electronics. Josh co-founded (and is a Board member of) The ImPact, a member network whose mission is to inspire families to make impact investments more effectively.
The discussion centered on the need for ongoing, lifelong learning, and the different forms that may need to take in order to better enable the workforce of tomorrow (and today, in fact) to better adapt as technology changes and new skills become key to success.
Recently, CEO Erika Karp moderated a panel discussion on behalf of the Jewish Federation of North America (JFNA), an organization that brings together Jewish foundations and non-profit organizations in support of shared goals and values. The panel focused on how foundations can incorporate mission-aligned investing in the endowment portfolios as well as through Program Related Investments. Suzanne Barton Grant from JFNA framed the discussion with an audience poll that revealed that a lack of knowledge among investment committees is a key barrier to adopting mission-aligned practices.
Erika spoke with Joel Wittenberg of the W.K. Kellogg Foundation and Ned Rosenman of Blackrock. They explore the variety of forms mission-aligned investments can take, the intersectionality of issues that can multiply impact, and the challenges of measuring impact.
New York, May 5, 2020 – Cornerstone Capital Group (“Cornerstone”) today announced the publication of its report titled “Investing in the Future of Work.” The report addresses the widening workforce skills gap, identifies investments that may help close the gap, and shares case studies of innovative training as well as skill-building programs. Cornerstone developed this report to discuss:
- Implications of the COVID-19 crisis on the future of work
- The solution to closing the skills gap
- Demographics that are most exposed to automation risks
- Education that will be needed in the future
- Investing to foster access to education
Cornerstone will host a webinar to discuss this topic with experts in the field on Tuesday, June 9, at 2 pm ET. To learn more and to register, click here.
Katherine Pease, Cornerstone’s Head of Impact Strategy, commented on today’s news, “The current global crisis is shining a light on companies that look to the future, have a culture of learning and prepare for the unexpected. While no one knows what the coming years will bring, these forward-looking companies may prove to be more resilient than others that don’t embrace change, training and education. Impact investing, or investing using an ESG lens, may help identify these more resilient companies that can rebound from adversity faster and stronger than others.”
The full report is available for download here.
The future is specialized. The rise of artificial intelligence (AI) is affecting the professional job market in much the same way automation and robotics impacted production and service jobs over the past decade. The current turmoil in the global economy may temporarily slow the pace of change, but could trigger accelerated adoption of AI as economies recover and companies seek to reduce reliance on personnel. The question remains: As technology advances and the required workforce skills change, will there be enough skilled workers to fill those future jobs? How can workers acquire the skills needed in the new paradigm?
Rethinking education and training. The U.S. employment market pre-pandemic was characterized by millions of unfilled jobs along with a pool of underemployed or “discouraged unemployed” who had given up seeking work. When economic activity resumes, this dynamic will still exist and may in fact be exacerbated by ongoing social distancing and companies’ ramping up focus on technological solutions to business challenges.
What can investors do to help close the growing skills gap? Reskilling and upskilling may provide the answer to the current and future employment skills gap. We have identified a series of funds that invest in practical solutions to help train, reskill and upskill the workforce of today and the future. Some of the funds focus on improving the skills of young people just entering the workforce, and some provide lifelong learning needed to adapt to the rapidly changing economy.
In this report, we address the widening workforce skills gap and identify the socio-demographic groups that may be most exposed to changing technology such as automation and robotics. We identify specific investments which may help close the widening skills gap. We also share case studies of innovative training and skill-building programs.
Download Investing in the Future of Work
We are pleased to invite you to a webinar to discuss the Future of Work with experts in the field on Tuesday, June 9, at 2 pm ET. The discussion will focus on investment opportunities that promote practical solutions to help train, reskill and upskill the workforce of today and the future. Register here.
The COVID-19 pandemic and the corresponding uncertainty in the financial markets necessitate a different approach to our Quarterly Market Update and Outlook. Importantly, COVID-19 is a health issue first and an economic issue second. In this report we highlight:
- Financial markets dislike uncertainty. We believe volatility will persist until the virus is contained globally or a medical solution (e.g., a vaccine) is developed.
- We recommend investors take a long-term view of the markets, and not focus on day-to-day volatility. This is a short-term shock to the system, not a structural issue as occurred in 2008. With a long-term view in mind, we are not changing our recommended asset allocation.
- The COVID-19 crisis and its disruption to our society and our prevailing modes of individual behaviors help to underscore the core tenets of impact investing:
- A consideration of our collective environmental and social well-being;
- a deep understanding of an investment’s positive or negative impacts;
- and sound corporate governance and transparency.
In Cornerstone’s view, following these principles will reward the long-term investor.
While we expect more evidence to emerge, we cite a few examples here that underscore the importance of investing with an impact lens:
- Governance in the public arena and private sector — in the form of leadership, planning, disciplined execution and adherence to safety protocols — is on full display as a differentiator in the consequences of the health crisis and its economic fallout.
- The underperformance of the fossil fuel sector, which predated this crisis, will likely continue. We can expect more investors will seek to reduce risk in their portfolios by implementing carbon-free investment strategies.
- People of color are being disproportionately impacted, both physically and economically, by the pandemic. Disproportionate impacts have also been recorded among poor and/or rural populations regardless of ethnicity. Demand for investments to promote greater social justice and reliable access to basic health care, nutrition and other basic services have already been heightened at the national and local levels.
We recently hosted a second discussion on the near-term impact and longer-term implications of the current coronavirus pandemic. Cornerstone Managing Director Alison Smith moderated a Q&A session with CEO Erika Karp and CIO Craig Metrick, based on questions submitted by attendees. The dialogue focused on asset allocation, implications for various sectors and asset classes, and the role of environmental, social and governance analysis in crafting resilient portfolios. We hope you find this replay helpful, and welcome your feedback at email@example.com or via our website Contact Form.
NEW YORK, March 24, 2020 – Cornerstone Capital Group today announced the addition of two seasoned professionals, Glen Macdonald and Shahnawaz Malik as Managing Directors and Senior Investment Advisors. Both bring extensive experience in the impact investing, capital markets, and investment advisory fields, with proven track records of providing innovative guidance to clients. Both Glen and Shahnawaz will report to Craig Metrick, Cornerstone’s Chief Investment Officer.
Erika Karp, Founder and CEO of Cornerstone, commented on today’s news, “We are delighted to welcome Glen and Shahnawaz to the team. Glen and Shahnawaz are recognized leaders who share our commitment to catalyzing the flow of capital toward a more sustainable and inclusive world on behalf of our institutional and family clients. In addition, this expansion of our team will ensure that Cornerstone continues providing clients with exceptional guidance as we continue to grow.”
Prior to joining Cornerstone, Glen Macdonald was a Managing Director at Bronfman, Rothschild, LLC and a Senior Vice President – Institutional Client Advisor at U.S. Trust. Earlier in his career, Glen was a Principal at a private equity firm, and a Partner at PwC’s management consulting unit. At PwC, he advised corporate and venture clients on business strategy, mergers and acquisitions, turnarounds, operational improvement and financial reporting. Glen leads the Wealth & Giving Forum, an organization he co-founded in 2014 that promotes values-aligned capital allocation among families who seek positive social and environmental outcomes.
“Cornerstone’s mission, depth of expertise and full alignment with my views are what attracted me to the firm,” stated Glen. “Along with the entire Cornerstone team, I believe that environmental, social and governance (ESG) factors are critical components in understanding a security’s true value and constructing a sound investment portfolio.”
Shahnawaz Malik was previously a senior banker at Standard Chartered, where he provided advisory solutions to high-net-worth & family office clients, foundations, and endowments. Prior to Standard Chartered, Shahnawaz worked for Barclays Wealth & Investment Management in London and Hong Kong, holding multiple roles across investment advisory, portfolio management and business development. Additionally, Shahnawaz is a Trustee of the Nomad Academy Foundation, a sports education charity that delivers mentoring, healthy lifestyle, and sports activities across some of the most impoverished regions in Asia.
“It’s an exciting time to join a Cornerstone, a firm dedicated to impact investing, as the move toward impact strategies continues to gain momentum throughout the financial services industry,” Shahnawaz stated. “I look forward to leveraging my advisory background to provide council to our clients with the goal to make impact investing a mainstream investing strategy.”
On March 19, 2020, Cornerstone Capital Group held a conference call addressing concerns about the current coronavirus pandemic and its impact on the markets, the economy, and importantly, the changes in how we think about the infrastructure of our society over the longer term. Cornerstone’s Erika Karp, Craig Metrick and Michael Geraghty were joined by two equity managers on the Cornerstone platform: Cathie Wood of Ark Investment Management, and Garvin Jabusch of Green Alpha Advisors. The full call replay can be accessed here.
Managing Portfolio Risk Through Integrated Analysis
The participants on the call focused on the benefits of integrating environmental, social and governance (ESG) factors into the investment process in an effort to de-risk long term portfolios and identify critical growth opportunities. Both Ark and Green Alpha look at multiple risk factors at a systemic level to minimize exposure to threats such as climate change. This extends to investing in methods to address risk — such as pandemic crisis. In their view, by focusing on innovation and the future while considering all stakeholders instead of only shareholders, investors may experience better long-term returns with lower volatility.
Kicking off the discussion, Erika highlighted that “sustainable investing is a proxy for quality. It’s a proxy for innovation and a proxy for resilience. And that is precisely what we need right now.” She asked whether, when we emerge from this current crisis, we would be forever changed:
“We have to think about issues like distance learning, telecommuting, distributed health systems. We have to think about supply chain logistics. We have to think about surge capacity. We have to think about virtual entertainment, emergency service centralization, obviously food safety, water quality, hygiene standards. We have to think about mental health provision. We have to think more proactively and in an innovative way about investing. Going forward to attack these challenges, we remind everyone that impact and sustainable investing is just investing. But a more conscious, predictive way to invest. Impact investing is the new cornerstone of capitalism.”
Michael Geraghty, Cornerstone’s market strategist, discussed the volatility of the markets under the current coronavirus situation. He doesn’t believe the markets will stabilize until the virus is either contained or a vaccination is developed and made available to the public. Michael notes, however, that this is a short-term shock to the system and not a structural one. That’s not to say that this pandemic won’t have a profound effect on the economy or the markets near term. The consumer accounts for 70% of U.S. Gross Domestic Product (GDP). If consumers are staying home and hunkering down, a cut in rates by the Federal Reserve and a payroll tax cut by the Federal government won’t have a strong impact on consumer behavior.
Craig Metrick noted that Cornerstone focuses on long term investment objectives while creating an investment plan which is designed to achieve social and environmental impact. He then interviewed Cathie and Garvin as to their views on the longer-term implications of the current crisis.
Investing in Disruptive Innovation and Strong Governance
Ark Investment Management focuses on investing in disruptive innovation over a five-year time frame. Its five core themes are: DNA sequencing, robotics, artificial intelligence, energy storage and blockchain technologies. Cathie Wood noted that the companies her firm invest in are not typically in any indices. Other managers are selling these names while buying names in the indices, such as the S&P 500, giving firms like hers an opportunity to buy these innovative company stocks at lower valuations. Over the long haul, she believes these investments should outperform older economy names that still dominate the indices.
Garvin Jabusch noted that a recession is already priced into the markets and his firm is looking for companies that will perform well out of the downturn. Bottom-up analysis is key, in his view. He looks for companies that are good stewards of capital, are innovative and create solutions that will make the economy more productive. Green Alpha is a long term buy and hold manager. The firm focuses on innovative companies that can help de-risk the economy such as those engaged in decarbonization, biotech and electrification.
Summing up the discussion, which included a very lively Q&A, Erika noted: “When it comes to ESG analysis, the “G,” governance, is first among equals. Because if we’re talking about a well-governed company, then by definition it is looking at environmental and social issues. And if a company is not looking at environmental and social issues, it is by definition not well-governed. It’s tautological.”
Ark Investment Management and Green Alpha are two of the strategies included in the Cornerstone Capital Access Impact Fund. Click the link to view standardized performance and the Fund’s top ten holdings: https://cornerstonecapitalfunds.com/quarterly-commentary
You should carefully consider the investment objectives, risks, and charges and expenses of the Fund before investing. The prospectus contains this and other information about the Fund, and it should be read carefully before investing. You may obtain a copy of the prospectus by calling 800.986.6187. The Fund is distributed by Ultimus Fund Distributors, LLC. Cornerstone Capital Group is the adviser to the Fund. Investing involves risk, including loss of principal. Applying ESG and sustainability criteria to the investment process may exclude securities of certain issuers for both investment and non-investment reasons and therefore the Fund may forgo some market opportunities available to funds that do not use ESG or sustainability criteria. Securities of companies with certain focused ESG practices may shift into and out of favor depending on market and economic conditions, and the Fund’s performance may at times be better or worse than the performance of funds that do not use ESG or sustainability criteria.
Cornerstone Capital Group Founder and CEO Erika Karp addresses the state of impact investing, offering a clear distinction between impact investing, ESG analysis, and sustainability. No matter what labels are used, someday this will all simply be called “investing.” Note: This video originally appeared on cornerstonecapitalfunds.com.
There’s a quote I love from the famed Jewish philosopher Martin Buber: “All journeys have secret destinations of which the traveler is unaware.”
Twenty-five years ago when I started working on Wall Street, I had no idea that my journey would find me running a firm that’s about impact investing, social justice, environmental impact and governance. I also had no idea that my Jewish heritage and its focus on “Tikkun Olam” — repairing the world — would become so intertwined with my professional mission.
There’s another quote that I find so relevant to my work, from an ancient rabbi, Rabbi Tarfon. He said, “It is not incumbent upon us to complete the task, but neither are we at liberty to desist from it.” In other words, we can all do our share. For my share, I think about capitalism and economics and finance every day, and I think they happen to be really powerful tools. I also believe that impact investing, sustainable investing, is entirely consistent — in fact, it’s the same — as practicing Jewish values.
Tools to Righteousness
For example, consider Noah. I think we all know there was an ark and lots of animals and Noah did something good because God asked him to. But was Noah a righteous man? He was certainly blameless; he didn’t partake in the evil that caused God to plan the flood. But was he righteous? According to Rabbi Tarfon’s teaching, if Noah had no power or resources to do fight evil, well then, he was blameless. If he had the tools and the power, and still stood by, he might be blameless but he would not be righteous. That’s the lesson I take from Judaism and apply to my work. We have the tools. Money is a tool. Investing is a tool. We use those tools to bring about as much good as we can, to be as righteous as we can.
The Social Impact of the Private Sector
We’re in a time of unprecedented challenges. Human trafficking, slavery, suffering persists. California is burning, the Arctic is melting, and a number of keystone species such as bees are at risk of extinction. We know that in the next couple of decades there’s going to be more plastic in the ocean than there are fish right now. Income inequality is creating social stress in many areas of the world.
There’s also some unprecedented good, and here’s where the capital markets come in. We’re seeing asset owners, asset managers, investment banks, accounting firms, regulators, exchanges, ratings agencies — all these pieces of the capital markets — start to move in the same direction at the same time, in the direction of seeking sustainability.
When it comes to investing, we need to move not millions, not billions, but trillions of investment dollars towards environmental and social impact. And you cannot move trillions until you engage the whole private sector, the entirety of the capital markets, the private sector. We need collaboration. We need understanding, we need transparency. And the good part is they’re coming. It’s happening.
Words of Economic Wisdom
Here’s another quote worth citing: “To feel much for others and little for ourselves; to restrain our selfishness and exercise our benevolent affections constitute the perfection of human nature.” Another rabbi?
Actually, that’s an economist: Adam Smith. (I think Adam Smith is poetry.) People typically associate Adam Smith with The Wealth of Nations and the concept of “the invisible hand,” which says that markets will work it out themselves. The only thing Adam Smith forgot with regard to the invisible hand is that there are externalities, negative externalities that companies produce when they do their thing.
Milton Friedman is another economist who forgot something. When a board of directors thinks that their job is to solely to maximize shareholder value, they cite his work. They say, that’s all we can do, that’s what we have to do, it’s a fiduciary obligation. Well, two words that Milton Friedman left out were “long term.” We need to maximize shareholder value over the long term. Friedman also said, “Most economic fallacies come from a tendency to assume that there’s a fixed pie, that one party can gain only at the expense of another.” And so Milton Friedman knew what it could, what it should be like when it comes to capitalism and the capitalist system.
Judaism and Capitalism: The Perfect Pair
When it comes to negative externalities created by business activity, and when it comes to creating value over the long term, Jewish values provide a roadmap. In fact, the best quote of all about capitalism actually does come from a rabbi. The great Hillel said, “If I am not for me, then who will be? But if I am only for me, then what am I? And if not now, then when.” To me, this is the essence of Jewish values, and the essence of how capitalism can grow the pie for all. Now is the time.
Erika Karp is the Founder and Chief Executive Officer of Cornerstone Capital Group. This piece was adapted from a speech delivered at a gathering of Cornerstone clients and friends. You can view the video here.
Human activities are causing a climate crisis, which is increasingly responsible for pushing various species of animals and plants closer to the edge of global extinction. These include “keystone species” that have disproportionately large impacts on their natural environment.
To understand the complexities, we conducted extensive readings of scientific journals and spoke with a wide range of experts, including apiarists (bees), botanists (plant science), herpetologists (amphibians and reptiles), and ornithologists (birds).
Modern extinction has been occurring at an accelerating rate. It’s estimated that, compared to pre human levels, modern extinction rates for all species have been 100 to 1,000 times greater. We highlight ten keystone species, two of which are plants, that are being pushed closer to the edge of global extinction by climate change.
Some investment management firms understand the need to focus on conservation and animal welfare, which, in turn, will contribute to the preservation of various keystone species. We highlight targeted thematic funds as well as ways to promote animal welfare indirectly through a focus on aligning investments to the UN Sustainable Development Goals.
Download the full report Fighting the Sixth Mass Extinction.
Cornerstone Capital Group recently had the honor of hosting a special evening at Congregation Beit Simchat Torah synagogue. CEO Erika Karp was joined by Robert Bank of the American Jewish World Service, who spoke of the close relationship between impact investing and Jewish values. We are pleased to share this replay for those who could not join us for the event.
Civic engagement and community education were common themes at CBCA’s Arts + Impact Investing Forum on Monday, August 19 at the Commons on Champa.
Attended by 100 people, the Arts + Impact Investing Forum was part of CBCA’s quarterly Arts + Industry Forum Series. Each forum in the series explores the unique intersection between the arts and a specific business sector significant to Colorado’s economy.
Expert speakers discussed why and how the field of impact investing should be looking at the creative sector when exploring investment options. There is ripe opportunity to seize on this trend of investing with a #CreativityLens (as advocated by UpStart Co-Lab), which can yield both powerful social and fiscal returns.
Forum speakers were: Phil Kirshman, Chief Investment Officer, Cornerstone Capital Group; Chuong Le, Partner, Snell & Wilmer, Thadeaous Mighell, Curator at Understudy Arts Incubator Space and an Independent Community Outreach Program Consultant; Jana Persky, Opportunity Zone Program Director, Colorado Office of Economic Development; Chris Scharrer, Senior Financial Analyst, Meow Wolf; and Gary Steuer, President and CEO, Bonfils-Stanton Foundation. Emily Winslow, Senior Manager of Investments and Impact Opportunities at Social Venture Circle, moderated the panel conversation and provided an opening presentation to set the stage.
As part of his introduction, Kirshman compared investing to voting. It’s a way to empower people to act on their values and participate in the betterment of our society. Cornerstone Capital Group published a report in October 2018 on the emerging theme of arts and creativity in impact investing.
Mighell echoed the sentiment about community engagement and spoke about his work with BuCu West in Denver’s Westwood neighborhood. He highlighted the importance of hearing from local citizens about their needs and wishes, and to inform development decisions.
Persky further encouraged residents, including those in the arts, to get involved and have a say in revitalization projects in Opportunity Zones. This point is particularly true in rural Colorado, where the creative industries are often leading economic development strategies within their communities. Enacted as part of the 2017 tax reform package, “opportunity zone is a federal tax incentive for investors to invest in low-income urban and rural communities through the favorable treatment of reinvested capital gains and forgiveness of tax on new capital gains” (Colorado Office of Economic Development and International Trade).
Scharrer mentioned that Meow Wolf is also a B-Corporation. With that B-Corp status, Meow Wolf demonstrates their corporate commitment to the highest standards of social and environmental business practices. He also encouraged consumers to seek out B-Corps and support their social causes with your patronage. Once again, an intentional investment, no matter how small, is a powerful act.
There is still a lot of education needed to help investors and funders better understand the creative sector and develop formal tools to facilitate their investments. Winslow told the story of being in a room of investors when Meow Wolf was getting started and seeing their blank and confused stares. She said they didn’t know what to make of this unique investment opportunity as the standard tools for assessing risk and valuation didn’t apply.
Steuer talked about mounting interest in pooled capital to support creative enterprises in Colorado. He mentioned the newly launched NYC Inclusive Creative Economy Fund from LISC. This exciting new LISC fund is “an opportunity for accredited investors to invest in New York City’s affordable, inclusive creative work spaces, fostering 21st Century quality jobs for low- and moderate-income New Yorkers.” But what about Colorado?
As the evening went on, speakers and audience members also touched on creative business models, intersectionality in arts organizations (arts and…) and the need to match the right type of capital to the right type of project. Following the panel, attendees formed small breakout groups or chatted with new connections.
To support this emerging trend of impact investing in creative enterprises, we need more creatives participating in community development conversations, more education for investors on innovative artistic business models, and more awareness and appreciation for the wide-ranging social benefits of the creative sector.
The 2019 Arts + Industry Forum Series is sponsored by College of Arts & Media at CU Denver, Denver Business Journal and Footers Catering. The Arts + Impact Investing Forum was sponsored by Bonfils-Stanton Foundation and RBC Wealth Management, with support from Colorado Association of Funders.
This recap was originally published by the Colorado Business Community for the Arts (CBCA).
Gender Lens Investing 2.0 was originally published by Mission Investors Exchange, one of the foremost impact investing networks for foundations dedicated to deploying capital for social and environmental change. Cornerstone is proud to support MIE’s mission.
In 2001, as a philanthropic advisor, I started on a journey with The Denver Foundation to bring more racial and ethnic diversity to the boardrooms of Denver-area nonprofits. Like many well-intentioned people in the foundation and nonprofit community, we assumed board diversity would address the racial bias that was evident in the programs, management and governance of many nonprofits. In fact, we were so confident in this as a change strategy that we engaged a group of advisors and developed a program plan.
What we quickly found out of course, was that increasing diversity was only one part of the very complex process that nonprofits would need to take if they were to tackle the legacy of structural racism that affects virtually all of our institutions today. So we rebooted our efforts and like many foundations and organizations in the U.S. and globally, The Denver Foundation embarked on a journey to break down biases and assumptions and began working with nonprofit and philanthropic partners to help the whole sector to become more diverse and inclusive, and ultimately, more equitable. During this process it became very clear to us that the complex issues that affect people and communities cannot be addressed without considering their interrelatedness.
When I reflect on the state of the gender lens investing movement today, I am reminded of this journey from almost 20 years ago and the important lessons we learned then about the essential need to address the root causes of bias and discrimination. The same principles of digging deep to understand why biases exist in the context of race are also critical when it comes to gender. While many foundations have done important and deep work over the last two decades to understand and attempt to address the root causes of many forms of gender bias and discrimination in their grantmaking, there has been scant attempt in the investment field to do the same thing. The discipline and rigor that many foundations take to understanding what drives inequality and the kinds of interventions that can help bring about true equality is critically needed today in the field of gender lens investing. Foundations have the unique ability to support critical research; to invest in innovations; to take risks where traditional investors will not; and to convene and shed light on what is needed and what is possible through grantmaking and investment capital.
At Cornerstone Capital Group we work with foundations, individuals, and families who care about an array of social and environmental issues, including gender inequality. Like our clients, we have been concerned about the discipline of gender lens investing and the limitations of what we think of as Gender Lens Investing 1.0, which has focused primarily on diversity — the diversity of women on corporate boards and in senior leadership, the diversity of fund managers, and the diversity of those who have access to capital. While all these variables are critically important— and we must continue to exert pressure on those who can have an influence on gender diversity — we cannot stop there. Like the foundations of the early 21st century that insisted on going more deeply into root causes, we have set about on a journey at Cornerstone to understand how investments can address the root causes of social and environmental issues, using the Sustainable Development Goals (SDGs) as the basis of our analysis. We view foundations as natural partners in this work, which we think of as Gender Lens 2.0.
At its heart the challenge we set out to tackle was how investors who care about various Sustainable Development Goals — especially SDG 5 — could align their investments with the SDGs by focusing on common themes underpinning the SDGs. The SDGs provide a framework to demonstrate the inter-relationships between different social challenges including inequality, health, poverty, gender, and much more. They also reveal opportunities, such as the critical role of gender in climate justice, and other related topics such as water management and extractive industries. We were particularly mindful of the challenge that mission-aligned investors face in analyzing the impact of publicly listed securities — including gender lens investors, who have been limited primarily to screening out companies with no women on their boards of directors.
Cornerstone Capital Group’s Access Impact Framework [TM] was created to illustrate the alignment of investment strategies to each of the Sustainable Development Goals. We identified the concept of access — which accelerates the ability of individuals and societies to achieve desired social, economic, and environmental outcomes — as a key common denominator underpinning all of the SDGs. The framework maps 11 such access themes across the SDGs. By facilitating access required for individuals and societies to achieve the SDGs, investors can help address the root causes of inequality and do so holistically by addressing multiple barriers to opportunity simultaneously.
When analyzing SDG 5: Gender Equality, we incorporate traditional gender lens themes with an analysis of seven “access themes” that align most closely to SDG 5. The seven themes are:
- access to fair treatment/equal opportunity
- access to healthcare services
- access to financial services
- access to telecommunication systems
- access to education
- access to clean water, sanitation and hygiene
- access to adequate housing and living conditions
These access themes are interrelated. For example, improving women’s access to telecommunication tools such as mobile phones and internet services enables better access to online financial services, educational resources, healthcare, and career opportunities (see related resources). Becoming more educated and having better access to financial services may result in becoming more financially secure. Internet access seems to correspond with improved health for women, as they can learn about disease risks and prevention. Access to clean water, sanitation, and hygiene along with access to adequate housing and living conditions clearly leads to better health and a more stable and secure living environment. The examples are limitless but the amount of investment that is flowing with an intersectional approach is not.
The Access Impact Framework represents a way to analyze the alignment of investments that is multidimensional and reflects how many foundations understand their work: it is rooted in rigorous research; it sits at the cutting edge of a critical discipline; and it has the potential for having an impact at scale. But we cannot stop here. All of us — especially foundations who are concerned about gender equality — can play a critical catalytic role in advancing gender equality through an intersectional approach using the SDGs. With virtually the whole world coalescing around the SDGs, the moment is ripe for foundations to ask hard questions of their investment advisors about how their investments are being used to advance gender equality and address the fundamental issues that are impeding progress. By working across sectors we can continue to innovate and develop new tools and products that gender lens investors can use to address the root causes of inequality in all its forms and to realize our shared vision of achieving a more just and equitable world.
In the second part of this series, we will review examples of how foundations can utilize gender lens investing options across asset classes.
Cornerstone has just released two reports addressing the impacts of climate change. Our report No Place to Hide? Climate Change and Systemic Financial Risk demystifies recent academic studies on the risk to global financial assets from various climate change scenarios. The conclusion: Without urgent investment to scale climate solutions, global financial assets face losses of $2-24 trillion, or 2-17%, depending on the pace and intensity of further global warming. The more extreme scenarios would affect entire portfolios as the global economy faces severe losses.
In other words — unless investment dollars are deployed at scale to limit further warming — there’s no place to hide.
There is still time to act, however, as we explain in Scaling Climate Action: Aligning Investments to Sustainable Development Goal 13. Our report provides a straightforward overview of the causes and most significant impacts of climate change. We then apply Cornerstone’s Access Impact FrameworkTM, identifying relevant “access themes” that offer tangible investment ideas. Those themes are:
- Access to sustainable sources of food and nutrition
Access to safe, affordable and sustainable transportation
Access to affordable, sustainable and modern energy
Access to clean air
Access to education
Our report relays the key connections of each theme to SDG 13 and highlights existing investment funds that address our themes. An overview of opportunities, by asset class, is provided.
A growing global population and economy leads to more demand for food, water, transportation, housing and the fuel to supply these essentials to the world’s populace. Growing food, providing transportation and supplying the energy to foster global commerce all lead to greenhouse gas (GHG) emissions. Rising GHG emissions are the root cause of climate change.
Warming temperatures put our agriculture, health and water supply at risk. Warmer oceans and higher seas lead to stronger hurricanes and storm activity, causing flooding, coastal erosion and crop damage.
As outlined in our report No Place to Hide? Climate Change and Systemic Financial Risk, without urgent investment to scale climate solutions, global financial assets face value destruction of 2-17% depending on the pace and intensity of further global warming. If the more extreme scenarios come to pass, entire portfolios would be affected as key sectors of the economy face severe losses.
In this report, we propose ways for investors seeking to fight climate change to deploy capital in support of SDG 13: Climate Action. To do so, we use Cornerstone’s Access Impact FrameworkTM, which identifies relevant “access themes” that offer tangible investment ideas and helps to measure the impact of those investments.
Investment opportunities include funds that support new clean, alternative energy technologies, better farming methods, electric vehicle transportation and other growth industries which can help curb greenhouse gas emissions and slow the pace of warming. These investments target market rate or better returns while offering solutions to restrain global warming and its negative global impacts.
Download Scaling Climate Action.
Despite decades of competitive returns, a “myth” persists that sustainable and impact investment strategies financially underperform conventional strategies. The myth should be dead.
We recently conducted a fresh review of the academic and practitioner literature on this topic. Sampling from 2,200 reports published over the past few decades, our review provides assurance that applying an ESG lens is consistent with fiduciary duty. (We would argue that it is essential to fiduciary duty.)
Our review also highlights that the effect of sustainable and impact strategies on a portfolio will depend upon the asset class, investment style, and especially the skill and expertise of the manager.
In this note, we seek to describe the consensus view among all studies identified in the bibliography at the end of the report, and where possible we provide some insight into the relevance of specific research for investment decisions. We organize the results according to asset class, and where relevant (i.e., for public equities and fixed income), we look at different applications of ESG analysis. We also highlight the discipline we at Cornerstone take in evaluating the ESG approach of the investment managers we recommend.
Download our full report Sacrifice Nothing.
I’ll never forget the first investing conference I attended where gender lens investing was discussed. From the mainstage, I listened as three powerful women leaders in finance commented on how much work had been done for women in the industry. At last, the woman who gave the keynote said, “Corporate boards are starting to seriously look at the lack of women in the boardroom… We should be celebrating that a handful of companies now have at least one woman on their board!” You might think this was 20th century talk, but it was not: it was 2014.
After spending more than 20 years in philanthropy, often working with women’s funds, I have accepted that the glacial pace of change in finance on matters of gender is the direct result of the systematic exclusion of women in finance. Research from McKinsey & Company shows that women remain significantly underrepresented in the upper levels of financial services companies. And while women and men begin their careers making up roughly equal portions of entry level staff, white women account for only 17 percent of C-Suite level positions and women of color hold just one percent of C-Suite level positions in financial services.
In investing, women are underrepresented as managers especially in private equity and venture capital firms, holding only 10 percent of all senior positions in the field globally. Further, in 2017, women-led enterprises garnished less than 3 percent of venture capital globally.
What might the world look like if women controlled how investments (of financial, human, and natural capital) were made? Would we continue to promulgate a system of extractive finance, where more value is removed as a result of investment than is returned to a community? Would we define success by the presence of one woman on a board of directors? Or would women tackle problems at their root cause, using an intersectional approach to understanding the interconnected nature of all of the world’s most intractable problems, including poverty, poor health and education, and climate change? I know without doubt that it would be something closer to the latter.
At Cornerstone Capital Group, a women-owned registered investment advisor, we believe that the UN’s 17 Sustainable Development Goals (SDGs) provide a powerful framework for addressing the complex challenges of our time. We believe the goals can help align all communities—regardless of geography, income, race or ethnicity, sexual orientation, or gender—to see how we are all interconnected. And, we believe it helps provide a framework for investing that is multi-dimensional and powerful in its ability to affect the root causes of the issues affecting people and planet.
The bottom line? For investments to have impacts related to achieving gender equality and truly supporting women and girls, investors do not have to invest solely in “gender lens funds.” Our approach to gender lens investing incorporates traditional gender lens themes with an analysis of seven “access themes” that align most closely to SDG 5:
- access to fair treatment/equal opportunity
- access to healthcare services
- access to financial services
- access to telecommunication systems
- access to education
- access to clean water, sanitation and hygiene, and
- access to adequate housing and living conditions
It is abundantly obvious that these factors are interrelated, so why don’t we treat them as such?
For example, research from Intel, World Wide Web Foundation, and US AID tell us that improving women’s access to telecommunication tools such as mobile phones and internet services enables better access to online financial services, educational resources, healthcare, and career opportunities. Becoming more educated and having better access to financial services may result in becoming more financially secure. Internet access seems to correspond with improved health for women, as they can learn about disease risks and prevention. Access to clean water, sanitation and hygiene, along with access to adequate housing and living conditions, clearly leads to better health and a more stable and secure living environment.
The examples are limitless, but the amount of investment that is flowing to women and to women-led initiatives (with an intersectional approach) is not.
We are all guilty of looking for easy solutions to complex problems, but it’s time that we come together to align our efforts to make life better for everyone, regardless of where they live or their gender.
To read more about intersectional approaches to investing with a gender lens, see Advancing Access: Looking Beyond Traditional Gender Lens Investing Approaches Using Our Access Impact FrameworkTM in Support of SDG 5: Gender Equality.
This piece was originally published at What Will It Take Movements as part of What Will It Take Movements’ Women and Money initiative. Join leaders in gender lens giving, spending, and investing September 16-17 in Austin.
It seems clear that the “circular economy” is the only way forward for humanity. In my view, adopting circular economy principles will combat our current crisis of waste – wasteful manufacturing, wasteful packaging, food systems, technology, extractive materials. We can begin to repair the planet. The concept resonates deeply with me and the team at Cornerstone, which was founded with the vision for a regenerative and inclusive global economy.
For those who don’t know, a circular economy “aims to redefine growth, focusing on positive society-wide benefits. It entails gradually decoupling economic activity from the consumption of finite resources, and designing waste out of the system.” 
I recently attended the Circularity 2019 conference, hosted by Greenbiz. It was a fascinating and thought-provoking few days, with sessions ranging from Digitizing Circularity to Catalytic Capital. I participated in a fascinating panel with Ron Gonen, Co-Founder and CEO of Closed Loop Funds, and Emily Landsburg, Director at private equity firm Ultra Capital, on the role of investors in financing companies engaged in the circular economy. I’m pleased to share Greenbiz’s recording of that conversation.