Godeke Consulting 2016 Shop Report

Here in my shop, 2016 was a year of learning, speaking and partnering thanks to friends & colleagues like you.

Teaching the Next Generation
Nothing keeps you on your toes like a room of MBA millennials. My course, Investing for Environmental and Social Impact, is now in its 6th run at NYU Stern and continues to be a huge source of inspiration for my practice. This year’s student projects spanned women’s health, fossil fuel divestment for university endowments, creating a market for runoff water credits, economic development programs for new immigrants and just transition energy projects in coal country. Best of luck to these students and their promising futures.

My other academic work included 1-day seminars at the NYU Center for Global Affairs and philanthropy training for private bankers visiting from China. In November, Jackie VanderBrug, dropped by to share her new book, Gender Lens Investing. This spring, Professor Richard Levich and I will be launching a new experiential learning seminar at Stern where students will work with family offices and investment firms to take on impact investing challenges.

Social Justice Investing at Jessie Smith Noyes
Outside of the classroom, I continued my deep involvement with the Jessie Smith Noyes Foundation as the Finance Committee Chair. In October, we issued an open call for letters of interest to work with Noyes as an investment advisor while also seeking to use crowd-research to better understand the intersection of impact investing and social justice. We received 35 responses reflecting a great amount of thought and energy on equality, diversity and inclusion, equal access, health, human rights and education as well as innovative community ownership structures. Stay tuned for our research report on Social Justice Investing later this year.

Back at my desk, I stayed busy leading conversations in a variety of forums, including a webinar with Confluence Philanthropy to share best practices when searching for impact investment advisors. These discussions continue to shape and sharpen my own work helping asset owners to find the best partners. I also had the opportunity to speak about diversity within impact investing at High Water Women's Investing for Impact Symposium, Diversity and Impact Investing: The Aspirational Gap, and at Bloomberg's 2016 Power of Difference Summit. These important topics are certainly touching more of our collective work, and I'm excited to be a part of the conversations.

ESG and Impact Investing Border Crossings
As ESG investors from the public markets increasingly mix and mingle with the private markets impact investing crowd, I see a growing interest in building and measuring social and environmental impact across asset classes and strategies. In December, I visited with Global X’s NYC team and did a radio interview webinar to share my view of the field and suggest some tools for financial advisors. In a related op-ed, William Burckart and I wrote about the growth of the ESG Impact sector as mom-and-pop ESG shops are facing consolidation. Staying current on the latest industry dynamics continues to inform my customized research projects and impact fund advisory practice.

Closing out the year, it was great fun to take the podium in The Great Debate: ESG Ratings & Rankings for Funds and Managers at Responsible Investing Americas Conference.


"Growth and Comfort Do Not Co-Exist"
In 2017, let’s dig deeper into how capital can drive positive change. I hope to stay edgy without getting cranky, inspired instead of complacent and reflective while moving forward. I greatly appreciate the opportunity to work with my 2016 project partners, Scott Budde, William Burckart, Sarah Cleveland, Stephanie Gripne, Christopher Lopez, Michelle Mengel, Gregory Pettit and Melinda Tuan, and look forward to finding more opportunities for all of us to push good ideas forward together in 2017.

All the best,
Steve

Show Me the Money: The State of the ESG Sector

It was a pleasure to be invited to Global X’s NYC Headquarters to be a guest expert for their ongoing radio interview series. In this webinar, I discuss the ESG and impact investing landscape and the tools advisors can use to leverage this rapidly growing investment strategy. A huge thanks to the entire Global X team for including me in their work!

https://www.globalxfunds.com/webinar-replay-integrating-esg-into-your-practice/

In a related op-ed, William Burckart and I shared our views on the growth of the ESG Impact sector as Mom and Pop ESG shops are facing consolidation.

Noyes Announces Call for Investment Advisors to Lead Evolution of Social Justice Investing

The Jessie Smith Noyes Foundation has announced an open call for letters of interest (LOI) from investment advisors to advance its mission-aligned investing strategy. A press release and the LOI are attached. 
If you would like to share this exciting development in social justice investing strategies with your networks, you can use the following messages for social media: 
To Email, or post the LOI on LinkedIn or Facebook:
Jessie Smith Noyes Foundation (Noyes), a pioneer in the field of sustainable, responsible and impact investing for social justice, has announced an open call for letters of interest from investment advisors to advance its mission-aligned investing strategy. As innovation and growth accelerates across the impact investing industry, Noyes wants to surface expertise and new approaches from the investment field. Click http://www.noyes.org/impact-investing/ for more information.
Twitter:
Call for #InvestmentAdvisors to Lead Next Evolution of #SocialJustice #Investing #IMPINV #NoyesImpact @forbes @Bloomberg http://bit.ly/2dL4ueh

For Immediate Release
October 5, 2016 
Press contact: Karlos Gauna Schmieder, consultkarlos@mediajustice.org
Jessie Smith Noyes Announces Open Call for Investment Advisors to Lead Next Evolution of Social Justice Investing.  Click for the Press Release and Letter of Interest.
New York, NY – Jessie Smith Noyes Foundation (Noyes), a pioneer in the field of sustainable, responsible and impact investing for social justice today announced an open call for letters of interest (LOI) from investment advisors to advance its mission-aligned investing strategy.
“Noyes is soliciting information and ideas from the investment field during a sea change in the the pace of innovation and growth in sustainable, responsible and impact investing,” said Steven Godeke, Noyes Board Member. “We want to push our potential advisors to think broadly about social impacts like equality, diversity, health and human rights as part of our social justice movement building strategy.”
LOIs are due by November 1st. Noyes will review the LOI and then select up to five firms to receive a more detailed request for proposal, and publish a broad analysis and share learnings with philanthropic and investment institutions. 
Noyes’ commitment to aligning its mission and investments was triggered in the late 1990s by a board discussion about Intel and the environmental impact the company was having on the Albuquerque, New Mexico water supply and environment. The concern over the negative impact Intel’s plant would have on the water supply and environment of New Mexico was compounded when a board member pointed out that the foundation owned stock in Intel and had approved those investments earlier in the day. It was an eye-opening moment for Noyes, and one that cemented its socially responsible and mission-related investing policies and led to its decision to sell investments that did not align with the Foundation's mission.
Twenty years later, 100% of Noyes’ assets align with its mission, which is dedicated to building a socially and environmentally just society.
“It makes no sense to use five percent of your assets to try to promote something, while the other 95 percent might be doing something totally contrary,” says Wendy Holding, Noyes Board Chair. “We try to use 100 percent of our assets to promote our values.”
Along the way, Noyes has supported the work of its grantees through shareholder engagement, and worked to build the industry through collaborations such as Confluence Philanthropy and the Divest/Invest campaign.  
“As the impact investment field accelerates, Noyes is committed to deepening the impact of its investments to further its social justice movement building,” says Genaro Lopez Rendon, a Chicano community organizer from Texas recently hired as the Foundation’s president. “By looking at themes that have not traditionally viewed as ‘investable,’ we hope to spur much needed funding for themes such as equality, diversity, health and human rights.” 
To drive this exploration, the foundation is using the selection of an investment advisor as a means to surface expertise and increase awareness. 
“We are making ourselves a test case and want to continue to share our learnings in a transparent manner with the field,” says Lopez Rendon.
LOI Continues Below.
 Investment Advisor
Open Call for Letters of Interest
October 5, 2016
The Jessie Smith Noyes Foundation (“Noyes”) will be engaging an investment advisor to partner with our finance committee and board of trustees to advise on the management of the Foundation’s financial assets. Noyes is a private family foundation founded in 1947 and located in New York City with an endowment of approximately $50 million and an annual grantmaking and operating budget of $3 million. Noyes currently supports work in the following focus areas: environmental justice, reproductive rights, sustainable agriculture and food systems, sustainable New York City, and building power across movements. 
Our Vision
Noyes envisions a socially just and environmentally sustainable society in which all people are able to gain the knowledge and build the power they need to exercise their rights and participate fully in the economic, social and political decisions that affect their lives and communities.
Our Values
Noyes is a diverse and inclusive organization working towards a more equitable society. We consistently challenge structural racism, gender inequality, and discrimination based on ethnicity, race, religion, age, sexual orientation, economic status, physical ability, gender and immigration status, and seek to open channels of opportunities for these communities. We believe that people, not corporations, have inalienable rights. The foundation builds the power of people — those most impacted and those who have been marginalized — to be actively involved in advancing solutions to the problems they face. We believe in an environmentally just earth in which all species have the right to co-exist.
Our Theory of Change
We understand that social change occurs over a period of time through a combination of strategies, forces and events both small and large, planned and unplanned. We recognize the special role of diverse, inclusive and democratically controlled grassroots movements—particularly when such movements are driven by the very people impacted by inequity. They are the best advocates to build public support and community understanding as well as drive lasting change. We believe that grassroots movements composed in such a way are among the strongest forces in our society for holding public policy makers and private corporations accountable.
Noyes’ vision, values and theory of change drive both our programmatic and investment strategies. Noyes has been a pioneer in the sustainable, responsible and impact investing field for over 30 years. We have practiced shareholder activism to assist our grantees, supported the development of the field through investor collaborations and seeded innovative environmental and social investment funds. The Foundation has new leadership and is focused on remaining close to our mission of grassroots movement building, and Noyes’ investment resources are a critical part of this heritage. 
Our full investment guidelines are available at:
The Investment Advisor Selection Process
In order to gather information about the broadening universe of investment advisors active in the sustainable, responsible and impact investing field, we are holding an open call to the investment community to provide letters of interest as the first stage of our advisor search. Given the accelerating pace of innovation and growth in sustainable, responsible and impact investing, we are soliciting information and ideas from the field to better inform our process, and would welcome your participation. 
Please include the following elements in your letter of interest:
Organizational Capacity (2-3 Pages):
·       Summary of your organization's capabilities and alignment with Noyes’ values and goals as a social justice investor and grant maker.
·       Team members with experience and commitment to sustainable, responsible and impact investing.
·       Examples of products that peer clients have invested in across asset classes (equities, fixed income, private equity, real assets, alternatives) and approaches (values/norms-based, best practices, thematic/sustainability solutions, impact).
·       Brief description of your due diligence of managers for alignment with Noyes' values and investment objectives.
·       Analytical capabilities with respect to integrating Noyes' values and investment objectives into strategic and tactical asset allocation. 
In addition, we would like to have your thoughts on the following questions for the field (2-3 pages) 
·       What does “social justice investing” look like now and in the future?
·       Given our resources, how can we more tightly translate our mission (social justice movement building, environmental justice, reproductive health and rights, food equity and sustainable agriculture) into investable opportunities?
·       What are the most effective tools (impact investing, ESG stock selection, shareholder engagement and activism, community investing, impact investing, program-related investments) that we might deploy?
·       What does corporate accountability mean in this era of globalization of capital and supply chains? How does this translate into portfolio selection?
·       How can our mission aligned investment portfolio drive the creation of systemic impact in the areas of social justice, equality, human rights, health and diversity? Are there external initiatives or targets—such as the United Nations Sustainable Development Goals—that might influence our portfolio? 
·       How can the practices and culture of our investment advisors and fund managers embody our values and mission of social justice and equality?
·       What investment resources do the grassroots social justice organizations we support need in order to develop sustainable and viable operations?      
Please be aware that we will be sharing the results of the broader field questions with philanthropic and investment institutions. Our goal is to describe the current state of the investment advisor community’s ability to integrate social impact into the investment process. We will not share details about the organizational capacity of specific firms. 
Following a review of the LOIs, Noyes will select up to five firms that will receive a more detailed RFP and meet with the Finance Committee later this year. 
We ask you to please email your LOI no later than COB Tuesday November 1st to finance@noyes.org. In the interim, please contact us at finance@noyes.org with any questions. 
We greatly appreciate your interest in working with us and your willingness to share your thoughts and ideas. We look forward to reviewing your letter of interest and continuing this conversation.
Sincerely yours,
Genaro Lopez Rendon, President
Jessie Smith Noyes Foundation
Steven Godeke, Finance Committee Chair
Jessie Smith Noyes Foundation 

Cutting off Capital to Mountain Top Removal

Long recognized as bad for the environment and bad for communities, mountain top removal coal mining is now being challenged by investors who are telling the banks that finance the activity to stop.  This engagement tactic has also been used with banks on other project finance activities through the Equator Principles.  

 The big question is does cutting off the bank lines stop the activity?  

 http://nyti.ms/1Ac6hrP

Where's the Impact Investing Beef?

The NYT's Wealth Matters column touched on impact investing recently to describe how the asset class is expanding.  It was great to hear more about Paul Herman's HIP Investor rating system, but I am a bit tired of the large financial institutions getting quoted on the bright future of impact investing even though they do not have lots of options for their clients today.

http://nyti.ms/1lFwvkU

Is the Peterborough SIB a Success or a Failure or Too Early to Tell?

While the initial results of the Peterborough SIB did not trigger payments to the investors, the many factors driving this first SIB's success or failure are still up in the air.  This report from NPQ outlines the various positions and opinions.  Perhaps most telling is that the UK government has decided not to continue the program as a SIB but rather to revert to a more standard pay for performance contract without outside investors.

I think the role/need for investors in SIB structures remains unclear.

First Social Impact Bond Fails to Meet Halfway Mark Performance Target - NPQ - Nonprofit Quarterly

Motivating Corporations to Do Good???

Eduardo Porter provides a nice summary of the history of what we now call corporate social responsibility.  He chronicles the increasing power of shareholders and equity-compensated managers over the last 50 years and calls on government to make sure corporations are good citizens.

Unfortunately, government does not exist in a vacuum and has increasingly lost power and resources versus corporations.  Shareholders (but primarily the senior corporate managers who control them) have used their additional power and money to fight government, labor , communities and all of the other stakeholders in our society.  We are now seeing the fruits of this 50 year transition.  

http://nyti.ms/1qdiQ6H

Modest Expectations and Consistent Followthrough

This Upshot piece in today's NYT offers the hope that maybe we can focus on social programs that actually work as a good middle ground between the "all government is bad" ideology of the right and the "more money will solve all problems" from the left.

While this approach can attract bipartisan support, it also requires reasonable expectations and consistency over long periods of time - not typical characteristics of our political process.

http://nyti.ms/1rcQNUl

Data and Knowing

David Brooks' recent op-ed on how data points are not knowledge - especially when looking at human behavior - made me appreciate the immense challenges we face when seeking to shift human behavior through interventions and programs.

http://nyti.ms/1g9XnXz