End of Week Notes
Juneteenth
Investing for change, the importance of engagement and proxy votes, another positive ESG performance study
You’ll probably hear about Tulsa, Oklahoma this weekend, as it’s the site of the first Trump Pandemic rally, where ̶1̶9̶,̶0̶0̶0̶ 6,200 mostly unmasked people will gather in defiance of science to celebrate their dear leader.
The rally was originally scheduled for today, Juneteenth, which commemorates the end of slavery in the United States and, given the events of the past few weeks, is an occasion to remind us of our unfinished business of achieving racial equity.
Given the date, what’s been happening in this country in the aftermath of George Floyd’s murder and Tulsa’s own history, the rally has been moved to Saturday.
Speaking of Tulsa’s own history, I have a story to share:
I grew up in an all-white part of Tulsa in the 1970s. Never heard a word about the Tulsa Race Massacre of 1921; not in school, not outside of school, not in the newspapers, which I read cover-to-cover every day after I finished my paper route. Not. One. Word. Ever.
As a grown person, I returned to Tulsa in the 1990s to teach a weekend class at what is now called OSU-Tulsa, situated near the site of what by that time I had been told was where a “race riot” occurred. It was marked, as I recall, by a single plaque.
A race “riot” implied to me that it was some kind of Black uprising that had to be put down with force by white police. An uprising that might have been perfectly understandable given the way Black citizens are treated in the 2020s much less the 1920s.
It was nothing of the sort. It was an out-and-out massacre started with what has been historically a common pretext for racist violence: a Black man supposedly looking at a white woman in the “wrong way”.
White people, including if not led by law enforcement, descended on the prosperous Greenwood District, called the “Black Wall Street” because of its prosperity, and laid waste to it, destroying 35 city blocks. They killed a still-unknown number of Black people, perhaps around 300, although contemporary accounts downplayed the number, saying it was only in the 30s. Thousands of Black citizens were rounded up by the National Guard and detained over the course of the next week.
The Greenwood District, and Tulsa’s Black community never really recovered. And for decades, white Tulsans were not made aware that the race massacre ever happened. Whitewashing history is a key component of systemic racism that results today in Black citizens living in fear of mostly white police forces and Black households having, on average, less than 10% of the wealth of white households in America.
The Trump rally will take place about a mile away from what was once Tulsa’s Black Wall Street.
Investing for change — Do it now!
We are at a time in America where change feels possible. And I know that most people don’t connect investing with being a change agent. But if you are a person who is fortunate enough to be an investor and want change, now is the time to invest that way. It’s really the least you can do.
Here are some ways to activate your entire portfolio:
If there is one area where investing can really make a difference, it’s in the area of shareholder engagement and proxy voting. This is where investors can talk to companies directly about their response to what’s happening in our country today and urge them to take action.
When choosing your investments, make sure the asset manager is committed to pursuing issues of racial justice and inequality through their engagements and proxy voting. Most sustainable funds managers are. For evidence, read their engagement and impact reports that should be prominently featured on their websites.
But many of the largest conventional asset managers are not so committed. My colleague, Jackie Cook, summarizes this year’s proxy votes on shareholder resolutions that at least touch on these issues. While many shareholder resolutions received enough support to draw the attention of company management, they generally fell far short of a majority.
This must change. As Calvert CEO John Streuer says in a blog post today,
Investors need to send a clear and consistent message to corporations that diversity and equality are priorities, and transparency must be provided now.
If you are an investor and believe that Black Americans, and really all of us collectively, as One Nation, have suffered enough from racial inequality, you should align your investments with that view.
Community Capital’s Minority CARES strategy
Community Capital Management (CCM) announced one way to do that today with the launch of Minority CARES (which stands for Community Advancement Racial Empowerment Strategy).
This will be an investment-grade, market-rate strategy investing in bonds that finance projects in the following thematic areas:
- Affordable health and rehabilitation care
- Affordable housing
- Economic inclusion
- Education and childcare
- Enterprise development and jobs
- Human empowerment
- Minority advancement
- Neighborhood revitalization
An investment in a Minority CARES separate account requires $25 million, so it’s for ultra-high net worth investors or institutions.
Individuals or institutions invested in CCM’s CRA Qualified Investment Fund Institutional Shares (ticker: CRANX) can designate all or a portion of their shares within this fund to Minority CARES. CRANX requires a $100,000 minimum.
Morningstar Minority Empowerment Index
The Impact Shares NAACP Minority Empowerment ETF (Ticker: NACP) requires only a $1,000 minimum. Launched last year, the passively managed large-cap U.S. fund tracks an index created by our index team at Morningstar, based on data from Sustainalytics, called the Morningstar Minority Empowerment Index. Any profits earned by Impact Shares are donated to the NAACP.
You might be interested in which companies are in the index, which you can find on the NACP website. Morningstar’s Karen Wallace takes a look at the 15 top scorers in that index here:
And here is the list:
Sustainable funds in Europe outperform over 10 years
A paper by my European colleagues Hortense Bioy and Dimitar Boyadzhiev out this week reports that sustainable funds in Europe have outperformed over the past decade. Among their key takeaways:
- Average returns and success rates for sustainable funds across seven Morningstar Categories suggest that there is no performance trade-off associated with sustainable funds. In fact, a majority of sustainable funds have outperformed their traditional peers over multiple time horizons.
- Over the 10 years through 2019, nearly 59% of surviving sustainable funds across the categories considered have beaten their average surviving traditional counterpart.
- More sustainable funds have survived in the past 10 years, in relative terms. Of sustainable funds available to investors 10 years ago, 72% have survived, compared with less than half (45.9%) of traditional funds.
Total Impact Virtual Series panel on Sustainable Investing video
ICYMI: I took part in a panel discussion this week sponsored by Social Capital, with Barron’s Leslie Norton moderating, along with Trillium’s Matt Patsky and RBC’s Catherine Banat. Check out the video here.
Have a great weekend, everyone!
Note: Edited on Monday to reflect the much smaller-than-expected crowd size at the Trump Pandemic Rally in Tulsa on Saturday.
Follow me on twitter: @Jon_F_Hale
