Last night I attended the annual Christmas party of Newground Social Investment, a Seattle-based investment company that is taking a unique approach to shareholder engagement. After working for investment firms for ten years, Bruce Herbert started Newground in 1994 to provide a way for individuals to invest in companies that are highly-profitable and socially and environmentally responsible. This chart on their website demonstrates that companies who practice responsibility have out-performed those who do not—indicating that social investing can be a profitable venture for individuals.
Whereas some approaches to social investment simply avoid the “bad” firms like tobacco, Bruce and VP Larry Dohrs take a far more active role in shaping corporate behavior. They call themselves “money managers and investment provocateurs” because they engage with corporations as stockholders through both dialogue and by filing shareholder resolutions.
For example, Newground has recently filed a resolution at Nordstrom on behalf of their client. Nordstrom has taken the first steps to participate in the BSI Sustainable WaterWorking Group that seeks ways to use water more efficiently in their supply chain yet Nordstrom has not yet provided a Sustainable Water report. The resolution filed by Newground requests that a report be prepared and released by December 1, 2011. The resolution explained, “In growing cotton, 25 cubic meters of water is required on average to produce enough fiber for a single t-shirt. That cotton is typically grown in arid, intensely-irrigated regions. Resultant agricultural run-off significantly harms local ecosystems and contaminates drinking water sources, and water degradation presents reputational, regulatory, and liability concerns. In response to flooding and droughts that affected worldwide supplies, the price of cotton rose nearly 50% in 2010, reaching an all-time high. Water issues represent a risk for our company.” Newground is seeking to hold Nordstrom accountable to the pledge that it made to improve efficiency in their water usage so that Nordstrom will continue produce a profit for their stockholders by maintaining a strong brand and sustainable supply chain.
As if to prove once again that profit and responsibility can go hand-in-hand, Bruce and Larry were voted Best Personal Wealth Managers in Seattle by readers of Seattle Magazine in 2007, 2008, and 2011. If Seattle Magazine had a “Best Egg Nog” category, they’d have topped that chart as well.