ICONS

ICONS Interview Series

Rebecca Adamson of First Peoples Worldwide interviews Bennett Freeman of Calvert Investments

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Welcome to the sixth edition of GreenMoney’s Icons Interview Series, where we invite Sustainable Investment and Business leaders to interview other leaders in their field. This issue features Rebecca Adamson, Founder and President of First Peoples Worldwide. She is a leader, activist, and groundbreaking indigenous woman, who holds a distinct perspective on how indigenous people’s values and economic systems can transform today’s business models. Rebecca interviews Bennett Freeman who as Senior Vice President for Sustainability Research and Policy at Calvert Investments, leads the environmental, social and governance (ESG) analysis, shareholder advocacy and public policy work of the largest family of sustainable and responsible (SRI) mutual funds in the U.S with over $12 billion assets under management.

Both Rebecca and Bennett have been true leaders for many years. They continue to help us make money responsibly and make a real difference in our world. Here is the interview…

REBECCA:  What changes have you seen in SRI and ESG since you joined Calvert seven years ago and how do those changes position the sustainable investment community for the future?

BENNETT:  I came to Calvert in April of 2006 in a springtime of optimism and opportunity in the SRI world. Assets subject to some form of screening were rising. Our longstanding proposition that corporate responsibility and sustainability benefit investors as well as business and society was finally gaining wider acceptance and greater traction. The combination of years of steady engagement and at times pressure from SRI firms, faith-based investors and NGOs — had compelled major companies in virtually every industry from footwear and apparel to oil and mining to at least acknowledge, if not fully address, the range of critical issues raised by shareholders and other stakeholders. While companies were at least managing risk to their brands, the momentum of the game was shifting from defense to offense. Recommendations from McKinsey and Michael Porter that companies could gain competitive advantage by focusing on unmet environmental and broader societal demands were borne out as corporate giants as diverse as GE, Unilever and Google seized opportunities like alternative energy, sustainable agriculture, and digital access. When that spring Al Gore’s film “An Inconvenient Truth” opened to unexpected acclaim, climate change captured the attention of the American public as never before. Propelled by the imperative of tackling climate change, SRI was finally poised to make a quantum leap to the mainstream investor in parallel with the mainstreaming of a new progressive yet pragmatic agenda for sustainable and responsible capitalism.

When the financial crisis hit in mid-2008, the validation of our concerns over inadequate regulation of the financial markets and management of risk at the big banks were little consolation in the face of plunging assets and economic meltdown on both sides of the Atlantic. While the Dodd-Frank reforms are slowly being implemented and the Occupy movement’s demands have (for the moment) dissipated, our values and views gained validation. SRI more than survived; it demonstrated its resilience and growing relevance in a 21st century world that will be increasingly defined by the imperative of sustainability and the demand for accountability.

That growing relevance, in my view, is based on two significant changes over the last half dozen years that should give us renewed confidence in the future of sustainable and responsible investment.

The first change is a growing confidence on our part—and recognition on the part of traditional mainstream investors—that our wide-angle lens view of the world helps us see around corners and over horizons in ways that others have not. Calvert’s grave concern over inadequate attention to safety at BP in the wake of the Texas City tragedy in 2005 was the basis of a decision in 2008 that the company still did not meet our traditional “Signature” criteria applied to most of our SRI funds, despite a decade of leadership by the BP company within its industry on climate policy and alternative energy, human rights and revenue transparency. The Deepwater Horizon tragedy two years later was hardly a vindication but nonetheless a validation of our analysis.

Calvert is not only continuing to apply our longstanding corporate responsibility and sustainability criteria, but also increasingly integrating the most salient ESG-related risks and opportunities into our financial analysis of our portfolio companies because we believe that this approach translates into more informed investment decisions and stronger performance. The emergence of such “integration”—under development for several years at Calvert and now being applied to a growing number of companies across our Equities and Fixed Income complex—reflects and will in turn reinforce the proposition that Environmental, Social and Governance (ESG) factors signify our community’s values but can also translate into company valuations. That fundamental insight will drive 21st century Sustainable and Responsible Investing (SRI).

The second change is a growing confidence on our part that shareholder advocacy and public policy engagement not only contributes to a more sustainable capitalism but also can contribute to our investment performance by challenging company directors and managements to focus on the long-term drivers of success. That is why at Calvert we have for years pushed for greater diversity on corporate boards through the Calvert Women’s Principles, research reports and shareholder resolutions because we believe that a greater diversity of background perspectives is essential to good governance and strategic insight. That is also why we have taken leadership roles on relatively new and unconventional issues that we believe pose material issues for companies. One example is taking the initiative to push successfully for greater disclosure of revenue payments by extractive companies to the governments of countries where they operate around the world, given the range of political and regulatory risks related to corruption. Another is helping to shape a global standard for freedom of expression and privacy rights for Internet and telecom companies with not only human rights but also global user and brand trust at stake. The ability of sustainable and responsible investors to spot these types of risks, make them the focus of advocacy and policy initiatives and in turn factor them into our company valuations—without missing a beat in our financial analysis of companies—is our comparative advantage.

REBECCA:  At a time of continuing uncertainty in the financial markets and investors’ need for stability amidst ever-greater complexity, how can Calvert appeal to mainstream investors and still retain its values while being an agent for change?

BENNETT:  As we seek to broaden our appeal even more to mainstream investors, there is no question that Calvert will retain its core values and continue to be an agent of change. That commitment is not only our legacy; we believe that identity is the key to our future opportunity in the marketplace and no one believes that more passionately than Barbara Krumsiek, our CEO now for over 15 years. We believe that as sustainability and accountability become even more dominant forces in both the investment world and beyond, more mainstream investors—individual and institutional alike—will want to allocate portions of their portfolios to firms at the cutting edge of ESG analysis and integration together with high-impact shareholder advocacy and public policy.

That confidence led us to develop our SAGE strategies, in which we invest in some companies that may not meet each and every one of our comprehensive ESG criteria but we commit to intensive engagement around some of the toughest issues with the largest companies in the world, as we have done with Wal-Mart, Dow Chemical and Exxon Mobil among others. We think that most traditional, sustainable and responsible investors are glad that we are in the trenches even – or especially — with those kinds of companies and that a new generation of investors will be attracted to invest in funds that give them a direct stake in some of the great sustainability and accountability battles of our era.

But fund performance matters most to investors of just about every size and stripe—and we must continue to deliver where it matters most. The integration of financial and ESG analysis—that ability to see around those corners and over those horizons—will blur the lines between “mainstream” and “sustainable and responsible” investment as it demonstrates its added value and in turn continues to gain acceptance in the marketplace.

REBEECA:  When you came to Calvert it was the only Mutual Fund company with an Indigenous Peoples screen. What have you learned and what is your strategy for moving it forward?

BENNETT:  Calvert was indeed the first investor with an Indigenous Peoples screen—distinct from our even longer-standing human rights screen—thanks to your leadership, Rebecca, as a new board member at the time. It was important to make that distinction then in the mid-Nineties in order to sharpen the SRI community’s focus on the cultural and economic rights of indigenous communities in North America and around the world, and it is a commitment that Calvert and other responsible investors will maintain as those rights continue to be imperiled.

I think that Calvert has learned we can make a difference on several critical sets of issues for Indigenous Peoples in different arenas in which investors have both credibility with those we are trying to influence and a stake in the outcome of their decisions. We have urged companies and universities (through their endowments) to demonstrate greater sensitivity towards cultural symbols, whether brand symbols, media images or team mascots. We have pressed oil and mining companies to be more respectful of cultural and economic rights in connection with their impact on indigenous communities, as Calvert and other SRI firms are now urging Newmont Mining to mitigate the environmental and water threats posed to local communities by its Conga Mine project in the Andean Highlands of Peru. We have gained commitments from major oil companies to endorse the UN Declaration on the Rights of Indigenous Peoples (UNDRIP): from Exxon Mobil to disclose how it implements its already established commitment, and from Conoco Philips to make that commitment following our dialogue together with other SRI firms. We have also brought our perspective as an investor to bear on public policy as we did when Calvert wrote to President Obama and Secretary of State Clinton in 2010 urging the U.S. to sign the UNDRIP (as it did that December) and when we urged the World Bank to adopt strong stand-alone safeguards for Indigenous Peoples in its project financing and other programs.

Besides learning that we can make a positive difference by working with indigenous communities and leaders, we have also understood more than ever that even with the best of intentions we cannot represent those communities and their leaders. That has probably been a greater challenge for some environmental NGOs than for SRI firms, but we nonetheless must remain careful and respectful; we must always listen before we speak.

I think that a strategy for building on these successes should rest on two main premises. First, our values will compel us to continue to support Indigenous Peoples’ fight for the cultural and economic rights that are the key to their survival in the 21st century. Second, the materiality of many issues related to Indigenous Peoples—especially those arising in large extractive projects—should gain greater understanding within the mainstream investment community. While SRI firms can and must continue to lead, the large institutional asset managers and pension funds also have a responsibility to their shareholders and stakeholders when a major mining project teeters on the verge of collapse —because the company has lost its social license to operate after failing to engage local communities—as is the case now with Conga in Peru.

REBECCA:  What are Calvert’s leading shareholder proposals and top priorities for 2013?

BENNETT:  Our key areas for our 20+ shareholder resolutions this year are sustainability reporting; board oversight of environmental and social risk; corporate board diversity, climate risk, and water-related risk disclosure and management — a good balance between longstanding and newer themes for Calvert. With President Obama reelected, we will intensify our efforts in coalition with other investors, through the Ceres organization in particular, to move forward in a straighter line on climate and public policy. We will support the President’s use of executive authority to work through the EPA to further curb emissions and will look for ways to renew the quest for the Holy Grail—a price on carbon—that still eludes us at the federal level as support for cap-and-trade and carbon tax proposals remains insufficient.

This year we will also place an even greater emphasis on corporate governance—especially of environmental and social risk—in our dialogues with companies as well as shareholder resolutions. And the more we can demonstrate the materiality of the issues we raise, the more ground we will gain, both with the companies we are determined to influence and the investors we seek to attract.

BIOGRAPHY:

Rebecca Adamson, Cherokee economist, is Founder and President of First Peoples Worldwide. A leader, activist, and groundbreaking indigenous woman, Rebecca holds a distinct perspective of how indigenous peoples’ values and economic systems can help transform today’s business models. Ms. Adamson has worked directly with grassroots tribal communities, and nationally as an advocate of local tribal issues, since 1970. She established the premiere US development institute, First Nations Development Institute, in 1980, and in 1997 she created the first US based global indigenous peoples NGO, First Peoples Worldwide. Ms. Adamson’s work established the first microenterprise loan fund in the United States, the first tribal investment model, and a national movement for reservation land reform. As one of the few Native Americans on a mutual fund board, the Calvert Social Investment Fund, Ms. Adamson led the creation of the Calvert Foundation’s Community Notes, the only private sector investment vehicle for community development among financial institutions CDFIs. She has worked closely with US investors building the infrastructure, investment criteria, corporate research, and risk indicators for supporting Indigenous Peoples rights. Last year this work led the International Finance Corporation, the World Bank and the UN Principles of Responsible Investors to adopt standards for implementing policies regarding Indigenous Peoples, Human Rights and transparency. Ms. Adamson is active in the social investment community serving on the Calvert Social Investment Fund Board of Trustees, the Calvert Social Investment Fund Governance Committee, and co-chairs the Calvert Social Investment Fund Audit Committee and the Indigenous Peoples Working Group of the Social Investment Forum. She is technical advisor to the Global Reporting Initiative, an international corporate monitoring forum for sustainable business practice.

Bennett Freeman is Senior Vice President for Sustainability Research and Policy at Calvert Investments. Since 2006 Mr. Freeman has led the environmental, social and governance analysis, shareholder advocacy and public policy work of the largest family of sustainable and responsible (SRI) mutual funds in the U.S with over $12 billion assets under management based in Bethesda, MD. He has helped to develop the investment themes of new Calvert funds and contributed to Calvert’s leadership on issues such as Sudan divestment; extractive revenue transparency; Internet freedom of expression and privacy; water sustainability; and climate change adaptation.

Prior to joining Calvert, Freeman was a Managing Director at Burson-Marsteller from 2003-2006, where he led the Global Corporate Responsibility practice and advised multinational corporations on policy development, stakeholder engagement and communications strategies related to human rights, labor practices and sustainable development. Freeman served as a presidential appointee in three positions at the U.S. Department of State in the Clinton Administration. As Deputy Assistant Secretary for Democracy, Human Rights and Labor from 1999-2001, Freeman was responsible for the State Department’s bilateral human rights diplomacy. In that capacity, he led the year-long multi-stakeholder dialogue and negotiation to develop and launch the Voluntary Principles on Security and Human Rights as the global human rights standard for oil, gas and mining companies. He previously served as Senior Advisor to Under Secretary for Business and Economic Affairs Stuart Eizenstat and as Deputy Assistant Secretary of State for Public Affairs and Chief Speechwriter for Secretary Warren Christopher. Freeman was Manager-Corporate Affairs for GE based in the corporate headquarters in Fairfield, Connecticut and the Washington government relations office from 1985-93. He began his career as a speechwriter and presidential campaign aide to former Vice President Walter Mondale from 1982-84.

Freeman is Chair of the Advisory Board of Global Witness; Vice Chair of the Board of United to End Genocide; a Trustee and International Advisory Board member of the Institute for Human Rights and Business (IHBR); Board Secretary of the Global Network Initiative (GNI); a member of the Governing Board of the Revenue Watch Institute (RWI); and Board Chair of EG Justice. He served on the Board of Oxfam America from 2002-10 and represented Oxfam on the Board of the Extractives Industries Transparency Initiative (EITI) from 2006-09.

Bennett Freeman earned an AB in History (Highest Honors) in 1979 from the University of California at Berkeley and an MA (Honours) in 1981 in Modern History from the University of Oxford, where he studied as an English-Speaking Union Churchill Scholar at Balliol College.

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