By Jane Swan and Roraj Pradhananga

Positive returns in the fourth quarter helped propel all major indexes

The year started with a robust recovery from the negative returns at the end of 2018, followed by a resting period in the third quarter, and then more growth at the end of 2019. Continued moderate expansion in the economy was a tailwind for investors, with total return for both bond and stock investors at the high end of historic norms. The greatest gains were from risk asset classes (stocks, real estate, and high yield bonds). Investors in investment grade bonds were also rewarded. Within the Russell 3000 (broad index of US stocks), the strongest returns came from the largest components. Technology jumped 14.3% in the quarter and 46.7% for the year. Financials were up 7.6% in the quarter and 32.9% for the year. Every sector other than Energy (up 9.6% for the year) increased by double digits. Investors were rewarded by the almost 11-year stock market expansion, but the gains have been not evenly translated to all participants in the economy.

Since the stock market began its recovery (March 2009) and the end of the last recession (October 2009), much has changed. Unemployment has fallen from 10% to under 3.5%. Inflation remains low, currently below the target rate of 2%. Average family income (when measured using the statistical mean), has grown by 35%, which is just over 3% per year. Profits to stock owners, measured by the S&P 500, are now 498%. Companies have benefited from low interest rates, corporate tax cuts, increases in worker productivity, and in many cases, reductions in regulations.

Uneven Gains
In statistics, there are two frequently used approaches to calculating an average (or mean) and median. In common usage, average almost always assumes use of the mean method of calculation. The process for finding the mean considers all observations and divides by the number of observations. If you have ten observations of hourly wages and nine of them reflect $10 per hour and the 10th observation reflects $500, the average hourly wage of those 10 people is $59. Using the statistical measure of median, we organize all observations in numerical order and take the mid-point observation.

In the example above, the median worker earned $10. As income inequality grows, we believe that monitoring the difference between average (mean) and median becomes an important measure of the financial strength of the workforce. This is demonstrated in the graph below.

The green line showing the average (mean) income for families has grown at a much higher rate than the blue line, which represents median income. If the highest wages grow while other wages remain steady, the average will grow while most workers experience no change.

A recent JP Morgan report noted the differences in spending rates between families earning the highest 10% of incomes and the other 90% of U.S. families. They found that the highest earners spent just 68% of their income, while the rest of the population averages spending of 101% of income. The divide between average and median earners and the spending patterns of high and lower earners has implications on the growth rate of the broader economy. If spending rates are highest among those with the slowest growing income but low among those experiencing high rates of growth in real income, the consumer contribution to economic growth will be limited. It also has implications for the savings rates of most families.

In the years since the end of the recession, the economy has grown at an average annual rate of 2.2%. The average economic growth during expansions of the last 50 years has been 3.7%. The majority of GDP (almost 70%) comes from consumer spending. Low growth in wages for the majority of American families during this economic expansion is a part of the explanation for the lower-than-average growth of the economy during this long, but tepid recovery.

Meanwhile, this limited growth in most wages mixed with extremely accommodating monetary policy, stock buy backs and growing dividends have propelled the stock market to record highs despite this slow growth environment. We have a sense of the economy doing better than it is because we see the stock market soaring. While observed by many, the benefits are largely constrained to the top 10%. Market strength and economic strength are often related, but they are not the same thing.

2020 Planning
With election year and impeachment on everyone’s mind, Veris monitors for changes to the pillars of the economy, which are the strength in corporate earnings and bond markets. We also recognize that portfolio management is a long-term process. An important factor is not just structuring a portfolio for growth, but also structuring a portfolio to provide for spending needs during periods of decline or volatility. As some investors celebrate these historic market gains, we invite and encourage all of our clients to reach out to your Veris wealth advisor to be sure your portfolio is positioned for the road ahead.

The Veris team mourns the sudden loss of Jud Bergman and his wife, Mary Miller-Bergman, with great sadness.

Jud was more than just a great friend and strategic partner of Veris.

Jud was a visionary and an optimist, a philosopher whose maverick ideas changed the financial world, a dealmaker extraordinaire, a gracious man with a big heart, and a person whose modesty never wavered despite his incredible success. He had a unique ability to share his joy, his curiosity and love of life.

Veris Co-Founder & CEO Patricia Farrar-Rivas said Jud was one of the most thoughtful and unique individuals she has worked with during her 35-year career. Patricia started collaborating with Envestnet in 2000, when the firm had $8 billion in assets and a few dozen employees. Today, it has more than $3 trillion in platform assets and 4,000 people scattered around the world.

“Jud was a truly creative and gifted thinker,” Patricia said. “He had an expansive vision about the financial services industry and impact investing. He knew before others that impact investing could change the world. As a leader, he also had a clear idea of where he wanted to take his company. He saw over the horizon and welcomed others to come along with him.

“Each year, Jud delivered an amazing annual presentation at the Envestnet summit. He included cultural references and historical-point-of-views that were both surprising and illuminating. Then we would go to his favorite blues joint or go to see his kids Natalie and Elliott’s Indie Pop band Wild Belle. It was so refreshing.”

One Big Extended Family
Patricia continued, “Jud was very kind and warm. I am still grateful to him while my sister was battling cancer. He spent so much time with me and helped me through a difficult period in my life. That’s who Jud was: He truly cared about people. You got that true sense of family when you were with him and his team. He connected with people. He never became too aloof, too busy or too important to take the time to talk.”

Veris Co-Founder and Partner Anders Ferguson also worked closely with Jud and Bill Crager, the company’s former president and now CEO of Envestnet.

Anders said, “Jud was an optimist. He saw what was possible. He understood the ongoing integration of finance and information before many others did. And, he wasn’t scared to follow his vision. He enjoyed being philosophical and always thought differently about financial services. That’s one reason he loved to make deals. Everybody used to joke about it: ‘What is Envestnet going to buy next?’ One way or the other, they always made those deals work.

“My experience with Envestnet was similar to Patricia’s: The company, under Jud’s leadership, felt like family. That’s pretty difficult when you grow from a handful of people to thousands. Jud was a man of big ideas who made everyone part of his success. I will miss him. He was a good man and a real loss at a time when the financial services industry is gripped by cynicism and greed. Jud was a gem.”

On behalf of the team at Veris, thank you Jud. We are thinking about your family. And to our colleagues at Envestnet, our thoughts are with you.

The Veris Team

Veris has worked with Envestnet for the past 12 years. Veris serves as the strategic advisor to Envestnet’s impact investing platform.

By Anders Ferguson and Casey Verbeck

We hope you will take a few minutes to read our just-published 2018 Impact Report.

Download the 2018 Impact Report

Our Impact Report is the latest in a series of annual updates summarizing key developments around the world. The report is also an affirmation that the impact investing community is making good on its value proposition: To deliver market performance and positive social and environmental impact.

To our delight, the report reflects the passion and energy of our clients and the team at Veris. Each day, we’re emboldened and inspired by all of our clients, which in turn, motivates the team to reach higher and explore new ideas and solutions.

Many Highlights
This comprehensive, 28-page report offers insight about important developments in the field over the past year, including the following:

• A strategic assessment of where impact investing is headed
• Four macro trends that gained momentum in the past year
• Veris’s accomplishments in advancing impact investing
• A retrospective about transformative business over the past 50 years
• A scorecard quantifying the results of impact investing worldwide
• The positive impact of active ownership of public companies
• A snapshot of Veris’s five key investment themes
• An overview of our commitment to diversity and reducing our carbon footprint

This year’s report is the product of many hands starting with the partners of Veris, whose support for this annual project has been essential to its success.

Special recognition goes to our Research Group, whose analysis is another reason Veris is a recognized thought leader in the field. A heartfelt thanks goes to the team that did all of the hands-on hard work – Jessica Lowry, Nicole Davis, Garrett Markley, Luke Seidl, Richard Chen, Chris Baldwin, Greg Berardi, Susan Nagy, and Brian Kay. Together, this terrific team has produced another terrific report. Click here to download the report.

Anders Ferguson and Casey Verbeck are partners at Veris Wealth Partners.

By Anders Ferguson, Partner

Over the past few years, it feels like “climate change deniers” have won the day – or at least were gaining the upper hand. But then weird weather produced billions of dollars of damage, large ice flows melted and raised the seas, and a growing number of businesses and governments said enough was enough.

At the same time, ordinary people are continuing to suffer from the negative effects of climate change, while still others are seeing the positive effects of the rapid growth in the renewable energy economy.

Change is never easy. It requires a faith in the future and the willingness to change our mind. But when we do, we produce the energy and power we each need for both optimism and action. Lately, there has been a lot of reason for faith and reasonable optimism. Let’s take a look.

Europe and China Lead the Way
That the Trump administration pulled the U.S. out of the Paris Accord 2016 wasn’t surprising. What was surprising was the groundswell of global support for climate change solutions.

The response from hundreds of cities and other entities that signed onto protocol agreements to uphold the Paris Accords’ goals was both catalytic and encouraging. Side by side, American and global businesses are marching ahead in decarbonizing. Lacking American presidential leadership, Europe and China are leading the way. The U.S federal government has surrendered moral and policy leadership, but that has empowered the private sector to lead the decarbonization of the economy. American people are taking action.

The Good News
There is plenty of reason for optimism. Around the world, the private and public sectors are taking meaningful steps to address climate change. The following are just a few recent examples:
Renewable energy sectors are transforming transportation, buildings and electric power generation. By some estimates 90% of decarbonization is likely to unfold in renewable energy, and all three of these sectors are changing because of it. International Renewable Energy Agency

The Administration wants to reduce CAFE mileage standards for cars, but even auto companies are not asking for this. California and other states currently have high CAFE and environmental standards. They push the entire country in continually raising the bar. They are initiating numerous lawsuits to stop the Trump administration. Automotive News, 2/4/19

Electric vehicles in the U.S. represent less than 4% of total auto sales in 2019. By 2030, they are estimated to reach 30% to 40% of sales. The major global auto companies like VW are retooling for a future centered on electric vehicles. China is currently the largest market of total numbers of EV’s. It’s widely accepted that the coming boom in self-driving cars is dependent on fleets of electric vehicles for operational and engineering fundamentals. International Energy Agency, Global EV 2018 Outlook

In Calgary, our northern neighbor’s oil capital, oil company offices are being converted to apartments due to the exodus of oil companies and job losses. In part, this is attributed to failure to get new pipelines built south through the U.S. and east through Canada. Bloomberg, 6/10/2019

The sunset of the oil age is actually occurring. One notable example is Shell Oil’s decision to spend down its oil reserves and prepare the company for a “lower carbon future.” This shift includes Shell’s increased commitments to the Paris Accords. Shell is the fourth-largest petroleum company in the world.
CNBC, 6/4/2019

The New Green Deal is motivating political candidates and activists to think bigger. Apparently, some oil companies are doing the same. Four major global oil companies, including Shell and BP, announced their active support for a carbon tax. LittleSis, 5/28/2019

The nuclear era is winding down and renewables are taking its place. Connecticut, over the next 10 years, will replace a 2000MW nuclear plant with 2000MW off-shore wind farm integrated with energy storage. The wind farm operators expect to significantly increase system efficiency via the rapidly expanding energy storage systems emerging. CleanTechnica, 6/6/2019

Carbon Sequestration. We know that plants and trees remove carbon from the air. U.S. estimates for forests is 10-20% of total carbon emissions sequestered. Soil is less clear on a national level, but getting increasing attention in Regenerative Agriculture. Forest Service, USDA

The Big Picture
What does this all mean?

Driven by innovation and change, we are moving rapidly to a whole new decarbonizing economy. This is the beginning of an enormous economic and societal transformation. Business and the marketplace are the change agents.

This realignment of the world’s power infrastructure is inspiring entrepreneurs, business and governments to dream and build a new future without fossil fuels. Just as importantly, it is inspiring average people to take positive actions, which in this case only reinforce themselves. Home insulation to PV on the roof to an electric vehicle. “I am inspired and my risk taking is encouraging my neighbor. Critical mass sprouts.”

For success, we need greater government support in building a low-carbon economy. Only governments can mandate these rapid changes, which must be implemented to make a difference in climate change on our world and all its beings.

Anders Ferguson, Partner and Co-founder of Veris Wealth Partners, is a long-time champion of climate change solutions.

By Patricia Farrar-Rivas and Nicole Davis

One of the most rewarding aspects of working with clients is the opportunity to share ground-breaking ideas that benefit people and society.

We believe that Regenerative Agriculture is one of them – like gender lens investing – that has the potential to redefine climate change solutions. The concept has been around for decades, but it has gained momentum in the past few years. The reason is that Regenerative Agriculture is likely a better way to grow crops and raise livestock, but is also emerging as one of the most effective ways to reduce atmospheric carbon.

We wanted to share our enthusiasm for Regenerative Agriculture, along with the latest research and thinking about the topic. Our hope is to promote a broader dialogue with investors who want to align their wealth with their values.

Regenerative Agriculture – The Magic of Photosynthesis
What is Regenerative Agriculture?

One insightful definition is from Regenerative International, “Regenerative Agriculture is a holistic land management practice that leverages the power of photosynthesis in plants to close the carbon cycle and build soil health, crop resilience and nutrient density.

Regenerative Agriculture improves soil health, primarily through the practices that increase soil organic matter.” Such practices include no till farming, rotational grazing, use of cover crops, and the application of compost.

In its recent white paper, the organization notes that Regenerative Agriculture increases soil biodiversity and health, while increasing biodiversity both above and below the soil surface. In turn, that increases the water holding capacity of the soil and captures carbon. The anticipated result: harmful carbon is sequestered, soil structure is improved and human-caused topsoil loss is reversed.

Rodale Institute has been another thoughtful proponent of Regenerative Agriculture. In its white paper, the organization highlights the potential for controlling carbon emissions through Regenerative Agriculture.

“Simply put, recent data from farming systems and pasture trials around the globe show that we could sequester more than 100% of current annual CO2 emissions with a switch to widely available and inexpensive organic management practices, which we term ‘regenerative organic agriculture.’ These practices work to maximize carbon fixation while minimizing the loss of that carbon once returned to the soil, reversing the greenhouse effect.”

A Better Way
In essence, Regenerative Agriculture practices can prevent the release of soil carbon, and vacuums up environmental carbon, depositing it into the soil. In addition to the carbon sink benefits, Regenerative Agriculture can play an important role in the resiliency of our food system. The healthier soil created by Regenerative Agriculture is better able to reduce crop loss from climate change including flooding-rains and drought.

Experts say transitioning to Regenerative Agriculture will take time. Or will it? Maybe the answer is rethinking the current allocation of capital to climate change solutions.

Today, approximately 80% of investment in climate change solutions is for wind and solar. Just 20% goes for soil health and biodiversity. Perhaps these percentages should be switched, or at least balanced through the allocation of additional investment in soil health.

In order to create widespread adoption, it’s important that capital is used to create economic incentives for regenerative practices. While many such mechanisms are utilized only on a small scale, the results are promising.

Pay for regenerative practices programs have been rolled out for cover cropping, but more practices need to be included. The reason is that the benefits of a holistic system go far beyond the sum of its parts. On a recent tour with Dirt Capital of regenerative farms in the Hudson Valley, a number of Verisians learned about the Hudson Carbon Project. We visited the Churchtown Dairy, the location of one of Hudson Carbon’s monitoring sites, which seeks to measure and verify some of the ecological benefits of regenerative practices.

The work of Hudson Carbon and their partners at the Woods Hole Marine Biological Laboratory, lay important groundwork for the establishment of a soil carbon protocol that could be used by farmers to sell carbon credits, and reap monetary benefits for their role as carbon farmers and ranchers.

As impact investors, we have learned many times that innovation and education can overcome vestigial thinking and entrenched interests. The impetus for that change is often individual investors. The unimaginable growth of impact and sustainable investing in the past decade wasn’t initiated by institutional investors. It was championed from the bottom up by individuals who believed another way was possible.

We believe that now is the time for all of us to think about Regenerative Agriculture. It’s a rare twofer: An opportunity to feed the world more intelligently and possibly stop climate change in its tracks.

We recently attended one of the regenerative learning sessions at Paicines Ranch in California. Sallie Calhoun, also known as the Queen of Soil, created the No Regrets Initiative whose goal is to encourage the expansion of regenerative agriculture through education, impact investing and on the “ranch” experimentation.

As Sallie would say “at the ranch we are creating balance, by regenerating ecosystems while growing healthy food.” For more information about Regenerative Agriculture, please visit this very informative site, the No Regrets Initiative, which is a compendium of research and perspective on the topic.

Patricia Farrar-Rivas is Co-Founder and CEO of Veris Wealth Partners. Nicole Davis is Partner and Senior Wealth Manager at Veris Wealth Partners.

By Jane Swan, Partner and Senior Wealth Manager

Positive returns across investment markets seem to have largely removed the decline and worry from the end of 2018 from our memories. U.S. equity markets added slightly to first quarter growth with large cap stocks up 4.3% in the quarter and 18.5% year-to-date (YTD). Small cap stocks are up 2.1% in the quarter and 17% YTD. International developed markets were up 4.2% in the quarter and 14.5% YTD. Emerging market stocks were up 0.7% for the quarter and 10.8% YTD. Fixed income markets were also positive on speculation of a reduction in Federal Funds rates playing a part in pushing returns higher. The 10-year treasury was up 4.2% for the quarter and 7.4% YTD. Corporates were up 2.6% in the quarter and 5% YTD, and municipal bonds were up 1.7% for the quarter and 3.8% YTD. High yield bonds were up 2.5% in the quarter and 9.9% YTD. They recovered considerably from the end of 2018, when there appeared to be more concern in low credit markets about future economic weakness. Real estate was also positive, with the REIT index up 1.8% in the quarter and 19.3% YTD.

1

Within domestic equity markets, all sectors but the energy sector continued the positive returns of the first quarter. Even with the negative returns in the quarter for energy, all sectors are positive YTD. The solid rebound from the negative returns at the end of 2018 suggests investors may have a renewed confidence within financial markets. Some of this confidence can be tied to hints of possible accommodation by the Fed. We believe it is somewhat hard to understand this stance. Typically, a rate reduction is a tool reserved to stimulate a suffering or potentially suffering economy.

2

The argument for a potential rate cut is thought to be a softening job market. Growth in the economy can come from two key sources. If the number of workers grows while the productivity (value of goods produced) of each worker stays steady, the economy is likely to grow. If the number of workers stays steady but productivity per worker grows, the economy is likely to grow. During a recession, layoffs lead to a decrease in the number of workers, which eventually leads to an increase in the productivity of each worker and the economy again will grow. During an expansion, the number of workers often grows more robustly than the increases in productivity. Today’s potentially slowing rate in the number of workers with a modest level of productivity growth, is raising some concern that continued economic growth may become more fragile.

The forecasted cut in the Federal Funds rate aimed at prolonging economic growth is part of what has created the slight inversion to the yield curve. An inverted yield curve means that bonds with longer maturities pay a lower yield than bonds with shorter maturities. In the curve chart to the right, you see that five years ago, bonds of longer maturities paid a higher yield than bonds of shorter maturities. The current yield curve shows yields lower on some longer maturities than those of the shortest maturities. In an economy expected to grow, investors seek to be compensated more to have their funds tied up for a longer period of time. In the past six decades, the yield curve has inverted for three months, seven times. In each case, the economy entered a recession within two years. While this isn’t a statistically significant enough number of observations to draw a confident conclusion, it raises some concern that a prolonged inverted yield curve can be a sign of a soon to be slowing economy.

In this summer of global record heat, we believe there are obvious needs for growth in productivity and workers to combat climate change. New York City has joined eight U.S. states and over 100 cities and counties4 committed to transitioning over the next few decades to 100% renewable energy. This means that each community would produce more energy from renewable sources than it consumed. Getting there will require both workers and increases in productivity, which could play a role in economic growth. Without renewable energy targets from the national government, it continues to be up to cities, counties, states, and business to take the lead in creating this new economy.

As the stock market continues its longest expansion of our lifetimes, we invite our clients to connect with their wealth manager and evaluate their portfolios ability to meet their goals over a variety of market conditions.

1 PMC Envestnet Capital Market Report 7/3/2019
2 U.S. Bureau of Labor Statistics, Private Non-Farm Business Sector: Labor Productivity [MPU4910063], retrieved from FRED, Federal Reserve Bank of St. Louis
3 US Department of the Treasury
4 Sierra Club “100% Commitments in Cities, Counties, & States”

Veris Guest Blog: By David Richardson, CFA

The theme of the UN’s annual World Water Day last month was “leave no-one behind.” This sentiment is applicable to both emerging markets and the developed world, while offering opportunities for investors in water.

The sixth sustainable development goal (SDG) from the UN is clean water and sanitation for all by 2030. The UN celebrates this day each year to call attention to this global priority and to advocate for sustainable management of freshwater resources.

While the need to develop water infrastructure in the developing world is understood, access to clean water, as the ongoing 2014 Flint, Michigan water crisis illustrates, is an issue for the developed world too.

My firm, Impax Asset Management, has been researching and investing in listed water related companies since 1999, running a dedicated strategy since 2008. In recent years, we have seen the universe of investable companies increase and an acceleration in the growth of many of its constituent companies. Climate change, pollution and a growing, increasingly urban population all drive demand that innovation and technology can help fulfil.

Governments, public bodies and private industry are all investing in new and upgraded infrastructure, and the investment momentum keeps gaining pace.

Access and changing preferences
Leaving no one behind in emerging market regions, like China, India and Sub-Sahara, largely requires the development of water infrastructure where it previously did not exist.

It is a positive development driven in no small part by urbanization, growing populations and changes in consumption patterns that demand higher standards of living. This isn’t just about access to clean water and water treatment. Many items taken for granted by urban dwellers require a significant amount of water to produce. A hamburger, for instance, requires 460 gallons (2,090 liters) of water to make.¹

Aging infrastructure
A great deal of the infrastructure in the developed world is outdated, inefficient and/or struggling to meet modern water demands. This was exemplified by the Flint’s water crisis, where cost-cutting led to insufficient water treatment and lead leaching into the water supply. The project to replace the lead pipes, which commenced in 2016, continues with costs running into hundreds of millions of dollars.²

Climate change
Climate change is impacting water security. In recent years there have been a number of severe periods of drought and water shortages that have impacted farming yields, industrial productivity and meant loss of revenue for workers, such as the 2012–16 California and the 2014-2017 Brazil droughts.

Most recently, South Africa’s second largest city Cape Town, with a population of about 4 million people, suffered its own water crisis. Rainfall well below historical levels meant the City’s main reservoir was close to empty in March 2018. Cape Town residential water use was cut from about 120 liters per person per day in 2015 to 50 liters at the start of 2018.

For officials and residents in these regions, the long-term impact of climate change on water supply requires investment in a range of measures, including conservation and leak detection. Examples of other extreme weather events, like storms, represent a different priority, where protection and clean-up can be more pressing.³

An abundance of opportunities
The investment opportunities in water are surprisingly diverse and resilient. Risk characteristics are comparable to equity markets, and water runs through the global economy, across markets, sectors and regions. Water also provides attractive opportunities through the economic cycle, encompassing both defensive and cyclical businesses.

Technology and innovation play key roles in reducing water consumption. Smart meters, for example, can help utilities manage the supporting infrastructure more efficiently, and provide an early warning sign of and location of leaks. Public entities and private industry globally are investing in upgrading their infrastructure and this investment momentum looks set to continue.

Sources: 
¹Friends of the Earth and Impax Asset Management ‘Investing in water: tapping into a source of resilient growth’
²Wikipedia
³The Financial Times

David Richardson, CFA®, is Executive Director of Impax Asset Management, which has more than $16 billion in assets under management.

By Anders Ferguson, Partner

Ellen Remmer’s journey from enlightened philanthropist to impact investor is a story that can inspire all of us.

Ellen grew up in a philanthropically engaged family that established a family foundation in 1990. Over the course of the past 30 years, Ellen’s vision has steadily evolved, and today she is a champion of impact investing and the opportunities to align her wealth and her values.

Recently, her mission has focused on helping women take control of their assets and invest with greater purpose and impact. Her vision manifested in a new nonprofit initiative, Invest for Better, which launched in January.

Last month, I sat down with Ellen to discuss her life’s journey. I wanted to share her experience because it speaks to the potential of investing capital to achieve both social benefit and financial gain. It’s also instructive in describing how investors can change their mind about the role and possibilities of wealth.

Developing Consciousness
Influenced by her family’s focus on the greater good through its foundation, Ellen began her career in 1990 as an advisor to philanthropic families and organizations. She primarily served families of significant wealth who wanted to be more effective donors to create positive change.

In 2000, Ellen attended a Council on Foundations meeting in NYC, where she heard a representative from the Jessie Smith Noyes Foundation talk about the idea of Mission-Related Investing. At that point, a lightbulb went off. Ellen realized that foundations can use their endowments’ capital to further their goals – a grant and invest.

This was a transformative moment for Ellen, who had always advised families to “give away” money to accomplish their mission. Ellen’s epiphany, however, was still ahead of its time. Her vision had only tepid support from advisors and co-trustees. The objections were similar to those we still hear today. “It won’t work.” “We’ll lose money.” “Not fiduciarily responsible.”

Education Is Key
Undaunted, Ellen kept pushing. In 2007, she was appointed to lead The Philanthropic Initiative(TPI), a philanthropic advisory practice for individuals, families, foundations, and businesses. In that new role, her thinking evolved further. She was responsible for identifying critical issues and trends in the field and translating them into practical advice for philanthropic clients.

The challenge was how to present the notion of impact investing to families and demonstrate fiduciary responsibility at the same time. She knew the task at hand was to educate and help investors think in new ways.

TPI worked with a number of partners to help clients assess opportunities for Mission-Related Investing. They also facilitated an initiative to help community foundations offer impact investing to their donors.

After years of advising families and watching others struggle forward, Ellen felt she had not made the big step in transforming her wealth and portfolio. As Ellen told us, “I simply was not practicing what I was preaching.”

As she became comfortable with the benefits of impact investing, she reflected on the advice she had been receiving from her advisors. It was clear most weren’t aware that wealth could be aligned with values and that a rigorous investment approach could achieve meaningful financial results andsocial benefit for clients. As Ellen noted, it’s easy to simply “follow the recommendations of your advisor.”

Ellen responded by giving her advisor an ultimatum: Could the advisor’s team meet her needs as an impact investor? It quickly became evident the advisor couldn’t, and that’s when we welcomed her to Veris.

A Different Way
As an impact investor with Veris, we have helped Ellen seek market-rate returns that proved the skeptics in her family wrong. She learned that impact investing was a sound and viable approach to creating social benefit and financial gain.

Working through her foundation, she then moved to higher-impact investments, which not only accomplished her financial objectives, but also brought Ellen personal joy. Her son joined her family’s foundation board. He was very interested in impact investing and helped bring along the rest of the family.

Always advancing, Ellen wrote the TPI Guide to Impact Investing, which furthered her thinking about women and impact investing. She understood that women, in particular, have a special interest in impact investing, but often fail to translate their intent into action.

Invest for Better
So, Ellen got determined to help women invest with impact. Her goals were to educate and empower women about impacting investing, while demystifying the process.

All of this work has culminated in her current project, Invest For Better, a nonprofit campaign whose collaborators include TPI, Mission Throttle, Mission Investors Exchange, The Case Foundation, among others.

Ellen believes more women should be engaged in impact investing than they are today, but says there are three “gaps” that prevent more women from doing so.

The first is the aspiration gap – the disconnect between interest and action among women. Second is the application gap – having the time and confidence to invest with impact. Third is the support gap – having advisors and peers to discuss impact investing.

Like all of Ellen’s work, she has put her heart, soul and keen intellect into her new project. The team at Veris believes this well-timed initiative will play a vital role in motivating women to embrace impact investing.

More than anything, Ellen is one of those courageous leaders whose passion, energy and vision will continue to inspire us all.

Thank you, Ellen.

By Alison Pyott, Partner and Senior Wealth Manager, and Rebecca Orlowitz

Many of us are struggling with the current global refugee crisis and seeking some small way to make a difference. Ban Ki-Moon wrote an op-ed for The New York Times titled, “The refugee crisis is a test of our collective conscience.” The crisis affects all corners of the world. Refugees face a host of common issues as they seek peace and security, ranging from the trauma of the refugee journey itself, experiencing or witnessing violence, challenging humanitarian conditions in refugee camps, prejudice from host communities, a lack of self-reliance and livelihood, and even problems
arising from resettling or returning home. Should refugees successfully overcome these obstacles, they must still cope with the trauma for generations to come.

At the end of 2017, a record 68.5 million people around the world had been forced from their homes, including 25.4 million refugees, according to the United Nations refugee agency. Only 102,800, less than 1% of the total number of displaced, were admitted for resettlement in 2017. The terms refugee and refugee camp imply a temporary situation. But this is not a new crisis, and for many refugees their situations are far from temporary. Some refugees have lived their entire lives in camps. Palestine refugee camps have existed since 1948, Mae La refugee camp since 1968 and Dadaab Kenya since 1991, to name a few.

What To Do?
The situation is overwhelming and absolutely a test of our collective conscience. As global citizens, we can use our awareness, energy and philanthropy to help. The impact investor has additional options. We can question how public companies are involved in the refugee and immigration crises. Are they or their supply chains involved in forced or child labor, unfair working conditions, human rights violations, or exploitation of undocumented workers? Companies with higher governance scores are often less likely to engage in these practices.

Divesting from private prisons is another option. There are two publicly traded private prison operators, GEO and CoreCivic Inc. According to the Migration Policy Institution, as of August 2016, nearly three-quarters of the average daily US immigration detainee population was held in facilities operated by private prison companies. That’s a sharp contrast from a decade ago when the majority were held in ICE-contracted bed spaces in local jails and state prisons. The industry’s bottom line depends on incarceration for investor profit.

Investing in solutions is another option for the impact investor. Community development finance institutions (CDFIs) work in many US communities. They deliver responsible affordable lending to help low-income, low-wealth, and other disadvantaged people and communities join the economic mainstream. Investing in a CDFI certificates-of-deposit or promissory note may help refugees and immigrants build credit with low limit cards, financial literacy seminars and loans. In 2014, Grantmakers Concerned with Immigrants and Refugees published a guide of CDFIs referencing Dreamer, immigrant and refugee programs.

Other developing options are supporting public companies who make significant contributions to refugee welfare, including hiring, funding, and in-kind services. New and further developing are pay for success bonds and private investments in refugee entrepreneurs directly or through funds.

Despite the scale of the refugee challenge, we need to think of it first and foremost as a crisis of solidarity. Whether the world can come together to effectively support these vulnerable groups will be a true test of our collective conscience.

Veris Guest Blog: By Timothy P. Dunn, CFA

Pacific Gas & Electric (PG&E) Corporation, California’s largest investor-owned utility, which serves roughly 5.2 million households in central and northern California, filed for bankruptcy and is facing an estimated $30 billion of potential liabilities stemming from its equipment’s role in the historic 2017 and 2018 wildfires.

PG&E’s bankruptcy is indicative of how our changing climate presents real economic and financial risks for companies and investors. Prior to the wildfires that burned over 240,000 acres, PG&E included warnings that weather-related disasters could weigh on or disrupt its operations in its regulatory filings. In a statement, the company noted that the state’s most recent climate assessment “found the average area burned statewide would increase 77 percent if greenhouse gas emissions continue to rise,” and that “prolonged drought and higher temperatures will triple the frequency of wildfires.” Further, PG&E performed extensive water risk assessments, water management was integrated into its business strategy, and the company spent hundreds of millions of dollars every year in fire prevention, including pruning or removing thousands of trees. This awareness and action, though necessary and important, was not enough.

In an environment that continues to be challenged by climate change, PG&E’s situation could be a harbinger of the economic toll of spatially-related climate risk. “California is now a riskier place to do business,” said the Environmental Defense Fund’s Michael Colvin, a former adviser to the California Public Utilities Commission. “This is a statewide problem.”

The bankruptcy not only points out the danger that warming poses for many companies, it also underscores how difficult it is for investors to analyze risks linked to climate change compared to conventional business challenges. It is becoming increasingly clear that economic damage from climate change will affect a variety of sectors, and even companies regarded as forward-thinking might not be able to directly prepare for all the externalities associated with this systemic global problem.

Source: Seeking Alpha

Terra Alpha first purchased PG&E in 2015 based on the fact that it was a leading US regulated power provider with solid fundamentals and a strong record of shifting to lower carbon power generation. Nearly 80% of the electricity that PG&E delivered in 2017 was a combination of renewable and GHG free. Accordingly, PG&E was well-positioned to benefit from increased regulatory action in California aimed at furthering the shift toward renewable energy.

We sold our shares of PG&E in mid-October of 2017, after PG&E’s equipment was linked to the start of several wildfires. We had determined that the risk profile for the stock had dramatically worsened and it was no longer prudent to own. We felt that its exposure to such enormous liability, coupled with CEO Geisha Williams’ concerns about the growing financial risk for PG&E from forest fires, intensified by a changing climate, and California’s unique inverse condemnation laws, represented material undiscounted financial risk.

While PG&E may represent the first climate change bankruptcy it likely won’t be the last. Investors need to learn how to account for long-tail climate risk in their portfolios.

Timothy P. Dunn, CFA, is Founder, Managing Member and Chief Investment Officer of Terra Alpha Investments, LLC, a global equities asset manager.

*The information presented by Mr. Dunn is not an endorsement of Terra Alpha Investments by Veris Wealth Partners.