Starting today, we are very pleased to be able to offer our clients two new options for investing in companies at the forefront of positive change on socioeconomic issues. This is part of LNWM’s ongoing effort to work closely with leading asset managers and research firms to build capacity and capabilities in the sustainable investing space and to offer our clients new ways to make a difference through their investment dollars.

In early 2021, LNWM approached Calvert, a pioneer in sustainable investing, and Parametric, a leader in portfolio customization, and worked with them for months to conceptualize and implement two new investment solutions. Our effort was driven by investor demand, based on LNWM’s work over many decades with high-net-worth and ultra-high-net-worth clients, foundations, endowments and nonprofit organizations. The solutions are powered by Calvert’s extensive research into ESG factors and key performance sustainability indicators, and Parametric’s portfolio implementation expertise.

Why Now: The operational decisions that companies make on a daily basis have a great impact on society. What is unique about this time in history is that more companies are acknowledging this. And many are taking action to address some of the biggest social challenges, not only through workplace policies they control, but beyond.

We believe our clients and others can have a meaningful impact on social issues by investing in public companies actively working to improve socioeconomic outcomes through their workforce policies, products/services, community outreach and philanthropic efforts. In addition to the societal benefits, financial benefits to the company can include higher brand awareness/loyalty, new market opportunities, and lower employee turnover.

“The sustainable investing opportunity set has not supported demand from investors to tackle social issues,” said Ronald G. Albahary, CFA, LNWM’s chief investment officer. “With a dearth of options, we set out to design solutions our clients need, and Calvert and Parametric were the perfect collaborators to bring this new strategy to life.”

CLOSER LOOK

The two socially focused investment solutions are: Empowerment and Community Health and Wellness.

The Empowerment solution focuses on diversity, equity and inclusion (DEI); financial inclusion, especially companies that provide affordable financial services to unserved populations and low-income communities; and how corporate activities preserve and improve on human rights. LNWM chose these three issue areas for their potential to reduce rising inequality and create opportunity for more people on a global scale.

The Community Health and Wellness solution emphasizes affordable housing; product responsibility; health care and nutrition; quality jobs; and basic services, such as drinking water, sanitation, energy, waste collection and broadband Internet. These issue areas were targeted for their potential to create strong and vibrant communities.

Both solutions were created in alignment with the United Nations’ Social Development Goals for 2030 (“UN SDGs”) and will invest in companies at the forefront of positive change on global socioeconomic goals. They will be invested through separately managed accounts (SMAs) that contain approximately 150 to 200 companies of varying sizes, sectors and geographies that have been researched, vetted and selected by Calvert. Account holdings will be monitored regularly by Calvert and adjusted when appropriate. The solutions will initially be available to LNWM’s clients but are expected to be expanded to other investors over time.

While the collaborative focus on social impact themes is new, the three companies have a history of working together. LNWM has recommended mutual funds offered by Calvert, as well as utilized Calvert’s Responsible Core Indexes in clients’ separately managed Parametric accounts.

In addition, LNWM recently launched a thematic solution called Planet Sustainability and Innovation (PSI), which invests in mutual funds targeting companies attempting to lead the global energy transition as well as those creating long-term sustainability in air, water, land, waste and biodiversity. Calvert is one of the three fund providers LNWM selected for the PSI for its expertise in global water solutions.

GAUGING IMPACT

Working with Calvert, we designed these two thematic solutions to have the key characteristics we look for in strategies that target positive environmental and/or social impact:

• INTENTIONALITY – Each solution has set goals that are aligned with specific UN SDGs that are widely recognized as the guideposts for sustainable investing.
• CONTRIBUTION – In addition to investing in companies leading efforts in targeted issue areas, Calvert’s engagement team is pushing companies to do more and filing shareholder resolutions when no progress is being made.
• MEASUREMENT – Measuring impact outcomes is challenged by data and framework consistency issues. We are committed to working with Calvert to find meaningful ways to define, report and improve the developing metrics within these thematic solutions, such as workplace diversity/opportunity or investment in affordable housing and healthcare.

“Sustainable investing has proven to be a sound strategy and it needs to be done right – goals-driven, performance-backed, and with companies that know what they’re doing,” said LNWM’s David Baker, Senior Director, Investment Strategy and Research. “We’re excited to be working with Calvert and Parametric to bring these new social impact themes to investors and put a new spotlight on the “S” in ESG.”

Read the press release on the new LNWM, Calvert and Parametric solutions targeting social impact.