Tuesday, September 17, 2013

Moving the Measuring Stick

     In good or in bad times where do we want the business sector to end up? Even the critics of CR [corporate responsibility] are not always clear about that. In short, I reckon the best outcome would be a return of the private sector to the fold of Joseph Wharton's vision of social entrepreneurship, where financial gain for a few is substituted by simultaneous financial, social and environmental gain for the many. Instead of a business (i.e. financial) case having to be made for a social and environmental benefit, the reverse would apply; a social and environmental case would have to be made for doing business.
                                                                     Parkin,  The Positive Deviant, p.133.


Fast forward to the "Sustainability Update" section in the June 30, 2013 Pax World Mutual Funds Semi-Annual Report. Here VP for Sustainable Investing, Dr. Julie Gorte (an MSU alum!) discusses their efforts to "benchmark our funds with respect to their carbon emissions. This means we calculated how much of the greenhouse gas (GHG) emissions of the firms in our investment portfolios Pax World "owns," based on the percentage of the firm's stock held in our funds. Carbon benchmarking measures an investment portfolio's carbon intensity or carbon footprint, which is total metric tons of carbon emissions per million dollars of revenue of the companies in the portfolio." (p.36)

When they did this they found that of their five largest equity funds, four of them were less carbon intensive than their benchmark indexes. But they didn't stop there. They made their Global Environmental Markets Fund carbon neutral, by purchasing verified carbon reduction offsets based upon the emissions portion they own of the companies in their portfolio. Not only are they now tracking them but with an eye towards their reduction in each sector of investment.

By the way the performance of their fossil free Global Environmental Markets Fund was up 23% for the past year and 13% over the past three years. Now if we could only get universities and other institutional investors to listen to Parkin and Gorte, maybe we could build a more sustainable profit one that we could all share in.