Carole Laible, chief executive officer of Domini Impact Investments, explains how investors' rigorous approach to ESG and impact investing is helping to deliver returns and drive change.
Environmental Finance (EF): What challenges do ESG- and impact-focused investors face in today's investment environment?
Carole Laible (CL): Actually, we believe there are more opportunities than challenges. There is a grassroots movement to harness the power of investment dollars to earn a competitive return while helping to build a better future for all. Every dollar put out in the world has impact. That impact can be positive or negative. Impact investors choose to channel their investment dollars to create positive change.
We find the community of impact investors has a great commitment to the planet and its people. They consider this in all avenues of their lifestyle. They recycle, reduce, reuse. They purchase locally grown food and organic cotton clothing. They seek to support small businesses. The growing community of impact investors understands that each individual action makes a difference. Impact investing brings together a community of caring investors to align their investments with their values to create positive change.
EF: What is the philosophy behind Domini?
CL: Our work began well before the launch of our first product. It began with the vision of our founder, Amy Domini, in the early 1980s. Early in her career, Amy discovered that non-traditional considerations, such as how a corporation interacts with the environment or its stakeholders, can impact performance. She integrated environmental and social criteria into her stock selection and found it was helping her avoid some pitfalls and find well-managed companies. Amy was an early innovator in the field and contributed important work to grow the field. She published her first book on the topic, Ethical Investing, in 1984 and built an index to quantify the impact of integrating sustainability criteria in the investment process.
At Domini, we believe in a triple bottom line: People, Planet, and Profit. Investing for retirement, education, or savings, can be used to save for the future but also to help build a better world for all.
EF: What investment benefits can rigorous environmental and social research offer?
CL: We fundamentally believe that what is good for people and the planet is typically good for business. Companies are likely to prosper in the long run if they care for the natural resources they depend on. Investing in employees typically yields a longer-tenured, more experienced workforce. Strengthening a supply chain will help a company maintain critical goods and services needed in the manufacturing process.
Using environmental and social research is a lens that helps identify well-positioned, forward-looking companies, and is often an indication of the quality of the management team and corporate culture. All this data is useful in building better portfolios.
EF: What are Domini's Impact Investment Standards, and how are they put into practice?
CL: The Domini Impact Investment Standards are the backbone of all our work. In 2005, we began publishing our standards to provide transparency to our investors and as a guiding star for financial markets. We built them based on classic impact investors and what they are looking to integrate into their portfolio.
Our Standards have been incredibly durable since their creation and are quite aligned with the UN Sustainable Development Goals, although they pre-date them. These Standards are available and downloadable on our website and provide a great amount of detail but can be summarised with Domini's two interconnected goals of ecological sustainability and universal human dignity.
For more information please visit https://domini.com/
