Iyassu: Welcome everybody to Inside the Flows, episode 13. I'm your Iyassu Essayas and I have a very special guest with me today, Leslie Samuelrich president of the Green Century Funds Welcome, Leslie.
Leslie: Hi, Iyassu. Hi, everyone.
Iyassu: Leslie is an amazing, amazing guest that we have here today. She's not only the president of the Green Century Funds, she's also the board member of USSIF And I think I've served with you since, what was it, 2000 and, I don't know, was it 2017, Leslie, when I first started? Yeah.
Leslie: It's been a while. Yeah. Isn't great.
Iyassu: Yeah. I remember you first showing me the ropes of what it means to be a board member. It was my first time being a board member at USSIF and I mean, you had it down, right. I was very impressed.
Leslie: Well, I'm glad I could help you along because now you're great. You're the vice chair.
Iyassu: Yeah. And thanks. Yeah. I learned from the, from the best, right? ⁓ But we're very fortunate to have you here on the show. It's going to be a really good show for audience members. inflows, AI update this, this time we're going to all things sustainability. So I'm really excited to have Leslie ⁓ who ⁓ is and her firm, Green Century in sustainable investing space. So really excited to have you on Leslie.
Leslie: That's very sweet. Thanks so much for having me.
Iyassu: Just so our audience members get a good grasp of you, Leslie, do you want to just kind of introduce yourself to them and you, your background and Green Century and what you all do, all the amazing work that you do out there in the field?
Leslie: Yeah, I'd love to. So as Iyassu also said, I'm Leslie Samuelrich. I'm the president of the Green Century Funds. We've been around 30 years and we've always been focused on sustainable investing, particularly environmentally responsible investing. We offer mutual funds to folks and to individuals as well as institutions. And we have a three part approach. First is... We follow screening and exclusionary And so our goal is to keep people's investments out of the most environmentally dangerous industries or companies. So to do that, we have things like fossil fuel screens, screens against factory farms, against weapons. And in some of our funds, we're starting to use the UN Sustainable Development Goals. another acronym in the field of SDGs. And it's totally fine if you've never heard of that. But following things like climate, clean it and affordable energy, life on land, which means like deforestation ⁓ and life underwater. So protecting ocean wildlife and trying to keep plastics out of the ocean. But a lot of people use us for that, but also because we do a lot of something called shareholder advocacy. And that's when you use your leverage as a shareholder to voice your concerns to companies. tend to go more than just voice our concerns. We're really pushing companies to make changes that improve the environment. So not just to protect them against what we think are financial and material. risks and threats, but also to deliver real impact. Because I don't know about all of you and Iyassu, but I think a lot of people want to do sustainable investing because they want to see a change in the world. And they want to make the place cleaner and healthier and safer. And so that's what we're focused on, whether we're protecting forests or reducing plastics or just getting the ability to fix your stuff. like your right to repair. That's a concept out there we've worked on. And the third is that we were founded and we're still owned by nonprofits. And what that means is that 100 % of our net profits belong to them. So they can use them to run their campaigns. There are state-based groups called the Public Interest Research Groups or yet another acronym, PIRGs Not the greatest acronym, but that's what it is.
Iyassu: You
Leslie: ⁓ And they've been around since the seventies working at state level and at the federal level to work on some of the same issues that I was talking about, like getting rid of toxic pesticides, ⁓ preserving parks and wild areas, and doing some consumer protection ⁓ good governance things. So that's Green Century. We were one of the early ones, one of the pioneers in the sustainable investing space and we've remained ⁓ independent all this time
Iyassu: Yeah, Leslie, just for our audience members to know, ⁓ when you started with Green Century and up until today, you also elevated Green Century's platform. I believe you are in the Forbes 50 under 50. then you're also on ⁓ 100 Most Influential Women in the group. So you have some accolades, Leslie. You're kind of on that rock star status. ⁓
Leslie: Thank you. Yeah, so I wish it was 50 under 50. It's 50 over 50.
Iyassu: There we are. was trying help you out there. ⁓
Leslie: I'll take it anyway. Yeah, that was such a cool event. was at the Rainbow Room in New York City. And it was just full of amazing women. And I don't really know how I got the awards. ⁓ Editors and people pick you for it. But yeah, I was on the Barron's Most Influential Women in Finance for two years running.
Iyassu: Yeah, that's amazing. So Leslie's also frequented on the New York Times, Wall Street Journal, ⁓ Forbes, Bloomberg. I mean, you'll see her in the media. this is ⁓ she's done a lot to elevate Green Century's mission. So I want to kind of thank her for that and her services also to just sustainable investing in general. You put a lot of good work in there and you've gotten you've gotten companies to change their behaviors, which is really, really hard to do. So.
Leslie: Mm-hmm.
Iyassu: hope our audience members appreciate that. now, Leslie, we are going to move on to the ⁓ recap ⁓ talk a little bit about what happened this past week. And so there were some ⁓ this week we're going to focus more on sustainable investing news. We typically cover broad market categories, but it's ⁓ much been the same. ⁓ ⁓ the war in Iran. ⁓ that's pretty much what dominates the conversation. But what's really interesting for audience members is there's a lot of happening on the sustainability front. you know, it's kind of, I would say it's not as inactive as folks would appreciate. So, you know, this past week, the Wall Street Journal covered a story on this is the net zero pledges that a lot of major companies put forth. And particularly there was an academic paper, actually two academic papers that came out showing that ⁓ commitments are ⁓ reducing deforestation and long-term emissions, even though some of them kind of don't work. And so what was interesting about it was there were, it was the journal of Nature that put out these reports saying that ⁓ ⁓ purchase carbon credits to protect forests is sometimes those carbon credits are only as good as the developer that they're purchasing on can protect those forests. And sometimes that doesn't work out. But then the other report said that, you know, sometimes it does because it brings a lot of attention. So it brings a lot of attention to the issue, to the area, and it does protect forests. And it is almost like a deterrent for companies wanting to go in and maybe go to the Amazon and cut a bunch of rainforest down for farmland. It becomes a deterrent. So that was a really interesting aspect of almost like a net-net. It's not a win, but not a loss in the carbon and the deforestation area. So have you guys done any work on that? And do have any thoughts?
Leslie: Right. Well, we've worked on deforestation for over a decade, less from the carbon credit point of view ⁓ and work, but more actually, which is okay. But again, it has mixed results. It can send a market signal, that's important. It might protect areas that otherwise would not have been protected. The obviously downside is if you're selling credits for an area that's already been protected or like, someone's double counting out there and it's not really having an impact. We've worked with companies more to actually adopt something called deforestation pledges. So growing palm oil that's in Southeast Asia or soy that's more in Latin America and Brazil to do that without burning and bulldozing down forests. That's a very direct way that corporations have made an impact. plus government policy. So Indonesia's deforestation rates have been going down significantly the last 15 years. And part of it was the corporate work that we and others did. And part of it was the government policy to put a moratorium on building new plantations. That's a little bit under threat now as there's a new agricultural ⁓ initiative in Indonesia. And we actually are working with. ⁓ mostly European and other global investors to try to demonstrate that investors actually care about protecting these. Remember like when you're young, the lungs of the earth, that's what they called rainforest. They hold a lot of carbon, they process a lot of carbon. And when you burn them, it actually releases a lot of carbon and then you don't have the forest to do that carbon capturing.
Iyassu: Yeah.
Leslie: process that they do. And it sends like 10,000 people to, used to 10,000 people to hospitals because it just literally they set them on fire and the smoke would carry as far as Singapore down there. that I feel is one of the most direct ways, especially in other countries ⁓ that where companies can play a real role. They can adopt these deforestation. pledges throughout their supply chain or banks, which we've worked on also that they can make pledges not to lend money to companies that are involved in deforestation projects. deforestation has gotten a lot, that plus biodiversity risk has really finally caught on here in the last couple of years as a real material threat. And it has a direct link to climate change. As you and all the viewers know, climate risk is an actual real material threat to companies that whether, no matter what side of the aisle you're sitting on, companies are incorporating it and investors are factoring it in to their choices too.
Iyassu: Yeah, it's one of those things where when I was younger, I didn't appreciate how much influence companies have on their supply chains until I got into the sustainable investing space. And, ⁓ know, it's ⁓ impossible to tell your supply chain, hey, if you want our business, well, you got to do things a certain way. And getting the to take that initiative on does take the investor voice to push them. direction or else, you know, they're going to think about how do I maximize returns for my shareholders, right? And slashing and burning is like the cheapest way to do it. Right. So to have investors like yourself, and I'm sure you had partners in the government on policy and other NGOs working with you, Leslie, it was like, that's it's a pretty big achievement to get these like multi, multi-billion dollar industries to change their supply chain practices.
Leslie: Yeah, it doesn't happen overnight, but when you win, it's worth it. And then there's a lot of follow up. Like we spend time ⁓ holding the companies to their commitments, which is an important part of any kind of shareholder engagement. The wins get the headlines, ⁓ it's the implementation where, you know, the rubber really hits the road, so to speak.
Iyassu: Yeah, I imagine it's like a relationship, right? Your partner is like, ⁓ well, I promise not to do this. And then you're like, all right, did you stop doing it? Did you stop doing it?
Leslie: It's not quite that loose for us. Maybe for some it is. And for some firms will talk about how we're really working in partnership with companies. And we certainly do with companies that have adopted the policies and are truly committed to them. they need more than just a suggestion. ⁓ know, they need to ⁓ urged to do these things. And so... ⁓ We take a more assertive approach, I would say. And if the company is not addressing the risk that we've identified, we will file a shareholder proposal. And then sometimes that will get them to the table to take the negotiations more seriously. like we've been presenting shareholder proposals just the last couple of weeks. week is the final week for ours. This is like the height of shareholder season. So this episode's coming at a really cool time where shareholders get to vote on what they think about these issues. we filed, I think this will be the fourth year we filed the most environmental proposals of any firm because, you know, sometimes they'll just listen to you. And then sometimes they need that. It's like the carrot and stick. need the stick. They hate shareholder resolutions to be on their proxy. So they have a lot of incentive to get rid of them through a negotiated thing. But we make them sign an agreement. We don't just like do it over a handshake and we want the agreement to be public. So it's not just for Green Century and Green Century's investors, but all investors to know what their plan is.
Iyassu: Do you want to just talk about the shareholder resolution process and why it's so impactful to the companies that we own? mean, some of our audience members, they've heard of proxy voting, but they don't really understand the functionality of it and why it's so effective. Do you want to just kind of give them ⁓ some insights, like why it's a tool you use to get companies to the table?
Leslie: Yeah, we think of it as a escalation tactic. So first, you always ask a company, you send them a letter, ask them for a meeting, you want to explain the concerns. Sometimes those meetings happen. And every once in a while they go, oh, we hadn't thought about that, or actually we have been thinking about that, and this is what we are planning to do. And every once in a while the stars align and you're like, that's great. That's what we were thinking you should do too. More often than not, the stars are not quite lined up. so then we, you know, ask them for something more. And we might say, you know, if this isn't, if you're not able to agree to this, we're all going to file a resolution. And you usually do that in the fall. And then the time between the fall and now is when you can do more negotiations with the company until that proxy is printed. And most of the questions as people ⁓ seen are about approving boards of directors or audit firms or some mechanics around the governance. But any of the other questions that appear and those are the ones that appear ⁓ after first questions the company puts on, those are the ones that some investor, some shareholder has put forth. And they're not binding. But if you get a strong vote, then it's a signal to the company that, you know, it's not just the filer or that shareholder that cares, like broader community cares. And it's another leverage point. So you use that to go back and negotiate again with them and see like, you know, this is the percentage of shareholders that care about this. you really should take this into account. And sometimes that works in one season and sometimes, you know, it takes two or three you know, get this, not only the sustainability people on board, but then the supply chain people. then sometimes those people use it as leverage internally to say like, we think we need to be reducing our plastic packaging. And now investors are asking us about this too. So they have more backing to use internally to put forward the process. ⁓
Iyassu: I bet you the sustainability folks really love you, like they're inside the companies, like, cause you're raising issues that they're either working on or because there's no, a lot of times, you know, the shareholder resolutions are on topics about risk mitigation instead of like maybe revenue generation or profit, you know, ⁓ margins. So the sustainability team members are looked at from the executive team as like a, almost like a cost center. So when you come and you say, hey, this is an issue that matters. And they were like, you know, I say secretly working on it, but they were like, they're very aware of their environmental impact. They probably love you when you bring up these topics to management.
Leslie: Yeah. I think we give them more. know, ammunition, though I hate to use that word exactly, but more ⁓ backing. Weight yeah, thank you. Thank you very much. So that they can make the case. So it's not just their voice. It's like, and then now there's investors. And then if it goes to a vote, it's like, we do brief all the top institutional shareholders, or we try to. ⁓
Iyassu: Weight okay, backing.
Leslie: to also get them to bring that forward in their conversations or devote in favor of the resolution. And so does give them that extra input. So it's not just them saying it internally and there's these other pieces happening. ⁓ Century also does media around this to the extent we can get it covered in sustainability publications or just ⁓ trade ⁓ or broader. ⁓ media outlets so that it gets more notice and companies generally ⁓ think like all publicity is good publicity. So yeah, we're really trying to leverage it and back the sustainability people who have answers a lot of the time ⁓ to issues, but they have to make the case.
Iyassu: I think the other impact you have, so for folks on the audience that don't know the shoulder resolution process well, it shows up on the proxy, ⁓ happens during the annual general meeting of ⁓ company. ⁓ it's the board who has to respond to the resolution. So it's not just management ⁓ taking reins, even though they probably do most of the work. ⁓ But board is putting their name on the line. to the resolution saying either most of the times they don't support it or else it won't make it to the the resolution or it won't make it to the the proxy card. And so you're elevating the environmental health and safety teams issue to the board and that could be very impactful for that team career wise, impact wise. ⁓ the board has to come up with a response on ⁓ they want to move forward with this or not. And if they don't, well, they got to answer to the shareholders why they think, know, management's response is a better or management's preferred point of view is much better than what the investors are bringing up a la green century.
Leslie: Yeah, the annual meetings are really beautiful thing. It's the one time that any shareholder can go and actually see and hear the chair and the board of directors. It's, know, a lot of them went virtual during COVID and fortunately most have stayed that way. But if they're in person, it's particularly great because not that many shareholders go and then you get a, you, you know, present your proposal, you get two minutes to talk about it, but then it's the afterward piece that you actually can go up and talk to the directors more. And sometimes we have not quite like finalized a deal then, but made a lot of progress just by being in the room, not just with the sustainability team or the investor relations people or other senior executives, but also the board. And not all board members are paying attention to every single issue that's coming forward on the ballot. ⁓ So it's important. It's one of the shareholder rights you have is to be able to put a question on the ballot. There's a few individuals who do this consistently every year. They're not with the firm. They just own a lot of shares. prolific filers to try to bring the issues up to a wide range of companies. So if you are ever asked to vote on proxies for your clients, other resources out there that you can use to figure out how you would vote if you wanted to support sustainability. ⁓ of them are pretty obvious what you would do too though.
Iyassu: Yeah, I think also even though some of those board members may not be paying attention or kind don't put that much weight on the ⁓ actual ⁓ what they do care about is their vote percentage. they look other board members' vote percentages. And if you piss off enough investors, that vote percentage FOR goes down. ⁓ And they don't that. That freaks them out. ⁓ You know, it's a tight rope that these board members have to walk and, you know, they're at the service of the shareholders. Just, you know, for audience members to remember, you know, these are publicly traded companies. They're basically using your dollars to run the company. And so they need to listen to you. And if they don't, well, you have a very, very powerful way of saying, I don't like where leadership is going. And it's by voting against the board of directors
Leslie: Yep. Other firms have taken on those campaigns. So like if you do this for a couple of years and the board and the company are not responding in a way that is moving you toward what you think you need to get addressed, you can run director campaigns. We don't do that at moment, but other other, especially nonprofits done it.
Iyassu: Yeah, mean, Green Century has a pretty well-oiled machine when it comes to shareholder resolutions. And a lot of other firms look to how you do it and try to replicate it, Leslie. So good on for you all for perfecting that system.
Leslie: Thanks. Yeah, we have four people who do it out ⁓ a smaller firm. So it's a top priority for us. It's again, it's the way that an advisor can show their clients ⁓ their investments are doing in the real world. So ⁓ lot of the advisors and I think find ⁓ the about it really helpful to translate. what sustainable investing can do to those clients who, know, they're like, you know, they meet an hour a year maybe with their advisor. just need a couple stories that will resonate with them and they'll remember. And then they feel good about it, which is especially important if it's a down market or a volatile market and, you know, the returns aren't a strong point of conversation that year.
Iyassu: That's a really important point you bring up, Leslie, because this is something I've talked a lot about on our ⁓ ⁓ this ⁓ wealth transfer that's happening. I think last week, what was it? was like ⁓ third of baby boomers have transferred at least some of those assets to the next generation. ⁓ that next generation, ⁓ millennials and the Gen Zers and ⁓ Y and all the others. they're going to be inheriting a lot ⁓ of wealth, whether it's in the form of a house or stocks and bonds and whatnot. But that next generation, they don't want to use their parents' financial advisors various reasons. One being they don't feel like they are in touch with them. ⁓ this next generation, ⁓ actually care about the environment. They really ⁓ ⁓
Leslie: They do.
Iyassu: aging clients you're trying to capture that next generation because you don't want your book to shrink. Yeah, you need to be well versed in these matters, these issues and getting your clients some exposure to something that, you know, either Green Century or other players in the space ⁓ do on issues, some things that just non-traditional aspects of like investment management. It could... ⁓ bridge that communication gap or that relationship gap that you have with your clients next generation. And it's really important to be knowledgeable and be able to speak on these types of topics and what solutions you can provide for the end client. yeah, it's a really important move of money that's happening. And there's a lot of advisors who are not prepared for that next generation that do need to. ⁓ Now looking at what you guys do in the space would be very helpful to capture that interest of that next generation.
Leslie: Yeah, and you don't have to completely change your practice. You know, you don't have to switch from whatever it is to all sustainable investing. You need to have, you need to be, you know, fluent in it just have some options on hand. ⁓ if I can make a plug for US SIF, US SIF has ⁓ a of three guides. They're called roadmaps. and their roadmaps for financial advisors and their free resources that you can get to learn more. Like what is this sustainable investing? What is ESG? What's impact? What's this? What's that? And you get up to speed fairly quickly as well as there are people like Iyassu or myself or others that have other resources and are willing to just spend a little bit of time with you to you know, connect you to other RIAs and advisors out there who know this and have been through it because those people, I think, have successfully navigated this wealth transfer. I just was meeting with an advisor in New York City and he just talked about how he's managing now the money of the kids since the parents are getting older. And, you know, he can address the issues that they care about through their investments. And so he's going to hold on to those. those assets and clients. Yeah, you don't want to lose them.
Iyassu: Especially in this environment where lot of advisors are looking to retire and sell their books to other ⁓ But if 80 % of your book is over ⁓ years old and there's no relationship with the next generation, that book is almost ⁓ ⁓ yeah, you're right, Leslie, you hit the nail right on the head. You do need to navigate this in a thoughtful way. So it works though.
Leslie: Yeah, the worst answer is comes in and says, ⁓ I'm kind of interested in, you know, avoiding tobacco or I'm not sure I really want to, ⁓ know, invest in fossil fuels anymore. And if you say, ⁓ well, ⁓ going to lose money if you do that, you shouldn't do that. I have seen, you know, it doesn't happen in like a big hullabaloo, ⁓ then they quietly ⁓ they leave after a little bit of that because you're not listening to them and you're not providing them what they're asking for. And you know, obviously that's your job is to serve your clients and you can do it in a financially responsible way.
Iyassu: You never know where your client's gonna get their information from. The next generation is so social media savvy that they might see a TikTok that really resonates with them, or they might be caught in an algorithm that just really knows them very well. And they're gonna come to you as ⁓ their financial advisor and say, I have a problem. Can you solve this problem? And if your answer is no, well, they're gonna find somebody who can solve it. You never know where your client's gonna get their information from. The next generation is so social media savvy that they might see a TikTok that really resonates with them, or they might be caught in an algorithm that just really knows them very well. And they're gonna come to you as ⁓ their financial advisor and say, I have a problem. Can you solve this problem? And if your answer is no, well, they're gonna find somebody who can solve it. It's as simple as that. It's as simple as that.
Leslie: Yeah. And you don't want it, right? You don't want to be in that spot. You want to know as much as you can. And again, you don't need to be a complete expert in it. There are ways to get well versed enough that you don't have to just shut them down or you just go like, that's a great idea. Like, let me get back to you. And then you listen to this podcast again and you remember you can go to USF and get these roadmaps. And then Iyassu. can connect you to me or other people he knows in the field to go like, here's some people you should talk to to get some more information about how to understand and navigate this.
Iyassu: I love repeat audience members. Don't forget to like and subscribe. It helps the algorithm. That was wonderful. So moving on to the midweek this week, the Wall Street Journal reported on a new bipartisan like Senate bill that's making its way through Congress and it's offering a 30 % investment tax credit for data centers and industrial sites that are related.
Leslie: Thank That's right, do that right now.
Iyassu: But really it's focusing on building water infrastructure. I don't think folks in the audience really appreciate how much water these data centers need. We went through this back in the early 2000s and sorry, the mid 2000s actually, when Google and Microsoft and other Oracle were moving everything to the cloud. So they had to create these massive data centers that needed a lot of water to cool their application or their hardware down. Well, guess what? It's back. And these AI data centers are even more massive. Some of them are starting to become the size of like townships, which is kind of crazy. But that's coming, that's making its way through the rounds on the policy matters, where 60 % of the US, at least in the article, said 60 % of the US is enduring drought conditions. So these are going to become table topics to neighborhoods where, you your water infrastructure, I guarantee you, I shouldn't guarantee you, but I remember we were investing in these water utilities and they were giving us some crazy stats, like almost every water infrastructure ⁓ that's out there that isn't part of a major, you know, urban city ⁓ is just failing. And there's just, there's not enough investments going into improving the water infrastructure. So you want to add more stress on top of that with a ⁓ AI ⁓ data center, well, then there's going to be some tough choices that need to be made at the local level. So these are going to be tabletop ⁓ dinner issues that are going to start popping up in the next six months to a year. And it's a massive capital expenditure that's going to need to happen. But who's going to foot the bill? Is it going to be the data centers? Is it going to be the localities? It's unclear.
Leslie: Yep.
Iyassu: you all should be aware of those conversations and the issue that's coming up because water is really important. I've always said this, if you want to have a successful society, need access to water, ⁓ and energy. And if one of those is not cheap, then it's going to be really hard to have successful society. So that was this Wednesday. ⁓ you focus on any water issues and like domestic water issues, ⁓ with the Green Century funds?
Leslie: A little bit. We have started talking to a lot of the companies about the environmental impacts ⁓ their use of AI and particularly around these data centers. Also ⁓ urging not to turn to nuclear at the same time. ⁓ But personally, don't think that a company's quest for AI should endanger people's access to ⁓ personally, I don't think that a company's quest for AI should endanger people's access to clean and affordable water. And that's really important. Unfortunately, water infrastructure isn't a very sexy policy issue and never has been. And so a lot of water infrastructure is old and needs to be updated and replaced. And this is just going to put an incredible strain on it. clean and affordable water. And that's really important. Unfortunately, water infrastructure isn't a very sexy policy issue and never has been. And so a lot of water infrastructure is old and needs to be updated and replaced. And this is just going to put an incredible strain on it. There is this quote around like the next ⁓ war is going to be fought around water. you know, I'm not wishing for another war and don't want that around water, but that is not an infinite resource, especially as climate change makes climate really unpredictable and these droughts and these wildfires that are happening at these incredible rates because of the droughts, you know, it's a lot of pressure. And so that is one of the issues we're going to keep elevating next year with, you know, all the tech companies that we invest in and others who are just spending massive amounts of money on this, almost just like throwing money at this to try to stay ahead, get ahead. It's not a really good trade off. I mean, I think it's great AI can get rid of some really. ⁓ unfulfilling tasks and jobs for people. That part's great, but the environmental impact ⁓ ⁓ need to push back and make sure that the public is not bearing the burden of a company's quest for AI. ⁓
Iyassu: You Yeah, think you hit the nail on the head. Again, it's the same conversation we were having in the mid-2000s or 2010, mid-teen 2000s, I should say, where a company sucks up a massive amount of resources and then there's a pushback and then the company changes. But you need somebody to push that company to make that change or else they're gonna go down the cheapest route to maximize their shareholder returns. Right, so we saw before with the cloud data centers and we're seeing it again with the AI centers. ⁓ the AI data centers are way bigger ⁓ the ⁓ existing cloud ones. Yep, yep. And it's interesting because it also bled into Friday's news, which ⁓ about ⁓ water usage with Oracle. And recently had to scrap plans for a natural gas plant that was going to power their New Mexico site.
Leslie: Yeah, we're a different scale.
Iyassu: Instead, they switched over to using Bloom energy for their fuel cell technology ⁓ they could reduce their water usage. So that just goes into show you that companies ⁓ immediately becoming sensitive to their water usage. And ⁓ even though like they scrapped up a water plant, ⁓ still uses natural gas to power their fuel cells, but it's at a much, much lower rate. So folks are becoming sensitive to the issue and they're starting to understand the impact.
Leslie: Yeah, mean fracking and getting gas out of the earth also, you know, can really be one uses a lot of water and then it produces very toxic water that can we, know, the pits that they line, you need to line the pits of the toxic water doesn't seep into the aquifers. And sometimes that's not So a lot of threats to water all around. And it's certainly an issue we have been increasingly focused on. We used to focus on it when we did invest in gas and we're very focused on the environmental impacts of fracking. Now that we don't invest in gas anymore, it's AI ⁓ just other companies that are using lots and lots of water.
Iyassu: Yeah, it's one of those things where it's like, it's really good when you got it, but then when it's gone, it's really bad. And then the water is one of those things where you just don't want it to be at risk. Like you want to be able to open up your tap and get like a glass of water or make some tea or, you know, boil some spaghetti. You don't want, you know, weird things popping up in your water, like forever chemicals or, you know, whatever else you want to be able to wash your
Leslie: Right, yeah. Mm-hmm.
Iyassu: your baby in the bathtub without worrying about poisoning them, right? It's good when you got it, but it's terrible when it's gone.
Leslie: Right, you kind of don't realize it. I'm just so used to here in the US being able to turn on the tap and that would be pretty safe.
Iyassu: Yeah. So ⁓ that was our weekly update. want to kind of tap into this kind of theme I have for my podcast, which is there's a lot of great people that work in the investment advisory industry. They're doing like fantastic things, but they don't get much sunlight. ⁓ You're one of those, Leslie. ⁓ You're well known in the space. ⁓ But work that you do ⁓ is it can be almost like a thankless job because you're doing so much. And so I like to kind of highlight the overall work that you've been doing on the advocacy side and kind of tap into this narrative that's playing out these days where folks are saying like sustainable investing is kind of dead and the space is dead. And it's just like a bunch of like three little words that are not as effective as folks want it to be. I disagree with that. notion and you know, want to I want you to like kind of walk us through You know your thoughts on on that kind of narrative of the sustainable investing being dead why it's not and like why why it's like really important nowadays to You know at least be knowledgeable about what's going on in sustainable investing if not be involved in it
Leslie: Yeah, it's alive and well. The headlines might indicate a different story, but really what's happened is over the last 10 years, know, there was a, you see my hand coming in, was a growth and when the bigger firms realized that if you incorporated
Iyassu: Yeah.
Leslie: the risk factors of environmental, social or governance issues, actually, you know, you should integrate it into your investments has nothing to do with making an environmental impact or a social impact really. That it was widely adopted. And when they saw that there was a market for it, you know, a lot of firms, BlackRock to State Street to Vanguard like adopted this as their you know, new revenue stream and people responded. What's happened is when this attack on ESG has happened, it's one, it's just, they're called, you know, a lot of times it's really driven in part by the fossil fuel divestment campaign and its origins and then misunderstanding what ESG data does. And which again, it's just a risk metric that might improve performance. It doesn't have any, you know, environmental or social impact in the real world necessarily. but companies and investment firms who aren't committed to it have scrubbed the acronym ESG off their websites in the last couple of years have renamed their funds, have gone back to their fund that used to just be a regular fund. And then they call this sustainable. Now they're calling it just a regular fund. So, It gives the perception that people aren't as interested anymore, but they are. And they're almost more interested at the individual level because they're looking for a way to make an impact. feel thwarted by that, whether at the state or federal level on the issues they care about. so maybe they don't bike to work every day. but that's not feasible for a set of people. But they can invest part of their money this way, and that's how they're looking to make an impact. so if you don't know unless you ask your clients, so it's less common for someone to come in and go, okay, I want to change my investment portfolio. just don't want to be associated with companies that are involved in animal welfare or this social impact issue or this. It's more that when you ask them like, what are your hobbies? Who are you giving money to? would you like to spend your time ⁓ You know, or you give them a survey and just have them check off the issues they care about, including like, are you interested in learning more about sustainable investing? That's when the aha moment comes because all of a sudden you realize, ⁓ I've never even asked about this. And or I've only talked to the guy in the family or whoever is making the money decisions. And this other person actually cares a lot about it. And a ⁓ It's like a risk for your practice to know something about it and be able to have the conversation. Again, you don't have to know everything, but a lot of money is still flowing in. A lot of money is sticking in there. It's a very sticky investment for most of the firms in this space. people more and more are looking, I'd say the growth areas are around community investing. So people are very drawn to something they can invest in, small amounts of money, invest in their state or city where they can see the impact. Or if you have a family that has more assets and they're not just in public equities and bonds that they might be looking at some small allocation to private equities like a cool company that's doing solar stoves somewhere else in the country. mean, people love those stories. And so, you you're never going to allocate a ton of money, but there are ⁓ are and investments out there that are vetted. Some of them ⁓ don't concessionary returns. Some of them have, you know, OK, market returns, too. So it's just it's. ⁓ I'm going into more specifics on how it plays out at the advisor level, but I mean, we're not going anywhere. We're about to hit our highest AUM. And certainly some of it's the market, but some of it is people are still investing with us they're still investing with our ⁓ slash competitors across the field too. this is where, you know, don't believe everything you read comes into play. ⁓ It's a very active community out there. It's it's a little quieter now with the big firms pulling back. And so I wouldn't necessarily ⁓ look them for ⁓ more They have some, but they're kind of a very lighter touch in most instances. ⁓
Iyassu: Well, you bring up a good point about having conversations with your clients, Leslie, because the way the advisor world is moving is away from managing clients assets in a portfolio. So actually being like the asset manager for your clients, like I'm going to put your money in this stock or I'm going to put your money in that stock. And it's moving more towards planning. Planning is the is the part where they make the deepest connections with their clients or in other words, an industry term would be like stickiness. That's where the stickiness comes from. And so if you are able to plan, that means you're able to have a good conversation with your clients and understanding how to answer these kinds of questions is gonna become even more important going forward if you wanna retain those clients. And again, you know. the next generation, care about these issues and that's where your growth is going to come from. So you need to be prepared to at least offer some kind of solution or start getting educated on what you can provide from a sustainable investing standpoint to those clients. that could be talking to your custodian or talking to your home office, but you need to get educated ⁓ if you're starting to take on the newer generation of And yes, you're right, there are managers out there who have dropped the ⁓ aspect of their marketing on their sustainable investing, but then there's folks who haven't, right? Folks who ⁓ still doing and still executing the same way as they were before the massive tailwind of assets came in and they're going to continue to do so to service their clients who come to them for these types of ⁓ solutions. And ⁓ doubt that's going to change ⁓ of the environment.
Leslie: I don't think so. The other thing we've seen is that if you're sitting there thinking like, ⁓ how that many younger clients like I have an older client set, what we've seen is, you know, grandparents who care now are thinking about their legacy in broader terms. You know, they're concerned about climate or nature or just clean air. They are setting up investments. for their grandkids that mirror those values as a way to teach them about investing, but also about, you know, bigger issues and wanna leave them sort of a world that is better than it is now. And so one of the, I think one of the cutest things is grandparents setting up ⁓ IRAs or... or SEPs for, you know, something for their grandkids and then going, do you have a brochure to explain Green Century to them? Cause I want to show them, you know, what they're invested in. And so that's just a nut, you know, it's, there are different generational opportunities. don't know. I don't know any grandparent that has done that with us or others that doesn't feel good about it. they're giving than. you know, not just money, but they're giving more than money. They're giving money and some values to them. So there's little opportunities everywhere to introduce it into your practice in a way that, again, not that hard.
Iyassu: Yeah, one, if you're interested in learning more, I mean, there's resources out there. think Leslie, I think I know you mentioned earlier, the roadmap that USSIF produces. I also wanna give a plug out to my buddy, Peter Krull He also has this book out, it's called The Sustainable Investor. And Peter Kroll is an RIA and if you wanna use, if you don't wanna commit to something, that big you can always, yep, there it is, the sustainable investor. You could always buy the book and it's actually a pretty good read ⁓ for folks.
Leslie: Yes. pretty good read. ⁓ I have extra copies. I I should encourage you to buy one, but I also have copies for free we give to advisors who are trying to learn about the space. ⁓ also have a guide that we put out with a nonprofit called Green America, and it's a guide to fossil fuel free investing. And so you can use it or you could give it to your clients.
Iyassu: Yeah, so.
Leslie: a lot of resources out there that are free.
Iyassu: Yeah, yeah. I like to end the show, Leslie, on my favorite question, which is, what are you looking forward to next week?
Leslie: I am looking forward to a couple of things. One, I just was on the road while here in Boston and New York City meeting some new advisors and next week I have some meetings set up with them to talk exactly about this. How could they do more sustainable investing in their practice? So that's one, that's always fun for me to talk to advisors. Two, we have the last of our shareholder resolutions going to the ballot. And so, One of our shareholder advocates is actually traveling down to Virginia to go to the Markel, it's an insurance company, annual meeting to talk about them, you know, looking more at climate change and not offering insurance to new fossil fuel projects. That's the ultimate goal. then three, I'm looking forward to the warmer weather here. I'm in Boston, it's a rainy day. I'm looking at my garden, the squirrel looking for all the acorns that things just buried last year. just getting out there and pulling up some weeds and cleaning it up.
Iyassu: Well, I want to thank you, Leslie, for joining us for this wonderful episode of Inside the Flows. If audience members, you're an FA or FP, an asset manager, anyone in the RIA space and you want to continue the conversation, please join Inflows. It's free to join. It's free to use. We've been updating the platform quite a bit lately. You'll find a lot of useful new tools in there. I'll be posting this podcast also in inflows if you want to keep the conversation going or if you have a question you want to ask Leslie, you know, feel free to drop in and ask your question and we'll get to, we'll try to get you an answer as soon as we can, but go ahead and join inflows. Again, I want to thank Leslie. Leslie, if people want to know a little bit more about a green century, where should they go for more information?
Leslie: They can go to our website, They can email me, ⁓ at greencentury.com ⁓ Or they can ⁓ me a call at my Zoom phone at 781-349-2830. ⁓
Iyassu: All right, thank you, Leslie. It's been amazing having you on here. I'm really pumped to be able to put this show out and good luck on the rest of your shareholder resolutions.
Leslie: Thank you. Yeah, thank you for having me.
Leslie: Hi, Iyassu. Hi, everyone.
Iyassu: Leslie is an amazing, amazing guest that we have here today. She's not only the president of the Green Century Funds, she's also the board member of USSIF And I think I've served with you since, what was it, 2000 and, I don't know, was it 2017, Leslie, when I first started? Yeah.
Leslie: It's been a while. Yeah. Isn't great.
Iyassu: Yeah. I remember you first showing me the ropes of what it means to be a board member. It was my first time being a board member at USSIF and I mean, you had it down, right. I was very impressed.
Leslie: Well, I'm glad I could help you along because now you're great. You're the vice chair.
Iyassu: Yeah. And thanks. Yeah. I learned from the, from the best, right? ⁓ But we're very fortunate to have you here on the show. It's going to be a really good show for audience members. inflows, AI update this, this time we're going to all things sustainability. So I'm really excited to have Leslie ⁓ who ⁓ is and her firm, Green Century in sustainable investing space. So really excited to have you on Leslie.
Leslie: That's very sweet. Thanks so much for having me.
Iyassu: Just so our audience members get a good grasp of you, Leslie, do you want to just kind of introduce yourself to them and you, your background and Green Century and what you all do, all the amazing work that you do out there in the field?
Leslie: Yeah, I'd love to. So as Iyassu also said, I'm Leslie Samuelrich. I'm the president of the Green Century Funds. We've been around 30 years and we've always been focused on sustainable investing, particularly environmentally responsible investing. We offer mutual funds to folks and to individuals as well as institutions. And we have a three part approach. First is... We follow screening and exclusionary And so our goal is to keep people's investments out of the most environmentally dangerous industries or companies. So to do that, we have things like fossil fuel screens, screens against factory farms, against weapons. And in some of our funds, we're starting to use the UN Sustainable Development Goals. another acronym in the field of SDGs. And it's totally fine if you've never heard of that. But following things like climate, clean it and affordable energy, life on land, which means like deforestation ⁓ and life underwater. So protecting ocean wildlife and trying to keep plastics out of the ocean. But a lot of people use us for that, but also because we do a lot of something called shareholder advocacy. And that's when you use your leverage as a shareholder to voice your concerns to companies. tend to go more than just voice our concerns. We're really pushing companies to make changes that improve the environment. So not just to protect them against what we think are financial and material. risks and threats, but also to deliver real impact. Because I don't know about all of you and Iyassu, but I think a lot of people want to do sustainable investing because they want to see a change in the world. And they want to make the place cleaner and healthier and safer. And so that's what we're focused on, whether we're protecting forests or reducing plastics or just getting the ability to fix your stuff. like your right to repair. That's a concept out there we've worked on. And the third is that we were founded and we're still owned by nonprofits. And what that means is that 100 % of our net profits belong to them. So they can use them to run their campaigns. There are state-based groups called the Public Interest Research Groups or yet another acronym, PIRGs Not the greatest acronym, but that's what it is.
Iyassu: You
Leslie: ⁓ And they've been around since the seventies working at state level and at the federal level to work on some of the same issues that I was talking about, like getting rid of toxic pesticides, ⁓ preserving parks and wild areas, and doing some consumer protection ⁓ good governance things. So that's Green Century. We were one of the early ones, one of the pioneers in the sustainable investing space and we've remained ⁓ independent all this time
Iyassu: Yeah, Leslie, just for our audience members to know, ⁓ when you started with Green Century and up until today, you also elevated Green Century's platform. I believe you are in the Forbes 50 under 50. then you're also on ⁓ 100 Most Influential Women in the group. So you have some accolades, Leslie. You're kind of on that rock star status. ⁓
Leslie: Thank you. Yeah, so I wish it was 50 under 50. It's 50 over 50.
Iyassu: There we are. was trying help you out there. ⁓
Leslie: I'll take it anyway. Yeah, that was such a cool event. was at the Rainbow Room in New York City. And it was just full of amazing women. And I don't really know how I got the awards. ⁓ Editors and people pick you for it. But yeah, I was on the Barron's Most Influential Women in Finance for two years running.
Iyassu: Yeah, that's amazing. So Leslie's also frequented on the New York Times, Wall Street Journal, ⁓ Forbes, Bloomberg. I mean, you'll see her in the media. this is ⁓ she's done a lot to elevate Green Century's mission. So I want to kind of thank her for that and her services also to just sustainable investing in general. You put a lot of good work in there and you've gotten you've gotten companies to change their behaviors, which is really, really hard to do. So.
Leslie: Mm-hmm.
Iyassu: hope our audience members appreciate that. now, Leslie, we are going to move on to the ⁓ recap ⁓ talk a little bit about what happened this past week. And so there were some ⁓ this week we're going to focus more on sustainable investing news. We typically cover broad market categories, but it's ⁓ much been the same. ⁓ ⁓ the war in Iran. ⁓ that's pretty much what dominates the conversation. But what's really interesting for audience members is there's a lot of happening on the sustainability front. you know, it's kind of, I would say it's not as inactive as folks would appreciate. So, you know, this past week, the Wall Street Journal covered a story on this is the net zero pledges that a lot of major companies put forth. And particularly there was an academic paper, actually two academic papers that came out showing that ⁓ commitments are ⁓ reducing deforestation and long-term emissions, even though some of them kind of don't work. And so what was interesting about it was there were, it was the journal of Nature that put out these reports saying that ⁓ ⁓ purchase carbon credits to protect forests is sometimes those carbon credits are only as good as the developer that they're purchasing on can protect those forests. And sometimes that doesn't work out. But then the other report said that, you know, sometimes it does because it brings a lot of attention. So it brings a lot of attention to the issue, to the area, and it does protect forests. And it is almost like a deterrent for companies wanting to go in and maybe go to the Amazon and cut a bunch of rainforest down for farmland. It becomes a deterrent. So that was a really interesting aspect of almost like a net-net. It's not a win, but not a loss in the carbon and the deforestation area. So have you guys done any work on that? And do have any thoughts?
Leslie: Right. Well, we've worked on deforestation for over a decade, less from the carbon credit point of view ⁓ and work, but more actually, which is okay. But again, it has mixed results. It can send a market signal, that's important. It might protect areas that otherwise would not have been protected. The obviously downside is if you're selling credits for an area that's already been protected or like, someone's double counting out there and it's not really having an impact. We've worked with companies more to actually adopt something called deforestation pledges. So growing palm oil that's in Southeast Asia or soy that's more in Latin America and Brazil to do that without burning and bulldozing down forests. That's a very direct way that corporations have made an impact. plus government policy. So Indonesia's deforestation rates have been going down significantly the last 15 years. And part of it was the corporate work that we and others did. And part of it was the government policy to put a moratorium on building new plantations. That's a little bit under threat now as there's a new agricultural ⁓ initiative in Indonesia. And we actually are working with. ⁓ mostly European and other global investors to try to demonstrate that investors actually care about protecting these. Remember like when you're young, the lungs of the earth, that's what they called rainforest. They hold a lot of carbon, they process a lot of carbon. And when you burn them, it actually releases a lot of carbon and then you don't have the forest to do that carbon capturing.
Iyassu: Yeah.
Leslie: process that they do. And it sends like 10,000 people to, used to 10,000 people to hospitals because it just literally they set them on fire and the smoke would carry as far as Singapore down there. that I feel is one of the most direct ways, especially in other countries ⁓ that where companies can play a real role. They can adopt these deforestation. pledges throughout their supply chain or banks, which we've worked on also that they can make pledges not to lend money to companies that are involved in deforestation projects. deforestation has gotten a lot, that plus biodiversity risk has really finally caught on here in the last couple of years as a real material threat. And it has a direct link to climate change. As you and all the viewers know, climate risk is an actual real material threat to companies that whether, no matter what side of the aisle you're sitting on, companies are incorporating it and investors are factoring it in to their choices too.
Iyassu: Yeah, it's one of those things where when I was younger, I didn't appreciate how much influence companies have on their supply chains until I got into the sustainable investing space. And, ⁓ know, it's ⁓ impossible to tell your supply chain, hey, if you want our business, well, you got to do things a certain way. And getting the to take that initiative on does take the investor voice to push them. direction or else, you know, they're going to think about how do I maximize returns for my shareholders, right? And slashing and burning is like the cheapest way to do it. Right. So to have investors like yourself, and I'm sure you had partners in the government on policy and other NGOs working with you, Leslie, it was like, that's it's a pretty big achievement to get these like multi, multi-billion dollar industries to change their supply chain practices.
Leslie: Yeah, it doesn't happen overnight, but when you win, it's worth it. And then there's a lot of follow up. Like we spend time ⁓ holding the companies to their commitments, which is an important part of any kind of shareholder engagement. The wins get the headlines, ⁓ it's the implementation where, you know, the rubber really hits the road, so to speak.
Iyassu: Yeah, I imagine it's like a relationship, right? Your partner is like, ⁓ well, I promise not to do this. And then you're like, all right, did you stop doing it? Did you stop doing it?
Leslie: It's not quite that loose for us. Maybe for some it is. And for some firms will talk about how we're really working in partnership with companies. And we certainly do with companies that have adopted the policies and are truly committed to them. they need more than just a suggestion. ⁓ know, they need to ⁓ urged to do these things. And so... ⁓ We take a more assertive approach, I would say. And if the company is not addressing the risk that we've identified, we will file a shareholder proposal. And then sometimes that will get them to the table to take the negotiations more seriously. like we've been presenting shareholder proposals just the last couple of weeks. week is the final week for ours. This is like the height of shareholder season. So this episode's coming at a really cool time where shareholders get to vote on what they think about these issues. we filed, I think this will be the fourth year we filed the most environmental proposals of any firm because, you know, sometimes they'll just listen to you. And then sometimes they need that. It's like the carrot and stick. need the stick. They hate shareholder resolutions to be on their proxy. So they have a lot of incentive to get rid of them through a negotiated thing. But we make them sign an agreement. We don't just like do it over a handshake and we want the agreement to be public. So it's not just for Green Century and Green Century's investors, but all investors to know what their plan is.
Iyassu: Do you want to just talk about the shareholder resolution process and why it's so impactful to the companies that we own? mean, some of our audience members, they've heard of proxy voting, but they don't really understand the functionality of it and why it's so effective. Do you want to just kind of give them ⁓ some insights, like why it's a tool you use to get companies to the table?
Leslie: Yeah, we think of it as a escalation tactic. So first, you always ask a company, you send them a letter, ask them for a meeting, you want to explain the concerns. Sometimes those meetings happen. And every once in a while they go, oh, we hadn't thought about that, or actually we have been thinking about that, and this is what we are planning to do. And every once in a while the stars align and you're like, that's great. That's what we were thinking you should do too. More often than not, the stars are not quite lined up. so then we, you know, ask them for something more. And we might say, you know, if this isn't, if you're not able to agree to this, we're all going to file a resolution. And you usually do that in the fall. And then the time between the fall and now is when you can do more negotiations with the company until that proxy is printed. And most of the questions as people ⁓ seen are about approving boards of directors or audit firms or some mechanics around the governance. But any of the other questions that appear and those are the ones that appear ⁓ after first questions the company puts on, those are the ones that some investor, some shareholder has put forth. And they're not binding. But if you get a strong vote, then it's a signal to the company that, you know, it's not just the filer or that shareholder that cares, like broader community cares. And it's another leverage point. So you use that to go back and negotiate again with them and see like, you know, this is the percentage of shareholders that care about this. you really should take this into account. And sometimes that works in one season and sometimes, you know, it takes two or three you know, get this, not only the sustainability people on board, but then the supply chain people. then sometimes those people use it as leverage internally to say like, we think we need to be reducing our plastic packaging. And now investors are asking us about this too. So they have more backing to use internally to put forward the process. ⁓
Iyassu: I bet you the sustainability folks really love you, like they're inside the companies, like, cause you're raising issues that they're either working on or because there's no, a lot of times, you know, the shareholder resolutions are on topics about risk mitigation instead of like maybe revenue generation or profit, you know, ⁓ margins. So the sustainability team members are looked at from the executive team as like a, almost like a cost center. So when you come and you say, hey, this is an issue that matters. And they were like, you know, I say secretly working on it, but they were like, they're very aware of their environmental impact. They probably love you when you bring up these topics to management.
Leslie: Yeah. I think we give them more. know, ammunition, though I hate to use that word exactly, but more ⁓ backing. Weight yeah, thank you. Thank you very much. So that they can make the case. So it's not just their voice. It's like, and then now there's investors. And then if it goes to a vote, it's like, we do brief all the top institutional shareholders, or we try to. ⁓
Iyassu: Weight okay, backing.
Leslie: to also get them to bring that forward in their conversations or devote in favor of the resolution. And so does give them that extra input. So it's not just them saying it internally and there's these other pieces happening. ⁓ Century also does media around this to the extent we can get it covered in sustainability publications or just ⁓ trade ⁓ or broader. ⁓ media outlets so that it gets more notice and companies generally ⁓ think like all publicity is good publicity. So yeah, we're really trying to leverage it and back the sustainability people who have answers a lot of the time ⁓ to issues, but they have to make the case.
Iyassu: I think the other impact you have, so for folks on the audience that don't know the shoulder resolution process well, it shows up on the proxy, ⁓ happens during the annual general meeting of ⁓ company. ⁓ it's the board who has to respond to the resolution. So it's not just management ⁓ taking reins, even though they probably do most of the work. ⁓ But board is putting their name on the line. to the resolution saying either most of the times they don't support it or else it won't make it to the the resolution or it won't make it to the the proxy card. And so you're elevating the environmental health and safety teams issue to the board and that could be very impactful for that team career wise, impact wise. ⁓ the board has to come up with a response on ⁓ they want to move forward with this or not. And if they don't, well, they got to answer to the shareholders why they think, know, management's response is a better or management's preferred point of view is much better than what the investors are bringing up a la green century.
Leslie: Yeah, the annual meetings are really beautiful thing. It's the one time that any shareholder can go and actually see and hear the chair and the board of directors. It's, know, a lot of them went virtual during COVID and fortunately most have stayed that way. But if they're in person, it's particularly great because not that many shareholders go and then you get a, you, you know, present your proposal, you get two minutes to talk about it, but then it's the afterward piece that you actually can go up and talk to the directors more. And sometimes we have not quite like finalized a deal then, but made a lot of progress just by being in the room, not just with the sustainability team or the investor relations people or other senior executives, but also the board. And not all board members are paying attention to every single issue that's coming forward on the ballot. ⁓ So it's important. It's one of the shareholder rights you have is to be able to put a question on the ballot. There's a few individuals who do this consistently every year. They're not with the firm. They just own a lot of shares. prolific filers to try to bring the issues up to a wide range of companies. So if you are ever asked to vote on proxies for your clients, other resources out there that you can use to figure out how you would vote if you wanted to support sustainability. ⁓ of them are pretty obvious what you would do too though.
Iyassu: Yeah, I think also even though some of those board members may not be paying attention or kind don't put that much weight on the ⁓ actual ⁓ what they do care about is their vote percentage. they look other board members' vote percentages. And if you piss off enough investors, that vote percentage FOR goes down. ⁓ And they don't that. That freaks them out. ⁓ You know, it's a tight rope that these board members have to walk and, you know, they're at the service of the shareholders. Just, you know, for audience members to remember, you know, these are publicly traded companies. They're basically using your dollars to run the company. And so they need to listen to you. And if they don't, well, you have a very, very powerful way of saying, I don't like where leadership is going. And it's by voting against the board of directors
Leslie: Yep. Other firms have taken on those campaigns. So like if you do this for a couple of years and the board and the company are not responding in a way that is moving you toward what you think you need to get addressed, you can run director campaigns. We don't do that at moment, but other other, especially nonprofits done it.
Iyassu: Yeah, mean, Green Century has a pretty well-oiled machine when it comes to shareholder resolutions. And a lot of other firms look to how you do it and try to replicate it, Leslie. So good on for you all for perfecting that system.
Leslie: Thanks. Yeah, we have four people who do it out ⁓ a smaller firm. So it's a top priority for us. It's again, it's the way that an advisor can show their clients ⁓ their investments are doing in the real world. So ⁓ lot of the advisors and I think find ⁓ the about it really helpful to translate. what sustainable investing can do to those clients who, know, they're like, you know, they meet an hour a year maybe with their advisor. just need a couple stories that will resonate with them and they'll remember. And then they feel good about it, which is especially important if it's a down market or a volatile market and, you know, the returns aren't a strong point of conversation that year.
Iyassu: That's a really important point you bring up, Leslie, because this is something I've talked a lot about on our ⁓ ⁓ this ⁓ wealth transfer that's happening. I think last week, what was it? was like ⁓ third of baby boomers have transferred at least some of those assets to the next generation. ⁓ that next generation, ⁓ millennials and the Gen Zers and ⁓ Y and all the others. they're going to be inheriting a lot ⁓ of wealth, whether it's in the form of a house or stocks and bonds and whatnot. But that next generation, they don't want to use their parents' financial advisors various reasons. One being they don't feel like they are in touch with them. ⁓ this next generation, ⁓ actually care about the environment. They really ⁓ ⁓
Leslie: They do.
Iyassu: aging clients you're trying to capture that next generation because you don't want your book to shrink. Yeah, you need to be well versed in these matters, these issues and getting your clients some exposure to something that, you know, either Green Century or other players in the space ⁓ do on issues, some things that just non-traditional aspects of like investment management. It could... ⁓ bridge that communication gap or that relationship gap that you have with your clients next generation. And it's really important to be knowledgeable and be able to speak on these types of topics and what solutions you can provide for the end client. yeah, it's a really important move of money that's happening. And there's a lot of advisors who are not prepared for that next generation that do need to. ⁓ Now looking at what you guys do in the space would be very helpful to capture that interest of that next generation.
Leslie: Yeah, and you don't have to completely change your practice. You know, you don't have to switch from whatever it is to all sustainable investing. You need to have, you need to be, you know, fluent in it just have some options on hand. ⁓ if I can make a plug for US SIF, US SIF has ⁓ a of three guides. They're called roadmaps. and their roadmaps for financial advisors and their free resources that you can get to learn more. Like what is this sustainable investing? What is ESG? What's impact? What's this? What's that? And you get up to speed fairly quickly as well as there are people like Iyassu or myself or others that have other resources and are willing to just spend a little bit of time with you to you know, connect you to other RIAs and advisors out there who know this and have been through it because those people, I think, have successfully navigated this wealth transfer. I just was meeting with an advisor in New York City and he just talked about how he's managing now the money of the kids since the parents are getting older. And, you know, he can address the issues that they care about through their investments. And so he's going to hold on to those. those assets and clients. Yeah, you don't want to lose them.
Iyassu: Especially in this environment where lot of advisors are looking to retire and sell their books to other ⁓ But if 80 % of your book is over ⁓ years old and there's no relationship with the next generation, that book is almost ⁓ ⁓ yeah, you're right, Leslie, you hit the nail right on the head. You do need to navigate this in a thoughtful way. So it works though.
Leslie: Yeah, the worst answer is comes in and says, ⁓ I'm kind of interested in, you know, avoiding tobacco or I'm not sure I really want to, ⁓ know, invest in fossil fuels anymore. And if you say, ⁓ well, ⁓ going to lose money if you do that, you shouldn't do that. I have seen, you know, it doesn't happen in like a big hullabaloo, ⁓ then they quietly ⁓ they leave after a little bit of that because you're not listening to them and you're not providing them what they're asking for. And you know, obviously that's your job is to serve your clients and you can do it in a financially responsible way.
Iyassu: You never know where your client's gonna get their information from. The next generation is so social media savvy that they might see a TikTok that really resonates with them, or they might be caught in an algorithm that just really knows them very well. And they're gonna come to you as ⁓ their financial advisor and say, I have a problem. Can you solve this problem? And if your answer is no, well, they're gonna find somebody who can solve it. You never know where your client's gonna get their information from. The next generation is so social media savvy that they might see a TikTok that really resonates with them, or they might be caught in an algorithm that just really knows them very well. And they're gonna come to you as ⁓ their financial advisor and say, I have a problem. Can you solve this problem? And if your answer is no, well, they're gonna find somebody who can solve it. It's as simple as that. It's as simple as that.
Leslie: Yeah. And you don't want it, right? You don't want to be in that spot. You want to know as much as you can. And again, you don't need to be a complete expert in it. There are ways to get well versed enough that you don't have to just shut them down or you just go like, that's a great idea. Like, let me get back to you. And then you listen to this podcast again and you remember you can go to USF and get these roadmaps. And then Iyassu. can connect you to me or other people he knows in the field to go like, here's some people you should talk to to get some more information about how to understand and navigate this.
Iyassu: I love repeat audience members. Don't forget to like and subscribe. It helps the algorithm. That was wonderful. So moving on to the midweek this week, the Wall Street Journal reported on a new bipartisan like Senate bill that's making its way through Congress and it's offering a 30 % investment tax credit for data centers and industrial sites that are related.
Leslie: Thank That's right, do that right now.
Iyassu: But really it's focusing on building water infrastructure. I don't think folks in the audience really appreciate how much water these data centers need. We went through this back in the early 2000s and sorry, the mid 2000s actually, when Google and Microsoft and other Oracle were moving everything to the cloud. So they had to create these massive data centers that needed a lot of water to cool their application or their hardware down. Well, guess what? It's back. And these AI data centers are even more massive. Some of them are starting to become the size of like townships, which is kind of crazy. But that's coming, that's making its way through the rounds on the policy matters, where 60 % of the US, at least in the article, said 60 % of the US is enduring drought conditions. So these are going to become table topics to neighborhoods where, you your water infrastructure, I guarantee you, I shouldn't guarantee you, but I remember we were investing in these water utilities and they were giving us some crazy stats, like almost every water infrastructure ⁓ that's out there that isn't part of a major, you know, urban city ⁓ is just failing. And there's just, there's not enough investments going into improving the water infrastructure. So you want to add more stress on top of that with a ⁓ AI ⁓ data center, well, then there's going to be some tough choices that need to be made at the local level. So these are going to be tabletop ⁓ dinner issues that are going to start popping up in the next six months to a year. And it's a massive capital expenditure that's going to need to happen. But who's going to foot the bill? Is it going to be the data centers? Is it going to be the localities? It's unclear.
Leslie: Yep.
Iyassu: you all should be aware of those conversations and the issue that's coming up because water is really important. I've always said this, if you want to have a successful society, need access to water, ⁓ and energy. And if one of those is not cheap, then it's going to be really hard to have successful society. So that was this Wednesday. ⁓ you focus on any water issues and like domestic water issues, ⁓ with the Green Century funds?
Leslie: A little bit. We have started talking to a lot of the companies about the environmental impacts ⁓ their use of AI and particularly around these data centers. Also ⁓ urging not to turn to nuclear at the same time. ⁓ But personally, don't think that a company's quest for AI should endanger people's access to ⁓ personally, I don't think that a company's quest for AI should endanger people's access to clean and affordable water. And that's really important. Unfortunately, water infrastructure isn't a very sexy policy issue and never has been. And so a lot of water infrastructure is old and needs to be updated and replaced. And this is just going to put an incredible strain on it. clean and affordable water. And that's really important. Unfortunately, water infrastructure isn't a very sexy policy issue and never has been. And so a lot of water infrastructure is old and needs to be updated and replaced. And this is just going to put an incredible strain on it. There is this quote around like the next ⁓ war is going to be fought around water. you know, I'm not wishing for another war and don't want that around water, but that is not an infinite resource, especially as climate change makes climate really unpredictable and these droughts and these wildfires that are happening at these incredible rates because of the droughts, you know, it's a lot of pressure. And so that is one of the issues we're going to keep elevating next year with, you know, all the tech companies that we invest in and others who are just spending massive amounts of money on this, almost just like throwing money at this to try to stay ahead, get ahead. It's not a really good trade off. I mean, I think it's great AI can get rid of some really. ⁓ unfulfilling tasks and jobs for people. That part's great, but the environmental impact ⁓ ⁓ need to push back and make sure that the public is not bearing the burden of a company's quest for AI. ⁓
Iyassu: You Yeah, think you hit the nail on the head. Again, it's the same conversation we were having in the mid-2000s or 2010, mid-teen 2000s, I should say, where a company sucks up a massive amount of resources and then there's a pushback and then the company changes. But you need somebody to push that company to make that change or else they're gonna go down the cheapest route to maximize their shareholder returns. Right, so we saw before with the cloud data centers and we're seeing it again with the AI centers. ⁓ the AI data centers are way bigger ⁓ the ⁓ existing cloud ones. Yep, yep. And it's interesting because it also bled into Friday's news, which ⁓ about ⁓ water usage with Oracle. And recently had to scrap plans for a natural gas plant that was going to power their New Mexico site.
Leslie: Yeah, we're a different scale.
Iyassu: Instead, they switched over to using Bloom energy for their fuel cell technology ⁓ they could reduce their water usage. So that just goes into show you that companies ⁓ immediately becoming sensitive to their water usage. And ⁓ even though like they scrapped up a water plant, ⁓ still uses natural gas to power their fuel cells, but it's at a much, much lower rate. So folks are becoming sensitive to the issue and they're starting to understand the impact.
Leslie: Yeah, mean fracking and getting gas out of the earth also, you know, can really be one uses a lot of water and then it produces very toxic water that can we, know, the pits that they line, you need to line the pits of the toxic water doesn't seep into the aquifers. And sometimes that's not So a lot of threats to water all around. And it's certainly an issue we have been increasingly focused on. We used to focus on it when we did invest in gas and we're very focused on the environmental impacts of fracking. Now that we don't invest in gas anymore, it's AI ⁓ just other companies that are using lots and lots of water.
Iyassu: Yeah, it's one of those things where it's like, it's really good when you got it, but then when it's gone, it's really bad. And then the water is one of those things where you just don't want it to be at risk. Like you want to be able to open up your tap and get like a glass of water or make some tea or, you know, boil some spaghetti. You don't want, you know, weird things popping up in your water, like forever chemicals or, you know, whatever else you want to be able to wash your
Leslie: Right, yeah. Mm-hmm.
Iyassu: your baby in the bathtub without worrying about poisoning them, right? It's good when you got it, but it's terrible when it's gone.
Leslie: Right, you kind of don't realize it. I'm just so used to here in the US being able to turn on the tap and that would be pretty safe.
Iyassu: Yeah. So ⁓ that was our weekly update. want to kind of tap into this kind of theme I have for my podcast, which is there's a lot of great people that work in the investment advisory industry. They're doing like fantastic things, but they don't get much sunlight. ⁓ You're one of those, Leslie. ⁓ You're well known in the space. ⁓ But work that you do ⁓ is it can be almost like a thankless job because you're doing so much. And so I like to kind of highlight the overall work that you've been doing on the advocacy side and kind of tap into this narrative that's playing out these days where folks are saying like sustainable investing is kind of dead and the space is dead. And it's just like a bunch of like three little words that are not as effective as folks want it to be. I disagree with that. notion and you know, want to I want you to like kind of walk us through You know your thoughts on on that kind of narrative of the sustainable investing being dead why it's not and like why why it's like really important nowadays to You know at least be knowledgeable about what's going on in sustainable investing if not be involved in it
Leslie: Yeah, it's alive and well. The headlines might indicate a different story, but really what's happened is over the last 10 years, know, there was a, you see my hand coming in, was a growth and when the bigger firms realized that if you incorporated
Iyassu: Yeah.
Leslie: the risk factors of environmental, social or governance issues, actually, you know, you should integrate it into your investments has nothing to do with making an environmental impact or a social impact really. That it was widely adopted. And when they saw that there was a market for it, you know, a lot of firms, BlackRock to State Street to Vanguard like adopted this as their you know, new revenue stream and people responded. What's happened is when this attack on ESG has happened, it's one, it's just, they're called, you know, a lot of times it's really driven in part by the fossil fuel divestment campaign and its origins and then misunderstanding what ESG data does. And which again, it's just a risk metric that might improve performance. It doesn't have any, you know, environmental or social impact in the real world necessarily. but companies and investment firms who aren't committed to it have scrubbed the acronym ESG off their websites in the last couple of years have renamed their funds, have gone back to their fund that used to just be a regular fund. And then they call this sustainable. Now they're calling it just a regular fund. So, It gives the perception that people aren't as interested anymore, but they are. And they're almost more interested at the individual level because they're looking for a way to make an impact. feel thwarted by that, whether at the state or federal level on the issues they care about. so maybe they don't bike to work every day. but that's not feasible for a set of people. But they can invest part of their money this way, and that's how they're looking to make an impact. so if you don't know unless you ask your clients, so it's less common for someone to come in and go, okay, I want to change my investment portfolio. just don't want to be associated with companies that are involved in animal welfare or this social impact issue or this. It's more that when you ask them like, what are your hobbies? Who are you giving money to? would you like to spend your time ⁓ You know, or you give them a survey and just have them check off the issues they care about, including like, are you interested in learning more about sustainable investing? That's when the aha moment comes because all of a sudden you realize, ⁓ I've never even asked about this. And or I've only talked to the guy in the family or whoever is making the money decisions. And this other person actually cares a lot about it. And a ⁓ It's like a risk for your practice to know something about it and be able to have the conversation. Again, you don't have to know everything, but a lot of money is still flowing in. A lot of money is sticking in there. It's a very sticky investment for most of the firms in this space. people more and more are looking, I'd say the growth areas are around community investing. So people are very drawn to something they can invest in, small amounts of money, invest in their state or city where they can see the impact. Or if you have a family that has more assets and they're not just in public equities and bonds that they might be looking at some small allocation to private equities like a cool company that's doing solar stoves somewhere else in the country. mean, people love those stories. And so, you you're never going to allocate a ton of money, but there are ⁓ are and investments out there that are vetted. Some of them ⁓ don't concessionary returns. Some of them have, you know, OK, market returns, too. So it's just it's. ⁓ I'm going into more specifics on how it plays out at the advisor level, but I mean, we're not going anywhere. We're about to hit our highest AUM. And certainly some of it's the market, but some of it is people are still investing with us they're still investing with our ⁓ slash competitors across the field too. this is where, you know, don't believe everything you read comes into play. ⁓ It's a very active community out there. It's it's a little quieter now with the big firms pulling back. And so I wouldn't necessarily ⁓ look them for ⁓ more They have some, but they're kind of a very lighter touch in most instances. ⁓
Iyassu: Well, you bring up a good point about having conversations with your clients, Leslie, because the way the advisor world is moving is away from managing clients assets in a portfolio. So actually being like the asset manager for your clients, like I'm going to put your money in this stock or I'm going to put your money in that stock. And it's moving more towards planning. Planning is the is the part where they make the deepest connections with their clients or in other words, an industry term would be like stickiness. That's where the stickiness comes from. And so if you are able to plan, that means you're able to have a good conversation with your clients and understanding how to answer these kinds of questions is gonna become even more important going forward if you wanna retain those clients. And again, you know. the next generation, care about these issues and that's where your growth is going to come from. So you need to be prepared to at least offer some kind of solution or start getting educated on what you can provide from a sustainable investing standpoint to those clients. that could be talking to your custodian or talking to your home office, but you need to get educated ⁓ if you're starting to take on the newer generation of And yes, you're right, there are managers out there who have dropped the ⁓ aspect of their marketing on their sustainable investing, but then there's folks who haven't, right? Folks who ⁓ still doing and still executing the same way as they were before the massive tailwind of assets came in and they're going to continue to do so to service their clients who come to them for these types of ⁓ solutions. And ⁓ doubt that's going to change ⁓ of the environment.
Leslie: I don't think so. The other thing we've seen is that if you're sitting there thinking like, ⁓ how that many younger clients like I have an older client set, what we've seen is, you know, grandparents who care now are thinking about their legacy in broader terms. You know, they're concerned about climate or nature or just clean air. They are setting up investments. for their grandkids that mirror those values as a way to teach them about investing, but also about, you know, bigger issues and wanna leave them sort of a world that is better than it is now. And so one of the, I think one of the cutest things is grandparents setting up ⁓ IRAs or... or SEPs for, you know, something for their grandkids and then going, do you have a brochure to explain Green Century to them? Cause I want to show them, you know, what they're invested in. And so that's just a nut, you know, it's, there are different generational opportunities. don't know. I don't know any grandparent that has done that with us or others that doesn't feel good about it. they're giving than. you know, not just money, but they're giving more than money. They're giving money and some values to them. So there's little opportunities everywhere to introduce it into your practice in a way that, again, not that hard.
Iyassu: Yeah, one, if you're interested in learning more, I mean, there's resources out there. think Leslie, I think I know you mentioned earlier, the roadmap that USSIF produces. I also wanna give a plug out to my buddy, Peter Krull He also has this book out, it's called The Sustainable Investor. And Peter Kroll is an RIA and if you wanna use, if you don't wanna commit to something, that big you can always, yep, there it is, the sustainable investor. You could always buy the book and it's actually a pretty good read ⁓ for folks.
Leslie: Yes. pretty good read. ⁓ I have extra copies. I I should encourage you to buy one, but I also have copies for free we give to advisors who are trying to learn about the space. ⁓ also have a guide that we put out with a nonprofit called Green America, and it's a guide to fossil fuel free investing. And so you can use it or you could give it to your clients.
Iyassu: Yeah, so.
Leslie: a lot of resources out there that are free.
Iyassu: Yeah, yeah. I like to end the show, Leslie, on my favorite question, which is, what are you looking forward to next week?
Leslie: I am looking forward to a couple of things. One, I just was on the road while here in Boston and New York City meeting some new advisors and next week I have some meetings set up with them to talk exactly about this. How could they do more sustainable investing in their practice? So that's one, that's always fun for me to talk to advisors. Two, we have the last of our shareholder resolutions going to the ballot. And so, One of our shareholder advocates is actually traveling down to Virginia to go to the Markel, it's an insurance company, annual meeting to talk about them, you know, looking more at climate change and not offering insurance to new fossil fuel projects. That's the ultimate goal. then three, I'm looking forward to the warmer weather here. I'm in Boston, it's a rainy day. I'm looking at my garden, the squirrel looking for all the acorns that things just buried last year. just getting out there and pulling up some weeds and cleaning it up.
Iyassu: Well, I want to thank you, Leslie, for joining us for this wonderful episode of Inside the Flows. If audience members, you're an FA or FP, an asset manager, anyone in the RIA space and you want to continue the conversation, please join Inflows. It's free to join. It's free to use. We've been updating the platform quite a bit lately. You'll find a lot of useful new tools in there. I'll be posting this podcast also in inflows if you want to keep the conversation going or if you have a question you want to ask Leslie, you know, feel free to drop in and ask your question and we'll get to, we'll try to get you an answer as soon as we can, but go ahead and join inflows. Again, I want to thank Leslie. Leslie, if people want to know a little bit more about a green century, where should they go for more information?
Leslie: They can go to our website, They can email me, ⁓ at greencentury.com ⁓ Or they can ⁓ me a call at my Zoom phone at 781-349-2830. ⁓
Iyassu: All right, thank you, Leslie. It's been amazing having you on here. I'm really pumped to be able to put this show out and good luck on the rest of your shareholder resolutions.
Leslie: Thank you. Yeah, thank you for having me.
