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October 21, 2011
How Occupy Wall Street and Sustainable Investment are Aligned
    by Robert Kropp

SocialFunds.com talks with Sonia Kowal of Zevin Asset Management about social unrest and its impact on the prospects for long-term sustainable investment.


As far back as the first confrontation with police on the Brooklyn Bridge—back when the so-called corporate media portrayed the Occupy Wall Street Movement as a hopelessly naïve assemblage of inarticulate complaints, if it deigned to notice it at all—it was apparent that the protest's primary focus is on the deepening inequality that threatens to become a permanent institution in American life. The protestors didn't choose Wall Street for its biodiversity.

Especially given the financial crisis and its ongoing aftermath, the movement seems a valuable example of a properly functioning democracy in action. And given that the voices of the movement are the voices of key stakeholders on whose behalf sustainable investors engage with corporations and policymakers, the alignment of concerns and goals between the two communities seems natural, if not inevitable.

So it was important news when the Boston-based investment firm Zevin Asset Management came out with a public statement of support for the movement last week. Stating directly that "As socially responsible investors, we seek the same goals as those protesting," Zevin pointed out, "overwhelming evidence demonstrates the rich have gotten richer at the expense of the middle class, the working poor, and the unemployed."

"We stand alongside the Occupy movement, supporting freedom, transparency, human dignity, and responsibility," the statement continued. "We hope that the voices of the 99% will bring much needed changes in government policy to help address excessive corporate greed, greatly weakened environmental and financial regulations, the housing crisis, crumbling infrastructure, shrinking schools and libraries, and a disappearing social safety net."

For Sonia Kowal, Zevin's Director of Socially Responsible Investing, the firm's support for the Movement grows out of a long-term investment philosophy that seeks to manage risk for its clients.

"We try to look at things like social unrest from a top-down point of view when we are choosing companies and regions for investors to invest in," Kowal told SocialFunds.com recently. She described social unrest as "this spirit of everyone figuring out that they've been done over by the establishment and trying to regain some control over things that have gotten away from people," and said, "That worries us a lot, but at the same time we almost think it's necessary for things to move forward. In the States it's a particular issue given the corporate personhood problem that we have" following the Supreme Court's Citizens United decision.

As part of Zevin's commitment to a long-term investment philosophy—according to which, Kowal explained, "We're willing to look through the dips and not chase our tails"—she said, "We wrote investment commentary on inequality last year, on declining living standards and declining employment for everybody except the top income earners. We don't think it's good for the economy in the long term."

Asked about the factors that she thinks contributed to the rise of the movement, Kowal said, "Concentration of share ownership in a handful of large financial conglomerates that aren't willing to challenge political activities by companies, and the rewards that are gained by investors focusing on short-term results instead of focusing on inherent sustainability."

"The revolving door between regulatory agencies and the corporate sector is a huge problem that leads to an American lag in terms of innovation," she continued. "Incumbents rather than the best operators are being rewarded."

"All of this is chipping away at the fundamentals of the democratic system that we theoretically have," Kowal said. "When people see these record high corporate profits, they're right in questioning what's going on. Companies are moving their activities from unionized and high-wage locations or cutting them altogether, and everyone that's left is overworked and underpaid. And I think companies do this to pander to short-term investor demand. They're cutting costs, eliminating research and development, eliminating maintenance, infrastructure, training, and community relations; and we think that's hurting their long-term prospects."

"We put a lot of blame on our government for being complicit, for bailing out bankers and companies while giving short shrift to everyone else," she added. "But it's not only our current administration. It goes back a long time."

Much has been made in the media of the absence of centralized leadership of the movement, and whether their aims are being clearly articulated. But it clear from Zevin's statement, as well as support from nongovernmental organizations (NGOs), some politicians, and even the independent board of Ben & Jerry's, that an understanding of what the protests are about is widespread.

This week, Adbusters, the Canadian magazine that first called for the Occupy Wall Street protests, did submit a single proposal that if enacted could help rein in Wall Street risk-taking and provide funds for a sustainable economic recovery. Adbusters called for a global march on October 29th in favor of a financial transactions tax, which would levy a one percent tax on all financial transactions and currency trades.

In a 2009 report, the Economic Policy Institute (EPI) concluded that a financial transactions tax of only 0.5% could fund the creation of 4.6 million jobs and support an expanded social safety net as well. Besides, EOI wrote, "the mean holdings of financial assets by the wealthiest 10% of households is 45 times greater than the mean holdings of the bottom 75% of households," so the tax would be extremely progressive.

In an email, Kowal indicated support for some kind of financial transactions tax; although, she wrote, "1% seems too high and also in order for it to be effective, it would need to be global."

However, "The evidence seems to be that when trading commissions were higher, market volatility was much lower. To this end, a tax would discourage short-term speculative activity while not affecting long-term decision making," she wrote.

"All the issues come back to the same theme that we're not in control anymore," Kowal told SocialFunds.com. "It's important that people start to think about that. It's always been an aim of the socially responsible investment movement, to get people to start thinking about where their portfolios are invested."

"I hope they keep the pressure on and continue to make their points in a peaceful way, but a stubborn way," she said. "I hope it moves that political needle back to where it has to be. I think the Tea Party and the right wing have really scared the government, and this shows that the other side is very strong and is a force that is to be reckoned with."

 

 
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