How a mainstream investment advisor meets the needs of clients who seek greater alignment to social impact
In 2012, students from The Putney School, an independent high school in Putney, Vermont, approached the administration about aligning the school’s endowment to its community’s values of encouraging diversity of thought and culture, as well as a commitment to equity and justice. A student group then worked alongside the school’s investment committee and board of trustees to research and hire a new manager: Glenmede.
Glenmede first conducted educational sessions with students, and then distributed a questionnaire to endowment trustees to assess their impact and investment goals. It subsequently crafted an Impact and Investment Policy Statement (IIPS) and set out to better align Putney’s portfolio with its values, with a special emphasis on diversity and governance. Today, Putney’s portfolio is 74% aligned with its mission and its entire public market portfolio seeks to catalyze change by engaging with public corporations or voting proxies alongside broad ESG values.
Glenmede, a privately-owned investment and wealth management firm, began building mission-aligned portfolios in 2001 in response to a client’s concerns about environmental issues and desire to integrate environmental factors. Over the past 17 years, the firm has expanded its commitment to impact investing thanks to an increase in data available to support investors, a shift from negative to positive screening, and the proliferation of sophisticated impact investing options across asset classes and international borders.
In 2015, an affiliate, Glenmede Investment Management, LP, formed a Women in Leadership strategy, utilizing a universe of domestic large cap public equities. At the same time, Glenmede began researching strategies that promote gender equality across the entire asset allocation.
Glenmede’s process for worknig with its clients aligns with our finding that investors are seeking a personalized approach to impact investing to address values and social impact as well as financial goals. To that point, Glenmede created a four-step client process to help transform mission and values into an investment plan:
- Education: Relationship managers annually ask clients if they are interested in learning about how to align values with investments. Today, 35% of Glenmede’s ultra-high net worth clients (with $50 million or more in investable assets) have at least one impact investment.
- Assessment: A questionnaire helps clients articulate personal values, level of commitment, and willingness to trade impact for return in specific instances.
- Implementation: Glenmede then creates a personalized portfolio from an array of investment products. It can align proxy voting policies with broad ESG goals, and match clients with managers who engage in direct dialogue with corporations.
- Measurement: Glenmede’s approach to impact measurement varies by asset class. Public market strategies, for example, can be measured according to their positive tilts (e.g., women in management, policies promoting gender equality), negative screens (e.g., no women on board of directors), and shareholder engagement activity (e.g., aligning proxy votes with gender diverse values and directly engaging companies on diversity, equal compensation, and work-life-balance policies).