Calvert Investments: Investments with a Story
by Alexandra Hensens, MPA ’14 (11/19/13)
This past summer Alexandra interned at Calvert Investments as a sustainability research and policy analysis summer associate and then hosted Barbara Krumsiek, CEO of Calvert Investments for a visit to Cornell.
On 24 April 2013, Rana Plaza, an eight-story commercial building, collapsed in the greater Dhaka Area, the capital of Bangladesh. The death toll was a staggering 1,129 and approximately 2,515 people were injured. The event is considered one of the deadliest garment-factory accidents of all time, as well as the deadliest accidental structural failure in modern human history. Many retail manufacturers operating in the building, mostly large American and European clothing companies, were aware of the safety concerns in Rana Plaza, yet they continued to employ garment manufacturers at the site. At a meeting of retailers and NGOs a week after the collapse, a new Accord on Factory and Building Safety in Bangladesh was created and a deadline was set for manufacturers to sign it. The Accord obliged retail manufacturers operating in Bangladesh to undergo building inspections, enforce fire and safety standards, and provide compensation to maintain building safety. Unfortunately, many multibillion-dollar retail corporations that were operating in Rana Plaza refused to sign the Accord.
My summer internship at Calvert Investments started six weeks after the collapse. Calvert Investments is a mutual fund that manages over $12 billion in assets for institutions, individuals and retirement plans. In addition to providing traditional investment management services, Calvert is one of the largest sustainable and responsible investment companies (SRI) in the world. The fund offers a range of equity, bond, cash, and asset allocation products. Many of these products integrate the firm’s proprietary environmental, social, and corporate governance research, which helps to guide the portfolios’ allocations.
While most social issues are not traditionally regarded as material to return on investment, incidents like the collapse of Rana Plaza create significant divestment, regulatory, reputational, operational, legal and stock price depreciation risks for corporations. During my time at Calvert, I developed a framework to assess human rights concerns in the agriculture, apparel, extractives and ICT sectors. The management team and I engaged with CEOs, investor relations and CSR (corporate social responsibility) departments of retail companies. We used the power of shareholder advocacy to request increased safety measures in the factories where they produced goods. In addition, we urged them to publicly disclose the countries in which they were operating. During my time at Calvert, I learned how shareholder power can truly be leveraged for the greater good. While it is a step in the right direction for corporations to have appropriate environmental, social and governance policies set in place, it is more important for them to live up to and enforce the policies that are in effect. Luckily, most of the companies that we engaged with started to publicly disclose the countries in which they operate and are working to increase the safety measures in their factories throughout the world.
In addition to financial institutions’ ability to leverage “shareholder power,” there are many other innovative solutions that can help to ameliorate human rights issues. Two such examples are LaborVoices and Rank a Brand. LaborVoices is an application that enables garment factory workers to report and share information about their working conditions. Rank a Brand is a rating agency which assists consumers and investors in making more informed purchase decisions based on the CSR practices of the organizations in question. Both financially responsible investment allocation decisions and consumer-empowerment will help drive progress in the sustainable living arena for years to come.
The Sustainable Global Enterprise Immersion at Johnson helped prepare me for my summer at Calvert. The immersion undoubtedly increased my knowledge base as to how the corporate sector can approach environmental, social and governance (ESG) issues as business opportunities. It also helped me develop my soft skills. The “hands on” project (which I completed for New Holland Agriculture who was seeking to expand in the second generation biofuel market) provided me with an incomparable experience in project management, a skill which I frequently utilized on the job. Other skills that I learned, such as conducting primary and secondary research and data analysis, were directly applied during my summer at Calvert. Professor Mark Milstein deserves a big thank you for allowing non-Johnson students to participate in the immersion!
Back in Gorges Ithaca
Last month, I had the honor of hosting Barbara Krumsiek, the CEO of Calvert Investments, during her visit to Cornell. Ms. Krumsiek has advanced Calvert’s position as a globally recognized leader in the field of sustainable and responsible investing. Ms. Krumsiek’s visit was highly enlightening. At the roundtable discussion with roughly 30 CIPA and Johnson students Ms. Krumsiek asked if anyone had a broker. Not a single hand was raised. The point Ms. Krumsiek was trying to make is that millennials do not seem to take the traditional route when it comes to investing. The big question is…how do/will millennials invest? And how can financial institutions respond to these needs?
As the head of Calvert, Ms. Krumsiek has also successfully advocated for issues relating to the advancement of women, an issue that is especially close to my heart as the outgoing president of Women in Public Policy. During her visit Ms. Krumsiek asked many thought-provoking questions: “Why do women only receive 4.6% of venture capital funding? Do men have some kind of monopoly on worthwhile business ideas? If not, what are the obstacles facing female entrepreneurs who are seeking better access to venture funding?” Ms. Krumsiek asked similar questions concerning women in wealth management. Women are known to be more risk-averse than men in managing finances. If that is the case, then what are the obstacles that women face when entering the financial sector? She closed by speaking about the progress she has made in her own organization. Seven out of the eleven people in the management team at Calvert are women. As such, Calvert is an organization which “talks the talk” and promotes female equality in the workplace and also “walks the walk” with a leadership team comprised mainly of women. It was inspiring to hear a woman, who successfully turned thought into action within a historically male-dominated industry.
Ms. Krumsiek is a mother, mentor and an incredibly inspiring woman who took two days out of her busy schedule to fly from Washington, DC to Ithaca in order to engage with Johnson and CIPA students about personal and professional decision-making. Spending the day with her was an absolute honor. This is the type of experience that makes the “Cornell Journey” a time that I will appreciate for the rest of my life.
To find out more about Calvert’s work please visit: www.calvert.com