Lucas W. Mansberger, CFA®, CAIA®

Investment Strategist, Senior Manager Selection Analyst

The Coevolution of Greenleaf and Our Clients

Throughout Greenleaf Trust’s history, we have been privileged to serve clients who not only have high standards for financial and investment advice, but that also have strong personal commitments to their values and their communities. Historically, many of our clients did not view their purchasing and investing decisions as a primary means of expressing their values or achieving a positive social or environmental impact. However, in recent years, we have seen clients increasingly seek to integrate their values and desire for positive impact into more aspects of their lives, including into the management of their investment assets.

In the following article, we explore three related market trends that we believe are driving these changes and affecting what our clients seek from their investment advisor: an interest in greater social and environmental awareness and transparency from the companies with which they partner, the desire for values alignment in the products they employ, and a desire to achieve greater social and environmental impact through their purchasing decisions. We also share some of the ways in which Greenleaf Trust has been evolving to meet our clients’ changing needs.

Social and Environmental Issue Awareness and Transparency

In recent years, consumers have come to expect that their companies will be aware of and responsive to broader social concerns. A recent survey from Markstein and Certus showed that 70% of consumers want to know about what their companies are doing to address social and environmental issues, with 46% paying close attention to a company’s efforts to be socially responsible when making purchasing decisions.1

It appears that younger consumers skew even more heavily towards such concerns. According to a survey from the marketing firm Clutch, while 44% of Generation Z respondents say that price or value offered is among the three most important attributes of a company, environmentally-friendly business practices (71%), social responsibility (68%), and giving back to the local community (68%) all ranked significantly higher.2

Values Alignment in Products Employed

The surveys above indicate not only that consumers increasingly want to know about the social and environmental characteristics of the companies they work with, but that they do so because they desire their purchasing decisions to be in alignment with their personal values. Within financial services, the desire for values alignment is best evidenced by growth in the field of sustainable and socially responsible investing (SRI), often also referred to as environmental, social and governance (ESG) investing. In SRI and ESG investing, assets are managed with a specific focus on the ESG characteristics of underlying holdings, and holdings are often included or excluded from purchase on the basis of a given investor’s values. In a 2020 survey, the CFA Institute and Greenwich Associates found widespread interest in this type of investing, with 76% of institutional and 69% of individual investors expressing an interest.3

That interest is translating into significant investor action as evidenced by the acceleration of the flow of investment dollars into dedicated SRI and ESG funds. Morningstar reports that asset flows into US SRI/ESG funds totaled $20.9 billion in the first half of 2020, which is just below the previous full-year record of $21.4 billion which was set in 2019.4 Today, assets in dedicated SRI/ESG funds globally exceed $1 trillion.

Greater Social and Environmental Impact

It might be expected that an increased interest in values alignment in one’s portfolio would be accompanied by an increased interest in having greater social and environmental impact as well. Indeed, investors appear to be highly motivated to achieve both in their portfolios.  The CFA Institute survey above indicates that nearly a third of all individual investors would be willing to give up some return in their portfolio in exchange for expressing their values or for achieving a positive environmental or social impact.

As with values alignment, the interest in integrating impact into product purchasing decisions, while fairly widespread, appears to be more pronounced among younger generations than older generations. In particular, Millennials are described by the Millennial Impact Project as “everyday changemakers” who “believe in the power of activism” and attempt to integrate their support for causes across all aspects of their lives.5 70% of Millennials reporting that they have changed their habits in an attempt to support their chosen causes.

Greenleaf Trusts’s Evolution to Meet Client Needs

As Greenleaf Trust has identified the growing interest from our clients in integrating their values and positive impact in their financial lives, we have innovated and evolved alongside them.  In recent years, we have expanded our roster of sustainable and ESG-focused investment options for clients to include both a suite of sustainable and socially responsible mutual funds as well as screened separately-managed account options. The flexibility of our offerings has allowed us to meet the varying needs of a quickly growing number of clients interested in investing with an SRI or ESG focus.

We have also deepened our efforts to help interested clients achieve high levels of social and environmental impact in their portfolios. We have facilitated client impact investments in a variety of forms over the past several years, including investments made through mutual funds and private funds or by investing directly in securities such as green bonds. Recently, we have assisted several clients as they have evaluated locally-focused impact investing opportunities. One of these projects is “The Creamery,” a mixed-use affordable housing development located in the Edison neighborhood in Kalamazoo that is slated to open in January 2021. In addition to offering 48 apartments at rents affordable to people earning near or below the area median income, the Creamery will house a 24-hour daycare operated by the YWCA. It is also being built to achieve LEED Platinum Certification, the highest level of sustainable construction recognized by the US Green Building Council.

Greenleaf Trust’s efforts to maximize our own firm’s impact have led us to seek out new ways to creatively address the needs of the communities we serve. As part of this effort, Greenleaf Trust has joined the Great Lakes Bay Region philanthropic partnership to fund the use of a program called Catchafire for up to 200 Midland-area nonprofits. Catchafire is a virtual platform that strengthens the social good sector by matching professionals who want to donate their time with nonprofits that need their skills. Catchafire allows nonprofits to obtain assistance for a wide variety of essential needs, such as marketing, translation services, policy reviews, and more. We are especially excited by the broad-based impact of Catchafire and the grassroots way in which nonprofits of any size and type in a given community can take advantage of the platform.

Greenleaf Trust strives to be a client-centric organization and has a culture of putting clients and their goals at the center of everything we do. As our clients’ needs have evolved to include the greater integration of values and impact into their financial lives, we too have evolved and grown. We look forward to continuing to serve you and grow with you from generation to generation.

  1. Markstein and Certus, “Consumers Expect the Brands They Support to be Socially Responsible,” 2019.
  2. Clutch, “How Corporate Social Responsibility Influences Buying Decisions,” 2020.
  3. CFA Institute and Greenwich Associates, “Earning Investors’ Trust: How the Desire for Information, Innovation and Influence is Shaping Client Relationships,” 2020.
  4. Morningstar, “Global Sustainable Fund Flows Q2 2020,” 2020.
  5. The Millennial Impact Project, “The Millennial Impact Report: 10 Years Looking Back,” 2018.

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