Wellington Management Talks About Investing in a Better Future

This post was written by Shari Siegel ’18

According to the Global Impact Investing Network (the “GIIN”), the financial markets will have to provide several trillion dollars annually if the U.N. Sustainable Development Goals (“SDGs”) are to be met by 2030.[1]  Thus far, impact investing has been mainly the realm of a small group of institutional and wealthy individual investors, but that situation is now poised for change.  The GIIN’s new framework is calling for impact investing to be “made more accessible by developing new products suited to the needs and preferences of the full spectrum of investors (from retail to institutional) and to accommodate the capital needs of various types of investees.”[2]

The Sustainable Innovation MBA Class of 2018 started Module 4 of its program with a visit from Meredith Joly, Christopher Kaufman, and Quyen Tran from Wellington Management arranged by Professor Charles Schnitzlein.  The Wellington trio came to discuss how the privately held Boston-based investment manager is making impact investing a viable option for a larger pool of investors.

First, A Little Vocabulary.  “Impact investing” differs from “ESG investing.”  ESG investing is a strategy in which investments, usually equity in publicly traded companies, are chosen because the issuers have environmental, social or governance practices that align with the investor’s values; the companies in question may or may not offer products or services that are intended to address social or environmental problems.  (For example, an ice cream manufacturer that is well known for its advocacy of better environmental practices and equality issues may be an ESG investment, but wouldn’t be an impact investment.)  Impact investing is a strategy in which the investor chooses investments with a view to addressing specific social and environmental issues.  The core businesses of the companies that the impact investor invests in are specifically aimed at solving one or more social or environmental problem.  (For example, a healthcare technology company that enables people in remote locations to have “virtual” doctor visits so that they can obtain otherwise unavailable or cost-prohibitive care could be an impact investment.)  The social and environmental issues impact investing usually attempts to address are subsets of the SDGs, including addressing adequate housing, access to education, healthcare, climate, water resources, etc.

Traditionally, impact investing has largely been done through large private investments in private companies.  Such investments would normally be limited to institutional investors or Very or Ultra High Net Worth individual investors (i.e., investors with more than $5 million to invest).  The Wellington team came to talk about how impact investing can be done through selecting publicly traded stocks, bonds and mutual funds, which are much more liquid and have much smaller minimum investment requirements than private equity, thus making such strategies more widely accessible.

The SDGs establish a common language for NGOs (non-governmental organizations), foundations, governments and private investors as they each work in their own ways to solve the world’s most pressing problems.  Supported by its large, centralized research team, Wellington has identified hundreds of publicly traded securities that provide capital for companies and projects whose core businesses and missions address SDGs in one of three impact themes: life essentials (housing, clean water/sanitation, sustainable agriculture/nutrition, and health), human empowerment (education and job training, digital divide and financial inclusion) and environment (alternative energy, resource efficiency and resource stewardship).  As the manager of its own equity and bond funds and subadvisor for third party funds, Wellington monitors and measures not only the financial performance of the securities in its portfolios but also the social and environmental impact the companies and projects are having to ensure that investor goals are being achieved.  This is an example of one more way business is being used as a force for good.

[1]           Global Impact Investing Network, Roadmap for the Future of Impact Investing: Reshaping Financial Markets (March 2018) at 9.

[2]           Id. at 49.

Is Wall Street Waking Up To The Benefits of Sustainability?

There’s something brewing among our economy’s biggest institutional investors, risk analysts, and economic forecasters.

Larry Fink is the founder, chairman, and chief executive officer of BlackRock, one of the world’s largest investment firms with over $6 trillion in assets under its management. Each year, Fink writes to the CEOs of leading companies in which its clients are shareholders. “As a fiduciary,” Fink states, “I write on their behalf to advocate governance practices that BlackRock believes will maximize long-term value creation for their investments.”

In this year’s letter, Fink urges business leaders to focus on “long-term value creation”. BlackRock also said its “engagement priorities” for talking to CEOs would include climate risk and boardroom diversity.

Also included in the letter is this paragraph:

“Environmental, social, and governance (ESG) factors relevant to a company’s business can provide essential insights into management effectiveness and thus a company’s long-term prospects. We look to see that a company is attuned to the key factors that contribute to long-term growth: sustainability of the business model and its operations, attention to external and environmental factors that could impact the company, and recognition of the company’s role as a member of the communities in which it operates. A global company needs to be local in every single one of its markets.”

As they say, read the whole thing.

BlackRock is not alone.  Fund giant Vanguard, which led a successful shareholder resolution on climate disclosure and strategies at ExxonMobil, also declared climate risk and gender diversity “defining themes” of its investment strategy.

Our mission at The Sustainable Innovation MBA is to build and launch the next generation of business, enterprise, and organizational leaders who are exceptionally well-equipped to create, and lead in, this new world.

Perfect Pitch: A Workshop with Cairn Cross

This post was written by Kevin Hoskins ’18

The members of The Sustainable Innovation MBA program at UVM were recently treated to a workshop on pitching by Cairn Cross. Cross is the co-founder and managing director of FreshTracks Capital, a venture capital firm based in Vermont that invests in early stage entrepreneurial companies. (He is part of The Sustainable Innovation MBA program’s Changemaker Network, as well as teaching the program’s class on venture capital.)

What is pitching? It is the art and skill of describing one’s project, entrepreneurial venture, or oneself in the minimal amount of words that communicates your message to the listener.  For startups and entrepreneurs, it is a skill that can be developed and honed over time with practice and feedback.

Cross began the workshop by outlining a number of different pitching styles. The first, is the one sentence pitch, as illustrated further by Adeo Rossi. It answers the question: “If you had to describe your company or mission in one sentence, what would it sound like?” For entrepreneurs, that response could look like this:

My (company) is developing (a well-defined offering) to help (the audience you’re targeting) (solve this problem) with (your secret sauce.)

The second style is the mantra. A mantra is a sacred verbal formula repeated in prayer, meditation or incantation such as an invocation of a god, a magic spell or a syllable or portion of scripture containing mystical potentialities.  Entrepreneurs and start-ups can use mantras to explain their mission in only a few crucial words. Guy Kawasaki, in his video Don’t Write a Mission Statement, Write a Mantra, gives a few helpful examples:

  • Starbucks: rewarding everyday moments
  • eBay: democratize commerce
  • Disney: fun family entertainment

The class was then asked to come up with mantras for The Sustainable Innovation MBA program. It’s important to remember that mantras should be short and sweet, but also outwardly focused. Your mantra should focus on the benefits that you provide to the customer.

Thirdly, Cross discussed the Art of the Pitch for entrepreneurs. The idea behind this is that entrepreneurs should always be prepared with a pitch handy for potential investors, co-founders, or partners. The pitch outline Cross illustrated and the questions you should answer in your pitch is as follows:

  • Title (name, organization, contact information)
  • The “Ask” (I am here today to ask you…)
  • The Problem (what is customer pain you will alleviate?)
  • Your Solution (why are we better?)
  • Your Management Team (why are you the one(s)?)
  • Your Business Model (how will you make money?)
  • Any Underlying “Magic” (what is your secret sauce?)
  • How Will You Reach the Customer? (sales/marketing)
  • Repeat the “Ask”

Cross noted that pitches should be as concise and succinct as possible. Remember that you can only speak at most 150 words a minute comfortably. It’s also helpful, Cross noted, to think of someone on your shoulder whispering “so what?” to better focus on the value your offer needs to create for others.

Lastly, Cross touched upon the idea of the personal pitch. Have a way to describe who you are what you do clearly and succinctly in a way that resonates with people. As a way to frame your personal pitch, think of these questions:

  • What’s your motivation?
  • What do you do well?
  • Why you?

Answering those questions is key to communicating your personal secret sauce.

Do you have a business idea that you’ve been working on? Can you say it in 140 characters or less? Tweet your business idea to @vtcairncross. Just remember to keep it concise!

Editor’s Note: What should we call a business pitch delivered by tweet? A “twitch”? Or a “peetch”?

Burlington Hosts “Slow Money” Food Economy Entrepreneurs

This post was written by Ariella Pasackow ’18

On December 6, Slow Money Vermont hosted its 3rd annual Entrepreneurial Showcase at the Main Street Landing Performing Art Center in Burlington. Together with the Moulton Law Group, Milk Money, Flexible Capital Fund, City Market, and other sponsors, the program brought together entrepreneurs and investors with a shared vision for local, sustainable food and farms. Slow Money Vermont “catalyzes new investment opportunities in the people, businesses and community that contribute to a sustainable food economy.” A project of the Farm to Plate Network, Slow Money Vermont is part of a national movement headquartered in Boulder, Colorado.

The Entrepreneurial Showcase presented two panels, along with opening remarks by Slow Money Vermont chair Eric DeLuca. The plenary panel was introduced by Janice St. Onge, president of Flexible Capital Fund, who discussed the life cycle of businesses and the need for a succession plan. Allison Hooper from Vermont Creamery and Bill Cherry from Switchback Brewing Company both spoke to their own exit strategies, and the challenges of thinking about selling your business before you even begin. After years of discussion and possible “suitors,” Vermont Creamery was purchased by Minnesota based Land O’Lakes in March 2017. Switchback Brewing became employee owned in February 2017, and changed their logo to reflect that decision: “Employee & Vermont Owned, Forever.” Matt Cropp from Vermont Employee Ownership Center also joined the panel to discuss broad based employee ownership programs and the ESOP model. Panelists offered advice to aspiring entrepreneurs to think about the culture that want to cultivate within their company and the legacy they want to leave behind.

Following the panel, five entrepreneurs presented a brief pitch, including an “ask” for capital and other resources, with time for questions and answers. Kimball Brook Farm, Zenbarn, Metta Earth, Kingdom View Compost at Tamerlane Farm, and Eden Specialty Ciders shared their story and plans for future growth, and showcased the diversity of businesses throughout the state. Audience members asked about the opportunities and challenges the entrepreneurs faced, and what they needed to help them succeed. Though each entrepreneur was seeking to solve very different problems, they were all committed to growing companies grounded in local, sustainable, and innovative business practices and beliefs. Additional information about the Slow Money Movement can be found here.

Alumni in Review: Chris Howell, Class of 2017

Chris Howell ’17 is currently working as a finance and investment consultant. He was interviewed by Isabel Russell, an undergraduate at UVM.  

What have you been up to since graduation?

I’m currently working with mission-driven businesses who are raising investment money to fund expansion: structuring a Series A for a SaaS business, working with a farm to purchase additional land, and advising an equity crowdfunding platform.

 Why did you choose to attend this MBA program?

I chose the UVM MBA program to deepen my Vermont network and broaden my business skill set.

What was your favorite part about the experience?

My favorite part of the experience was the people. The academic experience was top notch—thanks to the professors, staff, and classmates who worked hard to create a supportive and engaging learning environment.

How are you applying the tools/skills you learned in the program, post-MBA?

Working on diverse consulting projects after the program has allowed me to use the broad range of tools we learned—from organizational design to finance and venture capital.

What would you tell someone who is considering the Sustainable Innovation MBA?

Dive in. The program was an exceptionally challenging and immensely rewarding learning experience.

 

Global Evolution and The Sustainable Innovation MBA Explore Link between Sustainable Investing and Development

Editor’s Note: This post is taken from the text of a news release issued by Global Evolution. Global Evolution serves on our Advisory Board, and hosted a student practicum during the 2016-2017 academic year.

Global Evolution partnered with the University of Vermont Sustainable Innovation MBA program to offer a unique learning experience for students pursuing a career in the growing field of sustainable business and impact investing.

The leading emerging and frontier markets investment manager hosted two students in a practicum project to gain hands on experience with investing in emerging and frontier markets. The students, Mike Rama and Ted Carrick, worked closely with Ole Jørgensen, Global Evolution’s Research Director, at headquarters in Denmark. Together, they developed recommendations to enhance Global Evolution’s ESG model and offering in North America, where the company is currently expanding.

“Sustainable investing is in our DNA, and we are committed to supporting the best talent that is interested in our field,” said Robert Morier, managing director and head of North America for Global Evolution. “Working with the University of Vermont was a great way to do that, and we are excited to see how these students contribute to our industry in the future.”

Continue reading “Global Evolution and The Sustainable Innovation MBA Explore Link between Sustainable Investing and Development”

From the Web: These Tiny Houses Help Minimum Wage Workers Become Homeowners

If you live in Detroit and make only $10,000 a year, you still might be able to buy a newly constructed house. On two vacant blocks in the city’s northwest side, a new neighborhood of tiny houses was designed to help people living in poverty become homeowners.

Through a rent-to-own program, residents will pay $1 per square foot in rent each month. For a 250-square-foot house, for example, rent is $250, when a similar home in Detroit might normally cost twice as much. After a maximum of seven years, the house can be fully paid off.

Learn more (via FastCompany) >>

A ‘Shark Tank’ for Impact Investing: SEMBA’s Net Impact Chapter Featured

This post was edited by Mike Rama, SEMBA ’17, and originally was featured on Net Impact’s Hub Announcements.

The SEMBA Net Impact chapter held a pitch event described as a “Shark Tank for impact investing.”
Net Impact is an accelerator with chapters across the country that works to orient professionals and students to solve social and environmental challenges. The SEMBA Net Impact chapter is a hybrid chapter at the University of Vermont, Grossman School of Business, focused on bringing together current students, alumni, and community members in an effort to mobilize awareness and action on sustainability.

What makes this chapter stand out is the unique programming that equips its members with the skills and connections to drive impact now and throughout their careers. “Our chapter programming falls under three main categories: skill development, alumni relationships, and building collaborative networks with the community and other academic departments,” says Michael Rama, the Vice-President of the chapter.

Continue reading “A ‘Shark Tank’ for Impact Investing: SEMBA’s Net Impact Chapter Featured”

From the Web: Walmart invests billions to buy from women-owned businesses – but is it enough?

Women-owned suppliers make up just 2% of the retailer’s global purchases – but Walmart will join Coca-Cola, Pepsi and others in committing to buy more.

Walmart announced Wednesday it has achieved its goal to buy $20bn worth of goods and services from women-owned businesses in the US over five years. The company also conceded that it’s failed to reach another goal set around the same time: to double the amount of products and services sourced from women-owned companies outside of the country.

The mixed success shows the challenges for big companies to narrow the gaping gender gap. While Walmart’s initiative has doubled the amount of money it spends with women-owned suppliers, it’s still only 2% of the retailer’s global purchases. Yet that’s twice the global average retailers spend with women-owned businesses.

Learn more (via The Guardian) >>