For this Petaluma investment adviser, going green is for the environment as well as the portfolio

Dale Wannen believes investors should force companies to adopt better environmental, social and corporate governance policies.|

Dale Wannen isn’t your typical investment adviser: His goal is to get his clients to see green both in their wallets and in their investment portfolios.

Wannen operates Sustainvest Asset Management, a Petaluma-based investment advisory firm focused on investing in responsible, sustainable businesses. He has 120 clients with $18.5 million in assets under management, from individuals to family foundations to nonprofits.

He said that investing can help force companies to adopt better environmental, social and corporate governance polices, from divestment campaigns to shareholder activism. Wannen recently discussed with The Press Democrat his views on how to invest in a sustainable manner. The interview has been edited for clarity and brevity.

Wannen, 41, lives in Petaluma; he’s married and has two children. He grew up in the small shore town of Margate, New Jersey, received his undergraduate degree in economics from Rowan University in Glassboro, New Jersey, and his MBA from the Presidio Graduate School in San Francisco. He has 15 years of experience in the field of sustainable investing. Wannen also is a board member of Global Exchange, an international human rights organization.

Q: What can investors do on their own to promote sustainable business practices beyond driving a Prius, going vegan or putting solar panels on the house?

A: I think where they bank is primary. The first thing before anyone talks about investing their hard-earned dollars, I ask where do you bank? Most investors in America have just a 401(k).

The No. 1 place to make change through sustainable investing is through the 401(k) and then move on to their IRAs and brokerage accounts. In order to do that, you have to convince human resources (departments) and say, “Can you offer us an option for sustainable investing?”

Q: Are there any companies that offer such services?

A: There is one called Social(k) in San Francisco that provides such portfolios for 401(k)s. They primarily focus with companies that have sustainable values already and want to integrate such green 401(k)s into their workplace. These ?companies say, “We have employees who are very sustainably minded, but there are no options for investing.” As companies become more sustainable, it’s only inevitable the plans they offer will be more sustainable.

Q: The knock on such sustainable funds is that they don’t deliver the returns compared to more traditional funds, such as those that mirror the S&P 500. True?

A: That’s old news. Sustainable investing is shifting the paradigm so much that companies are acting more sustainably now. We’re seeing that the returns on these investments are equal to or better than companies that are not integrating these sustainable values. The sustainable index out there is called the MSCI KLD 400 Social Index Fund (DSI).

It has 400 companies with top environmental, social issues (gambling, tobacco, firearms) and corporate governance ratings. When you look at the one-year, five-year and 10-year chart compared to the S&P 500, it’s clear there is no giving up of performance. Things take time, but the shift is happening.

Q: What types of companies do your clients invest with?

A: It’s across all asset classes with 10 major sectors. It could be in areas such as health care or technology or others. For example, in retail food it could be Chipotle Mexican Grill versus McDonald’s. Chipotle is a sustainability champion in their sector in retail food versus McDonald’s. Even though they are trying to make changes, McDonald’s has been a laggard when it comes to organic and local sourcing. There’s always the Costco versus Walmart example. Costco’s CEO isn’t making as much as Walmart’s in regards to the average employee. If you look at the 10-year chart of Costco versus Walmart, it’s night and day, as Costco has really outperformed.

Q: Why are you a big proponent of the website, which allows investors to check if their mutual funds own investments in coal, oil or natural gas companies?

A: It’s very simple. All you have to do is type in a five-digit mutual fund symbol, which should be on every statement you have. After one click, it shows you how many positions in your fund are involved in coal mining, etc. You might even find you have a fund that has zero investments. Even after finding out such information, investors typically need guidance with an adviser who focuses on sustainable investing.

Q: What’s been the biggest ramification in the marketplace from such divestments?

A: There are numerous. Morningstar, a major investment research firm, now has a scoring metric for environmental, social and corporate governance issues right on its website. If Morningstar is jumping into this, it’s going to make the mutual fund companies like Vanguard more sustainability focused. These companies want to have a high score on Morningstar for the young, millennial investors.

We also have seen numerous bankruptcies in the coal mining industry. Executives at these coal mining firms have been quoted that the divestment movement had pushed their stock valuation down.

Q: Why have you focused on Dunkin’ Donuts so much? You have pushed for shareholder resolutions for the company to use more cage-free eggs and to get rid of its disposable single-serve coffee pods (K-Cups). (Both initiatives have been unsuccessful.)

A: I’m from the East Coast. When you visit the East Coast, you see Dunkin’ Donuts on every street corner. Another caveat is they still have Styrofoam cups, which is in my eyes as an investor just upsetting. I have witnessed friends and family members who use K-Cup machines and the amount of waste they produce. It triggered something.

It’s one of the fastest growing retail brands out there, so that concerns me. They are opening a lot of new stores in California. In my eyes, now is the time to put pressure on them because of their big growth plans. Any time you get a shareholder proposal on the proxy, it is a success as it opens up the issue to all shareholders.

Q: Are there companies that do sustainability right?

A: If you are talking in the privately held sector, one would be Patagonia Inc., the clothing company. When it comes to publicly held (companies), you can look at Unilever, the Dutch-?British food manufacturer that owns such brands as Ben & Jerry’s ice cream and Lipton tea. Everything they do revolves around sustainability, whether it’s their supply chain, buildings or waste. Also, there’s Apple. As the biggest company in the world in terms of valuation, they happen to be one of the most sustainably focused. They have human rights issues because of the labor they are (using for) their iPhones. They also, however, have been very open and very vocal about making change. Locally, there is Autodesk (a Mill Valley architecture software firm) that ranks pretty highly in the technology sector.

Q: What about Tesla, the Palo Alto-based electric automaker and solar roof manufacturer?

A: Tesla has an anti-union thing (with its assembly line), which a lot of tech companies do. It’s a great company. CEO Elon Musk is a disruptor, which is what the market likes and is why the stock continues to go up. Wall Street wants to see that. On the flip side, when you look at the financials and the acquisition of the Solar City subsidiary, there is some debt taken on from that.

Q: Why hasn’t more change taken place in the financial services sector, especially as the biggest U.S. banks are now even bigger in the aftermath of the recession?

A: Mainly because of their greed, but I think it will happen because of transparency and consumer demand. For instance, when it comes to transparency, 20 years ago investors didn’t even know what they were paying their advisers. Not only were they overpaying, it was hard to find out what you were paying your stock broker. Banking has become a lot more transparent as far as what the consumer is paying. Robo-advisers are even going to make it more transparent. (Robo-advisers are digital, automated platforms that allow users to make investments tailored to their needs and largely based on algorithms.) So you are now seeing a push down on fees.

Q: Will so-called “financial tech” firms such as SoFi and LendingTree be able to bring more competitiveness to the consumer banking sector?

A: Anything that rattles the cages of these behemoth entities that have been around for ?100 or so years is a good thing. It’s raising the potential for change in an industry that really has remained stagnant.

We also have to be careful. ?JP Morgan CEO Jamie Dimon is smart. These banks are going to be integrating these technologies into their own practices. The question is are they going to be doing it rapidly enough to change with the times? If a client walks through my door and gives me their bank statement and it’s, for example, Bank of America, I say before we even have a discussion: “Go walk to the bank and close that account out.” If you are not comfortable with a local credit union, I think there are regional banks that are doing a lot better job of managing your money and lending it than the Big 5 banks are.

Q: Can change actually occur in the airline industry given how much criticism it generates from consumers?

A: I look at companies based on sectors. The airline industry has its issues with environmental, social good and corporate governance that are a lot different than a company such as Apple. But look at Southwest Airlines. They rank highly in that sector. They have good fuel efficiency standards. They pay their employees a little bit better. It’s just finding the best in class. Airlines also are so heavily reliant on fuel costs, which is an external cost that they don’t have a lot of control over. That’s why Wall Street has never liked airlines stocks.

Q: Are there ways for consumers to directly invest in their local communities?

A: Yes. There’s the Calvert Foundation. The investment company offers notes that pay from 1 percent to 2 percent annually. You can see where the money is being directed. It could be in Oakland or another local area. It focuses on issues like affordable housing or sustainable agriculture. It can become part of your fixed-income package. It’s definitely a way to pool some of your assets in that direction.

Q: Overall, is it your contention that someone can be both a savvy investor and socially conscious? Those two traits are not mutually exclusive?

A: Absolutely. Take a look at the Parnassus Endeavor Fund, a portfolio that invests in companies with excellent workplace policies, with most coming from technology. If you look at the performance of that fund, it’s pretty amazing to watch. (Its 10-year average has been 12.29 percent compared to the S&P 500 Index of 7.14 percent.) We’re shifting the pendulum and it’s doing the right thing.

You can reach Staff Writer Bill Swindell at 521-5223 or On Twitter @BillSwindell.

Bill Swindell

Business, Beer and Wine, The Press Democrat  

In the North Coast, we are surrounded by hundreds of wineries along with some of the best breweries, cidermakers and distillers. These industries produce an abundance of drinks as well as good stories – and those are what I’m interested in writing. I also keep my eye on our growing cannabis industry and other agricultural crops, which have provided the backbone for our food-and-wine culture for generations.

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