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