Letter To Shareholders
Dear Fellow Shareholders:
The past few years have been extraordinary. Reviewing the headlines, one sees a broad range of issues that continue to develop: The Syrian refugee crisis, the scandalous revelation of sham accounts at one of our nation’s leading banks — along with the resignation of the CEO, the Panama Papers and the zika virus. The Department of Labor withdrew two legal bulletins that discouraged fiduciaries from considering the social and environmental impacts of their investments, and there were concerted efforts to avoid a point of no return on climate change. Meanwhile, the globe’s population continued to grow. Then came November, and the Presidential election, the sweep of the Senate, and a whole new approach to stewardship of this great American experiment.
For those of us interested in tracking social and environmental progress, the news has not been encouraging. We have had further affirmation that climate change is real and is manmade. We have had continuing acts of terror. Meanwhile, corporations have taken increasingly open positions that seem to refute the Administration’s stated policies, whether relating to immigration, gender-identity, climate, or race relations.
To say that global markets have shrugged off the tumult would be an understatement. Markets have been rising with extremely low volatility, in an almost eerily calm fashion. While on the one hand it makes sense — corporate earnings continue to rise and that is good for stocks — on the other hand one is left wondering how we can possibly see companies growing their earnings amidst all the uncertainty in the world.
There are some reasons for the market’s continued rise. Going forward, investors anticipate a potentially lower corporate tax rate in the U.S., making their ownership more valuable still. Interest rates, while rising, are nowhere near high enough to offer competition to stocks for investable dollars. The financial case still exists for equities. Higher earnings, less pesky government interest in how the profits are made, little competition from other potential investments, and that potential ability to keep more of the profits, by paying lower taxes, provide a formidable backdrop. This has all been good for stocks in the short term. However, as investors for the long haul, and as citizens of this planet, we have many concerns.
One of the most exciting developments of the past year has been the rapid acceptance of the United Nations Sustainable Development Goals (SDGs). This 17-point program was adopted in 2015 and lays out the issues, from Zero Hunger to Decent Work and Economic Growth, to Life Below Water, that the world’s nations have committed to address, in partnership with the private sector. Strongly supportive of Peace, Justice and Strong Institutions, the goals focus on cross-cutting issues such as gender equality and North-South economic cooperation. They even include a nod to corporate sustainability reporting, a provision Domini Impact Investments urged UN delegates and ambassadors to include, in meetings we attended back in 2012 and 2013.
The SDGs present an ambitious vision for the future, recognizing that societal and environmental challenges are intertwined. According to the UN Development Programme Administrator, Helen Clark, “We are advocating for countries to have access to the funding they need to improve the lives of all their peoples and to be able to do that in ways which safeguard the integrity of vital ecosystems.” At Domini Impact Investments, “universal human dignity and ecological sustainability” have long been our guiding principles. We were delighted to see the close alignment between our approach and the SDGs, as a more holistic vision for the future has taken hold globally.
As your mutual fund manager, we have undertaken an initiative to more deliberately track our efforts on your behalf and to consider how they support the SDGs. The essay in this annual report is a part of that initiative. In it we study one aspect of Life Below Water, sustainable seafood. As with all the goals, the hurdles are enormous and progress slow. Nonetheless, noteworthy actions have been taken. We hope you enjoy reading about these efforts.
On social and ecological levels, the past twelve months have documented for us the continuing need to have the voice of investors at the table as citizens of the planet. Investors stand at the junction between one of the strongest, most organized and universal forces on the planet — finance — and the very real impact that finance has, for good or bad. The role of the socially responsible investor has never been more important.
Thank you for your investment and for your continuing support of responsible investing.