sustainable and impact investing advisors - volume...

Journal of Sustainable Finance & BankingSM

October 2014 Volume I. Issue 12

©Marco Mayer/Cyrstal Graphics

Companies Mentioned in this Issue:

Global Market Strategy Regional and Sector Strategy Monthly Update Michael Geraghty … p.18

Gauging Governance Globally – Macro & Micro Metrics Michael Geraghty … p.28

Global Sector Research A Closer Look at GMOs John Wilson, Margarita Pirovska… p.30 Eating Ourselves Thirsty Brooke Barton… p.34 The Diabetes Challenge: The Unintended Health Consequences of Reformulating Food Products Jürgen Siemer, PhD … p.40 Investing in Global Seafood is Smart for Business, People and Planet Linda Cornish, Will Baird… p.43 7,000 Chemicals and Highly Sustainable Kevin Parker … p.46

Enhanced Analytics Sustainable Agriculture: What Drives Investor Decisions? Bruce Kahn, PhD… p.48

Accelerating Impact Impact Measurement Enabling an Effective Market Luther Ragin, Jr. Kelly McCarthy … p.51

Regional Imperatives Water and Sanitation: Everybody Needs Them, Especially During a Crisis Coco McCabe, Oxfam … p.55

Open Source Excellence Rise of the Corporate Wellness Officer Melissa Musiker, Julie Jack … p.57

Sustainable Standout The Future of Urban Agriculture in U.S. Cities Viki Radden, Doug Lawrence … p.61

Food & Sustainability…A Call for Action Robert Fireman … p.64

Featured Editorial The Search for a Sustainable Cuisine Irena Chalmers … p.66

Sustainable Product Review Transforming Snacks for Foodies Margarita Pirovska … p.71

CEOs Letter on Sustainable Finance & Banking

Erika Karp Founder and Chief Executive Officer of Cornerstone Capital Inc. and Former Head of Global Sector Research at UBS Investment Bank

As global markets show the strain of absorbing everything from the escalating battles with ISIS and Ebola, to the ECB's fight to stave of deflation by buying private sector assets to stimulate Eurozone lending, we step back in this month’s edition of the Cornerstone Journal of Sustainable Finance and Banking (JSFB) to consider both risks and opportunities across global sectors and regions, and across the world of “Food & Nutrition.” We start by offering a timely update from our Global Markets Strategist, Michael Geraghty. In the past months, Michael's position has been relatively defensive. But we take this opportunity to upgrade the UK in our regional tilts. Clearly, this month's market action begs the question of the durability of the global economic recovery and the sustainability of earnings growth forecasts. We argue that the UK offers a more reasonable and achievable earnings outlook; and among sectors we remain selective with an overweight to IT and Healthcare. Speaking of Healthcare, there is little more essential to analyze than “Food and Nutrition” and as ever, we seek to understand both risks and opportunities. We are less alarmed by the spike in stock market volatility than we are by that of the incidence of preventable disease around the world. In “The Diabetes Challenge,” Jürgen Seimer of RobecoSAM articulates that the unintended consequence of replacing fat with sugar has led to rising obesity and cardiorenal disease. Linda Cornish of the Seafood Nutrition Partnership reminds us that boosting consumption of fish and “Investing in Seafood” can not only yield healthier diets, but stronger portfolios. And in building these portfolios, we feature an article from Bruce Kahn of SICM. In “Sustainable Agriculture: What Drives Investor Decisions?” Bruce illustrates how best management practices can boost agricultural productivity and efficiency to meet the growing demand for food, feed, fuel and fiber. As food science continues to evolve, we take “A Closer Look at GMOs” with Cornerstone’s John Wilson and Margarita Pirovska. In a pragmatic look, we call for more engagement and transparency between companies and their stakeholders. We raise the key questions: What role do GMOs play in world food security, especially considering rising populations a changing climate? Might GMOs make us healthier — or sicker? We highlight the challenges of changing the polarizing nature of the GMO debate, and we argue that transparency can often lead to progress for the long term. We articulate the critical questions that shareholders need to pose to the companies in which they invest. Further in the JSFB this month, as it relates to transparency and the ability for investors to analyze the water-related pressure on agricultural supply chains, we offer research from Brooke Barton of Ceres. As water is the most essential element in the food chain and a key to global health, Brooke examines how corn and other Farm Belt products are contributing to water stress and groundwater depletion in “Eating Ourselves Thirsty.” In this article, we offer the compelling case to identify the data, metrics, and pricing approaches that will

Cornerstone Journal of Sustainable Finance & BankingSM / October 2014 / 2

allow the capital markets to gain much greater insights into a more sustainable and resilient ag economy. Before leaving the subject of water, we expand the discussion to include a comment from Coco McCabe of Oxfam America. We take this opportunity to offer their perspective on the challenges of providing enough clean “Water and Sanitation” to populations in crisis. In considering how capitalism can truly have a constructive impact on the outcomes associated with the issues we’ve raised this month, we turn to Luther Ragin Jr. and Kelly McCarthy of the Global Impact Investing Network (GIIN). Here we look to the future of “Impact Measurement” by providing an update on the latest effort from the international working group assembled by the Social Impact Investment Taskforce that emerged from last year’s G8 conference. These guidelines can build upon the efforts in Environmental, Social, and Governance (ESG) reporting, including those developed by the GRI, the IIRC, and the Sustainability Accounting Standards Board (SASB). Helping to evolve the narrative around food is a growing concern of corporates too. Melissa Musiker and Julie Jack of APCO Worldwide explore the “Rise of the Corporate Wellness Officer” charged with helping CEOs navigate nutrition and wellness for the masses. And just how will those urban populations be fed? Viki Radden and Doug Lawrence of 5 Stone Green Capital offer a compelling argument for the work of urban farms. Further, we feature Robert Fireman of Sky Vegetables showing just how green The Bronx actually is, producing fresh, nutritious and chemical-free vegetables 365 days a year. In rounding out the JSFB, we turn to noted cookbook author Irena Chalmers, a faculty member at the Culinary Institute of America. Irene argues that GMOs and transgenic crop technologies deserve more attention as they will lead to fewer hillsides plowed and can be building blocks for stemming world hunger as we search for a more “Sustainable Cuisine”. And for those who are fortunate enough to argue that no good meal can go without a fine wine, Kevin Parker invites us on his journey to produce biodynamic wines in France at the world’s first “carbon negative” winery; yes, 7,000 chemicals, but also highly sustainable. And finally this month, we admit that we don’t know exactly what we’ll be eating as part of a healthy diet in years to come as food supplies tighten. So, we put Cornerstone’s team to the test as Margarita Pirovska offers two Sustainable Product Reviews: Exo bars (made from cricket protein) and Runa tea (harvested from guayusa — a naturally caffeinated tea leaf.) Not sure you want to eat insects? Neither were we; but we did. Nearly 1,000 types of insects are already consumed in 80% of countries worldwide. And we had a healthful drink that helps preserve the rich ecosystem of the Amazon, while empowering communities to be more self-sufficient. Cheers to that! My sincere regards, Erika Erika Karp Chief Executive Officer


Table of Contents

CEOs Letter on Sustainable Finance and Banking

p. 2

Market Summary Overview Market & Global Sector Performance, Monetary Policy & ESG Data

p. 6 p. 8

Featured Domain SustainableGames.com

Erika Karp Juan Lois

CEO & Founder,

Cornerstone Capital Inc.

Director, Business Development


p. 16

Global Market Strategy Regional and Sector Strategy Monthly Update Gauging Governance Globally – Macro and Micro Metrics

Michael Geraghty Michael Geraghty

Global Markets Strategist,


Global Markets Strategist, Cornerstone Capital Inc.

p.18

p.28

Global Sector Research A Closer Look at GMOs Eating Ourselves Thirsty

John Wilson Margarita Pirovska, PhD Brooke Barton

Head of Corporate

Governance, Engagement & Research, Cornerstone

Capital Inc.

Policy & Sustainability Analyst, Cornerstone

Capital Inc.

Director, Water Program, Ceres

p.30

p.34

The Diabetes Challenge: The Unintended Health Consequences of Reformulating Food Products Investing in Seafood is Smart for Business, People and Planet 7,000 Chemicals and Highly Sustainable

Jürgen Siemer, PhD Linda Cornish Will Baird Kevin Parker

Senior Analyst, RobecoSAM Executive Director, Seafood Nutrition Partnership Summer Associate and Student, Dartmouth CEO, Sustainable Insight Capital Management

p.40

p.43

p.46

Enhanced Analytics Sustainable Agriculture: What Drives Investor Decisions?

Bruce M. Kahn

Portfolio Manager,

Sustainable Insight Capital Management

p. 48


Accelerating Impact Impact Measurement to Enable an Effective Market

Luther Ragin, Jr. Kelly McCarthy

President and CEO,

Global Impact Investing Network

IRIS Manager, GIIN

p. 51

Regional Imperatives Water and Sanitation: Everybody Needs Them, Especially During a Crisis

Coco McCabe

Writer, Oxfam Americas

p. 55

Open Source Excellence Rise of the Corporate Wellness Officer

Melissa Musiker Julie Jack

Director, APCO Worldwide

Senior Director, APCO

Worldwide

p.57

Sustainable Standout The Future of Urban Agriculture in U.S. Cities The Future of Food and Sustainability… A Call for Action

Viki Radden Doug Lawrence Robert Fireman

COO & Director of

Controlled Environment Agriculture, 5 Stone Green

Capital

Managing Principal, 5 Stone Green Capital

CEO, Sky Vegetables Inc.

p.61

p.64

Featured Editorial The Search for a Sustainable Cuisine

Irena Chalmers

Faculty Member, Culinary

Institute of America

p.66

Sustainable Product Review Transforming Snacks for Foodies: EXO Bars and Runa Tea

Margarita Pirovska, PhD

Policy & Sustainability Analyst, Cornerstone

Capital Inc.

p.71

Upcoming Events Global ESG Calendar

p.73

Journal of Sustainable Finance & Banking Subscription Form Articles Cornerstone Capital Team

p.74

p.76 p.77


Featured Domain

SustainableGames.com

By Erika Karp, Founder & CEO and Juan Lois, Director, Business Development, Cornerstone Capital Inc.

Each month in the Cornerstone Journal of Sustainable Finance & Banking (JSFB), we will offer thoughts on a “Featured Domain,” which is selected from our proprietary “Sustainable Domain Bank.” The Cornerstone “Sustainable Domain Bank” contains 2,000+ addresses on the Internet, which are an articulation of business processes, business practices and aspirations for a more regenerative form of capitalism. Many of these domain names have the potential to be developed into business plans reflecting a robust interpretation of sustainable capitalism and finance. In particular, each “Sustainable Domain” captures a principle, or reflects a value inherent in the systematic understanding of the Environmental, Social and Governance (ESG) imperatives facing businesses and the economy today. Each Domain is intended to facilitate dialogue across functions and sectors of the capital markets; and each is available for collaborative partnership, purchase or transfer should it have particular appeal to Cornerstone clients and colleagues.

In an effort to ignite and support the efforts of the next generation of business leaders, and a form of capitalism that is based upon greater collaboration and transparency, we launch this initiative among the world's students who will be essential drivers of sustainable innovation...This is a call to action for social entrepreneurship: “Sustainable Games: The Business Model Challenge.”

In this first iteration of the "Sustainable Games," we partner with the CGI, the United Nations Principles for Responsible Management Education (PRME) and RobecoSAM of Zurich to challenge university students around the world to develop the sustainable business of tomorrow. . . businesses which seek both profit and purpose as they address the huge societal imperatives of our day: education, healthcare, infrastructure, economic inclusion, climate change, access to energy, resource scarcity and the deployment of technologies to help solve societies great challenges.

"Sustainable Games: The Business Model Challenge," partners students with similar interests and vision to launch a new enterprises and drive progress towards environmental, social, and governance (ESG) excellence in the businesses of the future. The business models submitted will deploy one of the dozens of URLs (domain names) to be released from the Cornerstone Sustainable Domain Bank. Each of these domain names represents a business model,

©Raw Pixel/Crystal Graphics….

mission, principle or vision that can be converted into a business.

These domain names, selected from the 2,000+ in the Cornerstone "Sustainable Domain Bank", can be an articulation of the ideas, aspirations, and incredible intangible value inherent in the capitalist ideal. Among these URLs are domains including "Sustainable Shipping", "Flip the Pyramid", "Gandhi's Voice", "The Last Panda", "Female Pharoahs", "Trending Toward Health", "The Trillionth Ton", and "Domain Arbitrage. In fact, at Cornerstone Capital, we have argued that the closest thing to "arbitrage" or riskless profit, is the ability to create and protect relationships and ideas. The "Sustainable Games" are intended to leverage both of these valuable assets. For


more on Cornerstone's Sustainable Registry, see: Domain Arbitrage.

As referenced above, the massive global challenges we face around everything from clean energy, infrastructure, education, healthcare, to financing future growth, require fresh thinking and creativity. We want to empower the best student minds in the world to help solve them using the tools of capitalism. The business leaders of the future can gain access to the best current strategic thinking as we align with the Clinton Global Initiative's mission of gathering global leaders from business, government and academia, to create and implement effective solutions and build lasting partnerships that create positive social change.

The judges for this competition, from among the Cornerstone Global Advisory Council (GAC) members, Staff and Sponsors, will be looking for proposals to establish an enterprise that can achieve societal impact at scale . . . Profit and purpose combined. Judges will be looking for a statement of mission, strategy, tactics and the potential for operating leverage such that the entrepreneurs can achieve their vision.

At the opening of the competition in 2015, Cornerstone, PRME and RobecoSAM will conduct a Global University Outreach effort to coordinate the application process. Additional Sponsors from the Media, Technology and Institutional investment worlds will join along with CGI to provide team finalists with guidance and mentorship as the "Business Model Challenge" proceeds.

Each team will be asked to collaborate and work toward an idea that can create shared value and profitability. Teams can build their business models using video chat, document sharing, and other digital tools that allow for optimal communication. Competition finalists will be paired with a mentor from Cornerstone's Global Advisory Council or Sponsor Representatives and will present their ideas in person at an exclusive Cornerstone event. One

finalist spot will be designated by a "Peer Vote," where students from around the world will have the opportunity to vote for their favorite business model.

Each business model submitted will be evaluated in terms of the potential for operational success, as well as for an alignment with Cornerstone's vision for a more regenerative and inclusive form of capitalism. The winning Business Plan will reflect a value inherent in the systematic understanding of today's Environmental, Social and Governance (ESG) imperatives. We expect the competition will foster diverse thinking, collaboration, enhanced global perspectives and ultimately, the creation of better solutions to today's global issues.

In the judging phase of "The Business Model Challenge", after having worked to stimulate, applaud, and reward progress along the way, this initiative will work to support the generation of the capital required to fund an evolutionary endeavor. The hope is that the critical role of finance and banking will be further recognized, restored, and facilitated. Once a winner is selected, the team will be granted ownership of the Domain URL itself, support to build out the concept, business start-up consulting, a cash award, and a featured article in the Cornerstone Journal of Sustainable Finance & Banking (JSFB). And most importantly, this business model competition based on global sustainability issues will give students - our future leaders - a chance to think creatively, collaborate globally, and collectively shape the businesses of tomorrow."

Let the Games begin...

Erika Karp is the Founder & Chief Executive Officer of Cornerstone Capital Inc. and the former Head of Global Sector Research at UBS Investment Bank.

Juan Lois is a Director in Business at Cornerstone Capital Inc.


http://cornerstonecapinc.com/2013/12/domainarbitrage-net/

Upcoming Events

Global ESG Calendar

Date/Time Event Location Information

10.20.14 – 10.21.14 2014 CEO Connection Mid-Market Convention Cornerstone Speaking Event

Wharton School of Business Philadelphia, PA U.S.A.

http://www.midmarketconvention.com/

10.21.14 High Water Women Investing for Impact Cornerstone Speaking Event

CUNY Graduate Center 365 5th Ave New York, NY U.S.A.

https://highwaterwomen.secure.force.com/events/CnP_PaaS_EVT__ExternalRegistrationPage?event_id=a1YG000000A81oJMAR

10.28.14 “Flash Boys”: From High Frequency Trading to a Fair and Transparent Exchange

New York, NY U.S.A. Featuring Brad Katsuyama, President & CEO of IEX Group. By invitation only. Email us at [email protected] for more information. .

10.23.14 – 10.24.14 American Water Summit 2014: Smashing Silos

Omni Houston Galleria Four Riverway Houston, TX U.S.A.

http://www.americanwatersummit.com/

10.27.14 – 10.30.14 VERGE SF 2014 Palace Hotel SF 2 New Montgomery St San Francisco, CA U.S.A.

http://events.greenbiz.com/events/verge/san-francisco/2014/

10.28.14 Cornerstone Capital Investment Management Launch Party

Alliance Center 1536 Wynkoop St Denver, CO U.S.A.

Email us at [email protected] for more information.

10.28.14 – 10.29.14 TBLI Conference – Europe 2014 VU Amsterdam De Boelelaan 1105 1081 HV Amsteram

http://www.tbligroup.com/tbliconference/europe2014.html#.U5ixi_mwLmU

10.28.14 – 10.29.14 The Climate Business Forum Four Seasons Hotel 8 Finance St Hong Kong, China

By invite only. Visit their website at http://climatebusinessforum2014.com/

10.29.14 – 11.2.14 Sustainatopia LA – 5 Conferences Hyatt Regency Century Plaza 2025 Avenue of the Stars Los Angeles, CA U.S.A.

http://www.sustainatopia.com/

10.31.14 2014 Annual Social Enterprise Conference Cornerstone Speaking Event

Marriott Marquis Time Square 1535 Broadway New York, NY U.S.A.

http://www.columbiasocialenterprise.org/conference/

11.4.14 – 11.6.14 BSR 2014 Conference – Transparency & Transformation

Grand Hyatt 109 East 42nd Street New York, NY U.S.A.

http://bsr14.org/about/

11.6.14 – 11.7.14 Women’s Alternative Investment Summit The Pierre 2 East 62st Street New York, NY U.S.A.

http://www.womensalternativeinvestmentsummit.com/

11.9.14 – 11.11.14 SRI: The Conference on Sustainable, Responsible, Impact Investing – The Future of Investing

The Broadmoor Colorado Springs, CO U.S.A.

http://sriconference.com/index.jsp

12.4.14 Cornerstone Holiday Event New York, NY U.S.A. By invitation only


http://www.midmarketconvention.com/





mailto:[email protected]

http://www.americanwatersummit.com/




http://www.tbligroup.com/tbliconference/europe2014.html%23.U5ixi_mwLmU

http://www.tbligroup.com/tbliconference/europe2014.html%23.U5ixi_mwLmU

http://climatebusinessforum2014.com/

http://www.sustainatopia.com/



http://bsr14.org/about/



http://sriconference.com/index.jsp

The Cornerstone Journal of Sustainable Finance & BankingSM Access Form

A regular electronic journal discussing global perspectives on progress towards sustainable finance, banking and capitalism across regions and industry sectors. The JSFB features proprietary content from our Board, our Staff, and our Global Advisory Council. Sections including the Market Summary, Global Sector Research, Open Source Excellence, Corporate Governance, Enhanced Analytics, Accelerating Impact, Featured Domain and Sustainable Product Reviews, and Events are highlighted.

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The Cornerstone Capital Inc. Team

Erika Karp Founder and Chief Executive Officer [email protected]

Joel Beck Chief Operating Officer & Chief Compliance Officer [email protected]

Nicola Shelbourne Treasurer & Director of Executive Services [email protected]

John Wilson Head of Corp Governance, Engagement, Research [email protected]

Phil Kirshman Chief Investment Officer, CCIM [email protected]

Craig Metrick Director, Manager Due Diligence and Thematic Research [email protected]

Ariane de Vienne Managing Director, CCIM [email protected]

Michael Geraghty Global Markets Strategist [email protected]

Margarita Pirovska PhD Policy & Sustainability Research [email protected]

Michael Shavel, CFA Research & Business Analyst [email protected]

Helen Nickells Head of Marketing & Operations [email protected]

Karen Benezra Head of Strategic Marketing & Communications [email protected]

Tanya Khotin Head of Institutional Business Development [email protected]

Alice Petrofsky Executive Director Institutional Business Development [email protected]

Mauricio Barbeiro Latin America Business Development [email protected]

Juan Lois Director, Business Development [email protected]

Matthew Daly Director of Client Services [email protected]

Kara McGouran Assistant to the CEO [email protected]

Rose Spiegal Investment Management Associate [email protected]

Cornerstone Capital Inc. doing business as Cornerstone Capital Group is a Delaware corporation with headquarters in New York, NY. The Cornerstone Journal of Sustainable Finance and Banking (JSFB) is a service mark of Cornerstone Capital Inc. All other marks referenced are the property of their respective owners. The JSFB is licensed for use by named individual Authorized Users, and may not be reproduced, distributed, forwarded, posted, published, transmitted, uploaded or otherwise made available to others for commercial purposes, including to individuals within an Institutional Subscriber without written authorization from Cornerstone. The views expressed herein are the views of the individual authors and may not reflect the views of Cornerstone Capital Group or any institution with which an author is affiliated. This publication is for informational purposes only and nothing in this publication is intended or should be taken as investment advice. This is not an offer or solicitation for the purchase or sale of any security, investment, or other product and should not be construed as such. References to specific securities and issuers are for illustrative purposes only and are not intended to be, and should not be interpreted as recommendations to purchase or sell such securities. Information contained herein has been obtained from sources believed to be reliable, but accuracy and completeness are not guaranteed. Cornerstone Capital Group cannot accept any responsibility for loss occasioned to any person acting or refraining from action as a result of any material in this publication.




















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