Today on the blog we are pleased to share the story about the Dominican Sisters in the USA who wanted to enhance their socially responsible investment programs already addressing climate change and worked to develop their own Climate Solutions Fund.

First Steps

In the summer of 2013, a small group of international investors gathered in Scotland to work on climate finance concerns anticipating the work needed to make The Paris Accord possible. Sister Pat Daly, a Dominican Sister who helped lead the work on climate change at The Interfaith Center on Corporate Responsibility (ICCR), was invited to the meeting. This gathering of investors sharpened the urgency of taking action for Sister Pat, and she brought this reflection back to the broader Dominican community later that year.

Simultaneously, members of the Dominican Sisters Conference were preparing to meet regionally in anticipation of their 2015 National Convocation. Using the DVD produced by the Dominican Earth Council: Global Climate Change and the Praxis Cycle, Dominican sisters around the country and beyond reflected on next steps to advance their climate work.

Faith-based Investing and Climate Change: History and Context

The history of the Dominican Sister’s work on climate change and responsible investing began decades before these meetings. Since the late 1980s and early 1990s, Dominican Congregations, along with other faith-based institutional investors at the Interfaith Center on Corporate Responsibility (ICCR), have been engaging companies on the issue of global warming. Over the years, these engagements have been successful in encouraging corporations to calculate and report on their greenhouse gas (GHG) emissions, identify and report on their climate risk, add climate change scientists or environmental scientists to their Board of Directors or other positions, and many other actions. The ICCR community started by targeting utilities, oil and gas companies and the auto sector. Today, companies in every sector are engaged in this work with new steps emerging as the global business and investor community increasingly recognizes the urgent need to drastically reduce GHG Emissions.

A critical sector needs special attention here: the financial sector. While banks and investment firms might be disclosing their emissions, their greatest impact in this space was in their lending and investment in projects and industries that were carbon intensive. Until recently, these banks and investment firms would vote AGAINST our shareholder resolutions, making it more difficult to gain traction on some important issues.

Back to the Dominicans

While the Dominican Sisters were preparing for their 2015 National Convocation, The Earth Council was back at work proposing to all the Dominican Congregations that they commit to Climate Finance with the integration of the UN Sustainable Development Goals (SDGs). During the 2015 Convocation, this commitment was adopted and celebrated by every Dominican congregation. Six months later, The Earth Council realized that while a couple of congregations invested in fossil free funds, there were no investment products that provided the full integration of the SDGs. The Earth Council proposed the formation of a Climate Finance Taskforce that would include Treasurers and investment advisory committee members to join the Earth Council in finding investment products. Reaching out to dozens of likely firms, the Task Force found that there were no products that would align with their needs, so the focus shifted to finding an investment firm who would develop products specifically for the Dominican Sisters. Sister Pat Daly reflects, “we wanted this initiative to be a model of sustainable investing that would enable other investors to join us. We were looking for a shift in the financial sector away from damaging industries to true sustainability”.

Given ICCR’s work with banks and investment firms, the Dominican Sisters knew that an impressive investment team was developing at Morgan Stanley and ultimately decided to kick off the work of developing a fund with the Chicago-based Graystone Group at Morgan Stanley. The sisters felt that the team at Graystone shared their passion for Mission-based investment, and were pleased to be included and consulted in the process at every turn. After months of development, the Sisters were ready to present these public and private investment products to the Congregations’ Investment Committees and Elected Leaders. It was no small task to get these committees and Leadership to commit to new investment products, but Congregations knew this commitment was a critical next step in their commitments to address climate change.

In March of 2018 the Public Fund was Launched and by the end of the year the Private Fund initiated its first investment. The UN SDGs are clearly addressed in the investments and both funds are doing well, with the public fund wildly out-performing the index this year.

The Dominicans have inspired and seeded this first climate finance investment of its kind and the first ever climate impact investing-focused fund at Morgan Stanley. They have provided a model of how a group of investors and Wall Street can work together to address climate change and sustainability in investment products. We are happy to share their story and welcome other investors to join them in the critical need to address GHG emissions through their portfolios.