Light Green Advisors: Resolve Case Study

MISSION COMPATIBLE INVESTING YIELDS HIGH REWARDS FOR THE
CITIZEN’S MONITORING AND TECHNICAL ASSESSMENT FUND

Overview

The Citizens’ Monitoring and Technical Assessment Fund (MTA Fund) was established as part of a historic 1998 court settlement between the U.S. Department of Energy (DOE) and 39 peace and environmental groups around the country. The $6.25 million fund was established to support non-profit, non-governmental organizations and federally-recognized Native American Tribes to procure independent, third party technical and scientific reviews and analyses of environmental management activities at DOE weapons complex sites by. The MTA Fund is administered by RESOLVE, a non-profit neutral consensus building and dispute resolution organization, with offices in Washington, DC, Denver, CO, and Portland, OR.

The Challenge

Several investment professionals suggested it would be difficult if not impossible for RESOLVE simultaneously to meet its fiduciary responsibilities and make investments compatible with the origin and mission of the MTA Fund.

Keys to Success

RESOLVE, working with an Advisory Board and Light Green Advisors, successfully established a mission compatible investment approach in 2002. The investment strategy is compatible with the Fund’s origins and purposes, consistent with RESOLVE’s fiduciary and risk management obligations, and maximizes returns for the MTA Fund within the fund’s financially conservative framework. RESOLVE developed four keys to success that every organization can follow to achieve success with their mission-compatible investment process, independent of the circumstances and the specific social, environmental, or other non-financial objectives of a fund, endowment, or trust:

Ø selecting the “right” investment advisor to identify linkages between policy constraints and investment options

Ø establishing a vision to guide decision-making

Ø identifying principles to guide evaluation of options

Ø achieving agreement with the MTA Fund Advisory Board on the investment policy encompassing the vision and principles.

After developing general criteria for selecting an investment advisor, RESOLVE searched the US for investment advisory firms with experience in mission compatible investing. RESOLVE spent over 12 months reviewing various socially responsible investment advisors and their approaches. In presenting candidates and proposed investment approaches to the Advisory Board, it became apparent that the most important consideration was finding an experienced investment advisor who was able to identify with the MTA Fund’s mission and communicate effectively with the Advisory Board.

Light Green Advisors has played a crucial role in gaining the Board’s trust, assisting with development of the vision statement and specific principles for decision-making, drafting the investment policy, filtering specific securities offerings for compliance with the policy’s specific criteria, and managing the investments.

RESOLVE and the Advisory Board developed a shared vision of the purpose of the investments and how the investments fit within the larger context of the MTA Fund’s mission. This step was a critical step which provided the overall framework for evaluating and making decisions about potential investment approaches and vehicles. The vision explicitly addressed both the nature of the environmental and social responsibility screens the MTA Fund Advisory Board desired and the types of investments that were consistent with RESOLVE’s fiduciary responsibilities. The vision also explicitly addressed traditional investment questions such as the Fund’s time horizon, return expectations, and how much risk is acceptable. While answering these questions is vital, it is important not to let these considerations limit the imagination and thus the universe of potential investment opportunities and the framework for decision-making about organizational investments.

RESOLVE, Light Green Advisors, and the MTA Fund Advisory Board identified the core principles for evaluating specific investments for the MTA Fund. For RESOLVE, this included addressing its fiduciary responsibilities, paying attention to the Uniform Prudent Investor Act, and minimizing potential liability. For the MTA Fund Advisory Board this included identifying the potential beneficiaries and impacts of different equity and fixed income investments and specifying types of investments that did not satisfy the vision.

Despite coming to the process with divergent viewpoints and priorities, RESOLVE and the MTA Fund Advisory Board reached complete consensus on the investment policy and the specific investments to carry out the policy. One key to this consensus was the development of a common vision and of specific criteria for evaluating investment alternatives. The second key to unlocking the door to mission-compatible investing was defining the financial parameters of risk management and return maximization.

Light Green Advisors reports quarterly on investment results and how the investments meet the agreed upon parameters of the MTA Fund Investment Policy. RESOLVE uses this information to monitor the investments. RESOLVE also provides the quarterly information on Investment Policy Compliance to the MTA Fund Advisory Board to keep them informed.

Every endowment or trust fund is unique, with a unique set of individuals, ideas about investor responsibility, and financial objectives. RESOLVE’s experience with the MTA Fund shows that every organization can collaboratively develop an investment approach that will satisfy its financial needs, legal requirements, and social goals.

For more information about Light Green Advisors, click here <www.lightgreen.com>.