Smart Money: Senior living CFOs take a fresh look at the "new norms" of investing

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William C. Fisher
William C. Fisher

Senior living CFOs understandably are very concerned about investment portfolios and investment returns. The “investing as usual” mentality simply is not acceptable to boards and CEOs and is giving way to the “new norm.”

Today, as the markets recover, wary CFOs are increasingly taking a fresh look at risk as part of their investment decision. This often includes an evaluation of environmental, social and governance (ESG) risk factors by the investment adviser.

The Social Investment Forum, a trade association promoting ESG investing, estimates that this approach applies to one in nine dollars in the United States, or approximately $2.7 trillion in 2007 investment dollars.

Sam Pierce, CEO of IW Financial, which was recently named by World Finance magazine's ESG Awards as the best U.S. research house, said nonprofits now have the capability to align the mission of the nonprofit with its investments without incurring additional performance risk. For example, IW Financial has partnered with Parametric Portfolio Associates to produce a Catholic Values investment portfolio with a minimal tracking error to the mainstream Russell 3000 benchmark's performance.

In the spring of 2005, the UN secretary-general formed a group of the world's largest institutional investors to develop the Principles for Responsible Investment (PRI). Daniel Allen, with Ativo Capital Management and founder of the ESG Investing group on Linked-In states, “The PRI forms a solid foundation for evaluating the risks associated with ESG.”

After the last tumultuous 18 months, where does ESG Investing go now?

According to the UNPRI, more than $20 trillion is invested using ESG criteria globally. It is clear that ESG investing is increasingly moving to a mainstream methodology and may be the “new norm” for investing. CFOs should stay aware of this investment strategy for the future.


William C. Fisher is president of Investment Advisory Group, LLC, a business development company partnering with some of America's leading financial companies to provide independent financial services to nonprofit organizations.