Rich clients get more ‘S’ options at $8 billion firm

Laird Norton Wealth Management, which oversees almost $8 billion in funds, says a lack of socially responsible investment options has prompted it to team up with two industry heavyweights to design new strategies amid growing client demand.

The Seattle-based firm will work with Calvert Research & Management, a unit of Eaton Vance Corp., and Parametric, which is part of Morgan Stanley Investment Management, to design two equity strategies that specifically target the "S" in ESG investing. The “thematic investment solutions” will address issues such as human rights, affordable housing and access to basic services, Laird Norton said in a statement Tuesday.

The investment industry’s work within environmental, social and governance strategies has so far tended to focus on the “E,” as the urgency of fighting climate change dominates news headlines and the political debate. A recent survey by Macquarie Asset Management showed 55% of real asset investors identified climate change as the ESG risk they give the highest priority. By comparison, just 5% said their main focus was on diversity and inclusion.

But scientists have long warned that the climate crisis is bringing with it a social crisis as droughts, floods and wildfires force mass migration by rendering large parts of the planet uninhabitable. Extreme weather also adds to the likelihood that millions of people in some of the poorest regions of the world will be locked in poverty, according to a United Nations-backed report.

“The sustainable-investing opportunity set simply hasn’t supported the demand from investors to tackle social issues” at a time when interest in ESG factors is on the rise, Ronald Albahary, chief investment officer at Laird Norton, said in the statement.

Laird Norton said its clients, which in addition to rich individuals include foundations, endowments and nonprofit organizations, have been asking for strategies that allow them to steer capital toward social causes.

The firm will offer clients a so-called Empowerment solution, which focuses on diversity, equity and inclusion. It will target financial inclusion, especially companies that provide affordable financial services to unserved populations and low-income communities. And it will also zero in on how corporate activities preserve and improve on human rights. The three issues were selected based on their potential to reduce rising inequality and to create opportunity for more people on a global scale, Laird Norton said.

Its other strategy — the Community Health and Wellness solution — emphasizes affordable housing, product responsibility, health care and nutrition, quality jobs, and basic services such as drinking water, sanitation, energy and waste collection, as well as broadband internet. These issues were identified for their potential to create strong and vibrant communities, it said.

The solutions will invest through separately managed accounts that contain about 150 to 200 companies researched and vetted by Calvert, Laird Norton said. The solutions will initially be available to existing clients and the expectation is that they will be expanded to other investors over time, it said.

Laird Norton has a history of working with Calvert and Parametric. The firm has recommended Calvert’s mutual funds to clients and it also has utilized Calvert’s Responsible Core Indexes that are implemented by Parametric.