Breaking New Ground in Social Impact Investing

Find out how Newground Social Investments, a Social Purpose Corporation, is making profound change on the world around them through impactful investments.

To many, a banker with a heart may sound like an oxymoron. Wealth creation is perceived as a pursuit far removed from doing good. Three decades ago, Bruce Herbert started a financial advisory firm with a difference. A departure from commission based brokerage agency business, making an impact was a new idea at that time.

His company, Newground Social Investments, offers independent and values-aligned wealth management, tax management, financial planning, and philanthropic consultation for individuals and institutions.

 “I started advising clients at a time way before "Social Purpose ","ESG '' or “Sustainability” were known terms. I worked as a banker with Merrill Lynch, and with time, realized that every time money changes hands, it had a larger impact,” Herbert reflects.  

Herbert was inspired during a college trip to South Asia to learn more about Buddhism. He was exposed to a new way of living and thriving. In the war-torn countries he visited, poverty and prosperity had different meanings from what he grew up knowing in the West. He realized that money being invested in one part of the world, had a long-term impact on the other side of the world. And he saw immense potential in fixing this exploitative form of Capitalism. “Capitalism asks us to be greedy and self-centered. The system makes us forget that we live in a context that is dependent on our community and connection. We are stronger and more abundant when we work together and think of the common good instead of ourselves,” he says. 

Today his company based in Seattle serves clients nationwide with a sustainable goal in mind. “There is a shift in how we approach investing. Earlier, it was about screening out companies that produce or sell addictive substances like alcohol, drugs or tobacco or make money through extractive industries like oil and gas. Today, we focus on driving positive change by influencing the company's leadership through research, advocacy and shareholder engagement,” Herbert informs.

“As shareholders, my clients are owners and have a voice to make a difference- to discourage bad behavior and encourage good behaviors.”

Making a Difference in McDonald's Food Supply Chain 

Herbert invited McDonald’s to talk about how they manage their agricultural supply chain. The NPR-KUOW feature on Newground, "Getting McDonald's to the Table" summarizes Bruce Herbert’s conversation with McDonald’s representatives. The invitation to dialogue yielded results in a successful outcome. He warned McDonald’s that whenever the word McDonald’s and pesticides are used in the same sentence, it harms the shareholder value. That brought the company to be accountable and agree on studying their own potato- supply process. 

One day during the process, Herbert questioned a project manager, “When will you actually feel excited about the work you do rather than just checking off a series of tasks for a long project?”  The project manager was surprised by the point Herbert brought forward and simply responded after a long pause that he realizes that what we want to work on now is something that will make the world a better place for future generations. 

“Change happens in the human realm. There is no perfect company out there.” Herbert concludes. He cites two more stories, one at Nike and another at Microsoft to prove his point. 

Moving the Needle at Nike: Why Social Change Has to Be Driven From Within 

Herbert describes how a senior VP responsible for driving sustainability in the company had a hard time to influence the company to change its stance on several business issues. “The culture was predominantly driven by engineering teams. So she decided to internally transfer to an engineering role- and with that change, she found greater traction on several such issues she was trying to further in her earlier capacity.” Herbert mentions. 

Insiders can really influence social change. Herbert continues the Nike story. This was also a time when Nike faced a lot of external pressure from its stakeholders to take a responsible stance to fix their sourcing from developing nations. They were accused of buying from factories that had abusive labor practices. “In fact, the pressure from employees was spilling out into non-work situations, at informal barbeques in Portland, employees were embarrassed to tell they worked at Nike. Nike was being called “That sweatshop” company. This was a brand reputation scandal that hurt their ability to attract talent.” Herbert says. 

Making Microsoft’s Board Diverse Improves Governance 

As ESG matters become central to investing, and as environmental pressures mount, often Social and Governance conversations lag. Companies need to address racial disparities and offer solutions that matter. How companies Boards are instituted and run become important in this regard. ESG investors can influence big, public companies by speaking with executives, filing shareholder resolutions and proxy voting. 

“I was invited by Francis Coleman of Christian Brothers, to talk with Microsoft about how senior leadership at companies needs to have a diverse board. Frank (Francis Coleman) was instrumental in making sure race is spoken about in the senior leadership circles. Since then positive changes have happened, and Microsoft expanded the board,” Herbert informs. 

“Governance is a proxy measure to understand how well the company is doing in terms of its overall performance. A company that suffers on financial performance, often suffers in governance measures too and vice-versa,” Herbert opines. 

Social Investors are Vital Changemakers 

Fixing today’s capitalism needs active shareholders, vigilant media, conscious employees and active civil society. Even with these checks and balances, the pull of profits is very strong. Companies often need social investors to ask the right questions to make sure they are transparent, accountable to their stakeholders. Public, consumer facing companies are waking up to a new world, where their brand reputation can be at risk and their ability to attract talent is dependent on how they act on sustainability matters.

Companies like Newground Social Investments ensure that companies do not forget ESG imperatives.