In the sustainable investing world, motivating companies to do better has happened through two basic strategies: divestment and engagement — and new research shows that using elements of both can accomplish the most.

That won’t be news to investment providersand advocacy groups that specialize in sustainable investing — some have spent decades refining ways to prod corporations into action, whether that’s improving environmental practices or treating workers more equitably. But to asset managers that offer only a taste of sustainable options, or for investors just getting started on ESG, the findings could provide a road map.

The paper, The Impact of Sustainable Investing: A Multidisciplinary Review, was published in the Journal of Management Studies. The authors outline what they call “field building,” a combination of strategies to improve sustainability by using elements of portfolio screening and shareholder engagement.

“Field building means that investors influence companies by changing the (1) stakeholders and (2) assumptions, norms and rules that surround companies, thereby exerting their influence on companies indirectly,” the authors wrote in an overview of their research in the Harvard Business Review.

Investors don’t need to be the size of BlackRock or Vanguard to accomplish that, the research implies. Smaller investors can file shareholder resolutions and launch campaigns that get the attention of bigger investors, such as pension systems, which can then use their influence to get companies to adopt more sustainable practices. And once one company makes a change, there can be a snowball effect.

A prime example was seen in the palm oil business, said Leslie Samuelrich, president of Green Century Funds. Eight years ago, the firm began pressuring big food companies to ensure the palm oil in their supply chains wasn’t linked to deforestation.

“People didn’t even know what palm oil was in the beginning,” Samuelrich said.

The first company that Green Century got to sign a pledge was Kellogg, and after that it became easier to encourage competitors and other packaged food producers to do the same, she said. Today, consumers are also much more aware of the issue, and they care, she said.

“The producers get that market signal,” Samuelrich said. Now, 74% of the U.S. supply chain for palm oil is covered by non-deforestation pledges, compared with just 5% in 2014, and that has had a real-world impact, she said. “Deforestation rates in Indonesia have steadily gone down in the last five years.”

Of course, palm oil is exported globally, and much of the palm oil going to China has not been covered by pledges, she noted.

To address that, the fund company has been working with big banks — Citi, JPMorgan and Morgan Stanley — to “choke off lending to companies involved in deforestation,” Samuelrich said. “That influences the field. If there weren’t all these other agreements, and [the issue] wasn’t more well known … I’m sure it would have been impossible to get the banks to sign a policy like that.”

More recently, Green Century has applied the same strategy to address deforestation stemming from soy production and cattle ranching in Latin America.

In another instance, the firm lobbied Coca-Cola to work on its plastic pollution footprint, so that it wasn’t behind PepsiCo, Samuelrich said. “It matters enormously what their competitors are doing.”

In the recent paper, the authors also found that investors who share their expertise on sustainability issues with other investors can have more impact. As an example, they pointed to Robeco’s decision last year to publish its framework for evaluating 2,900 companies on United Nations Sustainable Development Goals.

Another tactic is working to delegitimize specific activities — something that many big investors, especially pension funds, have done by divesting from fossil fuel businesses.

Sustainable investors can also be effective by establishing voluntary standards that companies sign, the authors noted. And investors have a significant voice when they advocating for regulatory changes that can have far-reaching impacts, they said.

The research is an analysis of 69 other papers that cover the effects of sustainable investing.

It offers some support for practices that many sustainable investors have long been using, but it doesn’t appear to include a couple of investment strategies that can maximize impact, Samuelrich said, citing the use of social or green bonds and private equity funding for initiatives like clean water.

One of the benefits of such bonds from an impact standpoint is that the results can be measurable, as projects are funded that otherwise might not have been.

“We always talk about what you invest in or don’t invest in is largely a values or moral choice, and it is not directly leading to an outcome you can measure. That’s very difficult. Even on divestment you have to measure the movement as a whole,” she said. “My retirement account is not the one that tips the balance.”

As an example, Samuelrich cites the Starbucks Sustainability Bond, which saw its first issuance in 2016 and uses proceeds to help train coffee farmers on environmentally friendly growing methods and other causes.

“There are a lot of ways that sustainable investing can make a bigger impact, it just depends who is doing the sustainable investing,” she said.

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