Veris Wealth Partners, which recently crossed the $2 billion mark in assets under management, considers itself a “100% impact-focused wealth management firm.”
But the firm’s challenges in obtaining impact and diversity data from its network of nearly 100 fund managers illustrate the continuing difficulty even savvy investors have in understanding the full impact of their money.
“Too little information is currently available about the companies in our managers’ portfolios,” Veris’ Michael Lent writes in the firm’s just-released 2021 Impact Report, one of a spate of such year-end reports.
Veris has made a particular push to gather data on equity, diversity and inclusion efforts and says more managers are reporting such information. The impact report discloses that 12% of the firms Veris works with are owned by people of color and 24% by women. But fewer than two-thirds of Veris’ managers reported such information. Veris signed the “Due Diligence 2.0” commitment to accelerate the movement of capital to BIPOC managers (see, “How unlikely partners came together to fight racial bias in asset allocation”).
As for Veris itself, the report discloses 67% of the firm’s partners are women and 25% of its staff are people of color. Veris did not report on the racial makeup of its ownership partners.
San Francisco-based Veris, founded in 2007, has ridden the growing interest in impact investment among high net worth families. Most of the firm’s clients have assets in the $5 million to $50 million range (the minimum is $2 million), Veris’ Casey Verbeck told ImpactAlpha. In almost all cases, he said, Veris manages 100% of the families’ assets.
Verbeck said most of the firm’s growth has come from new accounts. Increased mandates from some clients and general market growth also contributed.
The firm endeavors to provide its clients with competitive returns, but in her introduction to the impact report, CEO Stephanie Cohn Rupp suggests such comparisons may be misleading.
“I believe that the entire world of financial services should be taking a very serious look at itself, including its benchmarks. Is it laudable to beat a benchmark if it mostly represents an extractive economy?” Cohn Rupp writes. “The concept of what is ‘market-rate’ seems to omit the true cost to society.”
Three of the firm’s original partners have recently retired, occasioning a generation transfer among the partners. Verbeck said the firm has opted out of the consolidation trend in the wealth-management industry that has seen firms like Cornerstone Capital, Trillium, Aperio and others acquired by larger companies. Private equity investor TA Associates in September acquired a majority stake in Caprock Group.
“We made a very, very unanimous decision as the next-gen to say, ‘We’re independent,’” Verbeck said. “We think the industry needs an independent firm with no conflicting interests.”
With more assets, Veris says it can make more impact. In its private-market investments, the firm says its managers collectively have averted nearly 52 million metric tons of greenhouse gas emissions and 219,000 tons of waste, as per industry standard IRIS metrics. Veris’ stable of managers also claim to manage sustainably 6.5 million acres of land and to have financed or supported nearly 500,000 small- and medium-sized enterprises. As one of many investors in such funds, however, Veris can claim only its pro rata share of such outcomes.
Examples from Veris’ managers portfolios across environmental and social themes provide another, albeit anecdotal, window into the firm’s impact. One manager invested in one of the first green bonds for conservation, issued by the Conservation Fund to acquire land in their Working Forests Fund. A New England private debt fund is financing small utility scale renewable energy projects.
Veris highlighted Ecosystem Integrity Partners’ investment in EV connect, which provides open-source software for public charging stations. Property managers Jones Lang Lasalle is a portfolio company of Veris’ own Global Sustainability Fund, which has more than $100 million in assets. JLL has committed itself to net-zero emissions by 2040 across all of its operations.
Among public companies, Veris highlighted Trimble, part of Impax Asset Management – Pax Global’s Environmental Markets Fund (PGINX). Trimble is a leader in precision agriculture, which can reduce water and fertilizer use. Jopwell, a private startup backed by SJF Ventures, connects Black, Latinx, and Native American students and professionals with internships and job opportunities.
Veris report is titled, “The Time is Now,” and in her note Cohn Rupp said the scarcest resource is not clean water nor financial resources, but time. The recent COP26 climate summit produced many pledges not ambitious enough to meet climate goals.
“However, we represent private actors who can act faster than nation-states,” she said. “The urgency we face with global warming, climate justice, and racial and gender equity only strengthens our resolve to act together with our clients and partners.”