Investing in Sustainability: An Interview With Newday CEO Doug Heske - The Public Goods Blog Investing in Sustainability: An Interview With Newday CEO Doug Heske - The Public Goods Blog

Investing in Sustainability: An Interview With Newday CEO Doug Heske

Most investments are all about profit, and most investors are wealthy elites.

doug heske headshot

In these cases, doing good for the world is — at best — an afterthought or unintended bonus.

But what if investors reversed that equation and made their opportunities more accessible? It’s actually possible to prioritize the planet and still make money. This approach is called impact investing, and its mission is to drive positive social and environmental change.

To learn more about the field, we linked up with Newday CEO Doug Heske and picked his brain. Here’s what he had to say:

Public Goods: What is the origin story of Newday investing?

Doug Heske: Newday was created based upon an ideal. This ideal of building a more resilient future for the world and all of its inhabitants could potentially be achieved through democratizing access to values-based responsible investing and education.

Our story began with a question. What is the impact that we could have if we were able to unleash the younger generations’ vigor for deep and lasting change by providing them a mechanism for engagement that’s more grass roots, allowing them to share their collectivized desire to change the world? We were determined to provide education and impact investing solutions to generations of responsibly minded investors and consumers determined to align their financial strategy with their values.

PG: How would you explain the company to someone completely new to investing?

DH: Newday is offering a tangible, technology enabled, accessible solution on how EVERYONE can participate in actualizing their objective of aligning financial investment to values and social impact. The simplification of engagement in this process alone speaks to what is much needed in the marketplace.

PG: Alternatively, how would you pitch the company to someone familiar with investing in diversified public companies, who also deeply cares about a cause such as removing ocean plastic or protecting wild tigers?

DH: Focusing on companies who are responsible stewards of our world’s environmental and social resources is core to our work at Newday. Newday provides individual and institutional investors to select a set of impact investment strategies that are aligned with their own personal values or the mission of their family or institution.

All of our investment strategies have been built encompassing the United Nations Sustainable Development Goals in areas like Climate Action, Wildlife Conservation & Animal Welfare, and Gender Equality, Inclusion, & Diversity. Our clients are provided opportunities to invest in the world’s leading companies supporting these issues, oftentimes without sacrificing financial returns. They have comfort in knowing their capital is being deployed in ways that are responsible, and not supporting industries that are harmful to our world like fossil fuel companies, arms manufacturers, etc.

Our thesis is that investors don’t have to sacrifice investment returns to invest “for good.” This premise has been supported by countless research publications and by the performance of our own investment strategies.

Our belief is that companies accumulate “contingent assets” as a result of their environmental, social and governance practices that they put in place. These practices often lead to superior operating and financial performance. The data we derive is oftentimes rich with material and non-financial considerations that deliver stronger alpha (the active return on an investment) and more intense impact. As portfolio managers, we use this data to make securities selections, generate excess returns, control risk, and drive impact.

The point is that the way an organization discharges its practices as a responsible (or irresponsible) organization drives future returns before they become real financial factors. And once they become financial factors, they are already efficiently absorbed into stock prices. It is these extra financial factors that determine long-term shareholder value.

The argument that investing in companies that are more responsible leads to concessionary returns is over. Many recent studies have demonstrated that taking into account companies’ ESG (Environmental, Social, and Governance; three central factors in measuring the sustainability and societal impact of an investment in a company) or business and responsible business practices can positively contribute to investment returns, help reduce risk and drive shareholder value. By directing capital to and engaging with the organizations and companies that are themselves improving and solving society’s greatest environmental, societal and governance challenges, we create well-being for our entire community.

PG: How do people get started investing with Newday?

DH: Opening an impact investing account has never been easier. Just download the Newday Impact app from the Apple iOS store or the Google Play store. An account can be opened in five minutes after you answer a series of onboarding questions regarding your financial objectives, risk tolerance and values orientation.

You will also be asked for some personal information that allows you to open and fund your account. Note that all of your confidential information is highly protected and not stored at Newday, but at Plaid, who serves as our partner in funding investment accounts.

PG: Can you explain what an Impact Score is? Is there anything else we should know about the process of choosing the companies for a specific impact portfolio?

DH: The Newday impact score is a reflection of a company’s commitment to advancing sustainable policies and practices ranging from carbon footprint reduction to supporting diversity and inclusion across its base of employees. Newday uses these proprietary impact scores to determine how a company is ranked, scored and weighted into our investment strategies. Impact scores are shared with our clients to lend an understanding of company behavior so that consumers can make better informed decisions about their investments or consumer purchases.

PG: What portfolios excite you the most? Any recommendations for our readers?

DH: My two favorite strategies are our Ocean Health strategy and our Stakeholder Capitalism strategy. I am a big advocate for protecting our oceans, including our fish populations, coral reefs and marine habitats. The ocean serves a critical role as a ventilator for the planet that helps sustain life. I am also an avid diver and do everything I can to support the work of our NGO partners who do the work that few can do in supporting these essential marine ecosystems.

I am also a big believer that we need an alternative form of capitalism to support a more resilient and sustainable future. It’s not to say that capitalism is bad, but the way that we use it needs to change.

It makes sense to adopt an alternative form of capitalism that considers a set of higher standards in which companies are responsible not just to shareholders, but also to employees, consumers, suppliers and communities. This new form of responsible capitalism is an innovative economic system for the 21st century society that re-designs and solves the problems associated with the current short-term-oriented shareholder-centric capitalism.

Under the current shareholder model, most financial analysts and investors focus on the “return on equity” as a primary measure of corporate performance. Responsible Capitalism considers long-term corporate strategy and governance decisions as primary drivers of returns, and the model fairly distributes this created value amongst all stakeholders: employees, customers, suppliers, local communities, society and the environment.

The ”Stakeholder Capitalism” investment strategy is based upon substantial empirical research that companies that adopt measurable policies and practices that support stakeholders outperform those that do not in a meaningful way. These companies have historically demonstrated a lower cost of capital, better operational performance, and their stock price performance was positively influenced.

PG: Five years down the road, how do you see New Day evolving? What are you most looking forward to?

DH: We like to characterize Newday as a “Participatory Impact Engagement Platform”. Newday is much more than just a delivery mechanism for impact investment strategies. We are competitively authentic and distinctive. Our three core pillars we brand under are “Get Informed,” “Get Involved” and “Get Invested,” all of what we define as mechanisms of engagement for a responsibly minded investor.

Our brand positioning is designed to be iconic and emotionally driven — something very unique and missing in the current space. Newday has become a company with a real soul.

With this idea in mind, we are focused on building an ecosystem around the Newday platform, culling investment from within that ecosystem, and harvesting it for change. Our approach in working with NGOs across various issues in Impact allows us to approach the marketplace in a more authentic fashion.

The power of contribution aligned with investing is what we view as the tipping point for growth that has not yet been done. We look forward to introducing additional services to our impact community both here in the United States and in international markets.

PG: How do you think awareness will contribute to the success of Newday?

DH: The biggest challenge we face today is bridging the chasm between awareness and action. Most people won’t react to a crisis until it’s burning on their doorstep or actually in their house. The environmental crisis is no longer at the doorstep, and the urgency in making meaningful steps toward creating a more sustainable future have never been greater.

At Newday we are believers in change. We are believers that we are in the midst of a tidal shift. And companies that fail to adapt and innovate will be left behind. This tidal shift will accelerate over the coming years as the correlation between good corporate behavior and financial performance becomes more evident.

There’s a groundswell building fueled by a younger generation that cares more about the issue of sustainability than anything else, and they are rising up all over the world. And the values that WE teach this generation today are ones they will carry forward throughout their lives.

There are some very important and encouraging trends that are moving in our favor regarding sustainable investing.

But it’s not just the millennial generation who’s paying attention. New philanthropists are developing their own blueprints for change rather than just writing checks. A proliferation of impact related investment opportunities are channeling capital to these causes.

There are many organizations that do incredible things for our communities, but too many that don’t. Sometimes, these organizations are led by naysayers who have powerful roles in government and industry and, for their own reasons, have chosen to either put their heads in the sand or selfishly profit. They often stand in opposition to social and environmental change. And these naysayers contribute to the white noise, banter and chatter that works against progress.

It is our intention to work proactively in educating the uninformed, and engaging where organizations need support in getting to a more positive place. Part of the work that needs to be done in education is allowing for an understanding of how corporations and their executives can perform and benefit as good corporate citizens.

Our mission is to empower institutions and individuals of every generation to effect change by thinking differently about how they make financial, investment and savings decisions. By directing capital to and engaging with the organizations and companies that are themselves improving and solving society’s greatest environmental, societal and governance challenges, we create well-being for our community as our clients join our mission to create and be part of positive progress.

Starting today, every one of us need to make decisions that lead to cleaner rivers, greener trees, fossil fuels being left in the ground and out of cars instead of out on the road, that bring diversity and fairness into the workplace, where women and minorities populate management roles for like compensation, that support the improvement of workplace safety records and eliminate unacceptable working conditions.

So what can you do? Be a believer in change. Empower your generation to make positive change in their world. Develop a “big tent” view of the world. Your personal financial decisions can have a more meaningful impact on the world that extends well beyond financial returns. Convey to everyone you know that we can all make a difference, and can make a better world, whether you’re young, old, big or small.

PG: Additionally, is awareness the main goal of Horizon, the blog/newsletter portion of Newday?

DH: Horizon is our new content platform and blog that we launched on March 31st. The objective of the platform is to serve as an educational tool for Newday users and other members of the impact community.

We are building a library of curated and created content sourced by some of the world’s leading experts in impact investing. For every piece of content that we deliver in the blog we need to answer this question, “Why will this information be valued by our target audience?”

We want our community members to consume this info because it’s unique, smart, serious at times, amusing at times, and it’s information that they can’t get elsewhere. We’d like to make available information that our users can’t live without. If we deliver the “right” content, then we will ultimately create a powerful network effect where community members are not only consuming information, but providing useful information to other members.

We have asked members of our impact community to share their work by submitting articles that can be posted on the Horizon platform. The preliminary content categories are organized as follows;

  • Human Nourishment & Nutrition: local, plant-based, bio foods, GMO and the alignment with animal welfare and human well being
  • Physical Human Health: brain science, life extension through preventive medicine, family planning
  • Human Enlightenment: combating social isolation, depression, anxiety, removal of suffering
  • Foundational Systems: developing innovative economic structures, supporting education and a living wage, protecting native communities of people, creating new infrastructure for communities and cities that support people, animals, and the environment like water , renewable energy, and transportation systems.
  • Future Proofing: creation of healthy environmental ocean, water, land, and forest habitats, gene editing for plants to mitigate climate change, addressing existential threats, pandemics, sea level rise, food shortages that potentially impact people, animals, and the environment.

Here’s the link to the Newday Horizon platform:

https://www.horizon.newdayimpact.com/

PG: What is one thing we didn’t cover that you would like our readers to know?

DH: When we founded the company, we knew it was important for us to build an organization that could stand in perpetuity, that embraced the same values that we expect in our portfolio companies. It was important for us to become a B-Corporation and to collaborate with and support our nonprofit partners that are doing important direct impact work in the causes that we support. Today, Newday Impact contributes 5% of our revenues back to our nonprofit partners, and we are intent on collaborating with other mission driven organizations.

Our nonprofit NGO partners include:

We also have developing relationships with the following NGOs:

Lastly, one of the most impactful things you can do as a citizen is engaging in the issues you really care about. Newday Impact Investing has partnered with Community Bond to create a social platform app that brings other like-minded people from around the world who want to make an impact through sharing information, organizing events and having fun.

On April 13 we introduced the first version of the Newday Community Network. The platform will provide the Newday community of users a mechanism where our community members can meet, talk, join events and share their experiences around our impact issues. We decided this month to accelerate the introduction of the platform given the backdrop of the Covid-19 crisis to provide a platform for our users to connect with other members as we all solve this crisis together.

You can sign up here;

https://lnkd.in/e4BSyDz

  1. Download Community Bond from the App Store or Google Play Store.
  2. Find Newday Impact Community.
  3. Create an account.
  4. Answer a few purposeful questions.
  5. Start logging meaningful activities and earning coins.

The community platform provides us the opportunity to create user-generated content (UGC). UGC will be an important component in helping drive “virality” of the Newday platform.

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