Heartland Capital Strategies

Deep Dive: The Heartland Road Show and Lessons Learned

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Published on Friday, 28 September 2012 16:07

The Heartland Road Show

By Tom Croft, Managing Director of HCS & Executive Director for the SVA, and
Marco Trbovich, Vice President of Strategic Communications for Tricom Associates

The forums were stimulating and brought dedicated investment and economy leaders around a common table to talk about the important work of rebuilding America. In the process, the prospect of exciting new partnerships were realized. Here’s a short re-cap of the Heartland barnstorming tour:

• The Atlanta forum (2/22) featured Atlanta Mayor Kasim Reed and Rutherford Seydel, Ted Turner’s son-in-law, who are driving Atlanta’s Better Building Challenge (BBC), a major retrofit and energy efficiency project for downtown Atlanta, involving 40 buildings owned by the largest corporations, universities and the city (including the airport, possibly). Mayor Reed urged forum attendees to consider investing in the Better Buildings Challenge, the city's retrofitting initiative to create a more sustainable economy, improved air and water quality and job growth. "Capital goes where it is needed and stays where it is well cared for," he told the gathering. Aided by staff of the BBC and the Emerald Cities Collaborative, the Mayor provided a comprehensive presentation on how investments in the project would be managed to minimize risk.

• The LA forum (3/14) was convened by Phil Angelides, former Chair of the Financial Crisis Investigation Committee and former Treasurer, State of California. Mr. Angelides expressed his continuing disgust with how Wall Street has become “a casino floor as big as New York, New York,” after wiping away $9 trillion of household wealth “like a day trade gone bad.” He assailed the financial system centered on Wall Street for “becoming a conduit for speculation rather than productive investment.” Citing Heartland as “a clearinghouse for what’s good in investment,” he asserted that four years after the market collapse “the financial crisis is still metastasizing.” He also presented a superb panel focused on clean energy and clean tech investments. Dennak Murphy (SEIU) and Kirsten Spalding (CERES) also moderated a colloquia on critical new infrastructure investment plans, including a new west coast initiative promising to amass billions in pension fund investments to rebuild sorely-needed infrastructure. Brian Rice, the CalSTRS Investment Officer responsible for overseeing risk in the pension fund’s multi-asset Green Initiative Task Force, said that in 2010, CalSTRS developed an Infrastructure Investment program that will operate through limited partnerships, co-investments, consortiums, separate accounts and direct investments. By February of 2012, $650 million had already been committed to the program.
   
• In Philadelphia (4/2), the forum featured a special deep-dive conversation about investment opportunities and capital gap challenges in rebuilding sustainable cities. The event highlighted the AFL-CIO Housing Investment Trust's (HIT) unique investment in Paseo Verde, a multi-use project that will help revitalize a distressed neighborhood in North Central Philadelphia, near Temple University. Partly financed by the HIT’s Building America CDE, the affordable housing, retail and services center complex has built in new LEED construction, energy efficiency, the use of renewable energy sources and transit-oriented development strategies. The project organizers hope to bridge the perceived gap between "sustainable" and "affordable,” citing Paseo Verde's green roofs, permeable paving, solar panels and wallet-friendly rents (green architecture and affordable living). The forum also focused on the Philadelphia Energy Innovation Cluster Project, a federally-funded "collaboratory" that is researching applied techniques in retrofitting buildings in Philadelphia.

• The Detroit forum (5/9) focused on rebuilding the American auto industry and the related manufacturing resurgence in efficient vehicles and transportation, renewable energy and industrial energy efficiency. Prestigious capital stewards such as Steve Sleigh, Director of the Machinists Pension Fund and Michael Musuraca, Managing Director of Blue Wolf Capital led lively discussions around responsible pension fund investment in the real economy, and the challenges being faced by pension trustees. Michael Psaros, Managing Principal of KPS Capital Partners, described how his firm invested in the successful turnaround of HHI, a supplier of forged and machined steel automotive part components with sixteen plants in the Midwest, saving and creating several thousand good union jobs. Bill Atwood, Executive Director of the Illinois State Board of Investment (with $11.5 billion under management for 120,000 plan participants), noted that “Ensuring the sustainability of manufacturing gives the economy greater stability. Manufacturing in the U.S. is crucial to the economy’s long-term sustainability and a preeminent principle of sustainability is workforce sustainability.” The BGA provided a presentation on a national manufacturing center to align firms with clean energy OEMS.

In the aftermath of event of these events, Heartland posted blogs in Huff Post and other venues.

Take-Aways from the Road Shows

A Community of Shared Practice is emerging for investors of workers’ capital--pension and institutional funds--to demonstrate, educate and advocate responsible investment (RI) in the real economy. As a result of this emerging community, there is an opportunity to build a united front for responsible investment. Innovative investors who are part of this Heartland Capital Network emphasize good union and living-wage jobs – on shore – as part of their focus on RI, within the UN framework for investing in a sustainable future. These investors believe it is vital not only to invest profitably and sustainably, but also to prioritize the “S” in investing with environmental, social and governance (ESG) criteria (for more on RI, visit the United Nations website at www.unpri.org).

Despite this emerging community, there is a lack of consistent information and knowledge about importance of its growth. A Heartland RI Network that projects a community of practice is the missing link. There is incomplete knowledge about the value of real and clean economy investments in general, and the good work of investors who value labor rights and high performance workplaces in particular. There’s a need to ensure that capital stewards and pension consultants are fully aware of this good work and the frequency with which it results in competitive, sustainable returns.