Tara Doyle: Capital Mobilization as the Driving Force for Sustainable Change

Sustainable investing for a sustainable economy

Tara, please tell us a little about your work and how it intersects with the impact sector.

I lead the business development efforts for Terra Alpha Investments, a sustainable investment manager based in Washington, DC. We allocate capital to mid- and large-cap publicly traded companies that are leading the way to a truly sustainable economy. As Director of Business Development, I’m responsible for fundraising, crafting our marketing and communications strategy, and overseeing investor relations.

Impact means being a force for good

What does ‘impact’ mean to you? How do you define it for yourself? 

To me, impact means being a force for good. Every person and every business is responsible for both positive and negative outcomes throughout the course of their existence. No one is a neutral variable, and neutrality – the principle, “first, do no harm” – doesn’t pass muster for me these days anyway.  We are living in a moment that demands courage and action. It’s not enough to keep your side of the street clean, particularly if you are among the fortunate few who know the privilege of education and influence. Global growth has pushed our society to unprecedented levels of wealth and income inequality. And though these inequalities benefit a small portion of the population at the top, this inequality is a cancer to the system itself, posing serious long-term threats to the health of our economy.  These disparities will only be exacerbated as climate change increasingly devastates the communities most vulnerable to natural disasters – the very same communities who are often least responsible for the underlying changes in our planet’s climate. We need to start having some tough conversations about environmental justice, and we need leaders who are willing to sacrifice some of their power in order to create a healthier, more sustainable society. I think electing more women would be a good place to start.

The reality of climate change 

Based on your experience, what do you believe is one of the most important issues that needs to be solved over the next 10 years?

Terra Alpha is focused first and foremost on climate change because we think it is the defining issue of our time. If we don’t find solutions for mitigating and adapting to the reality that we have set in motion, no other issue matters frankly, because we won’t be around to face it. 

Of course, climate change can’t be solved in the next 10 years, so if the question is what other concern hits home for me these days, I’d have to say distrust in American institutions. Hyper-partisanship, conspiracy theories, and a certain carnival barking former president have led an all-out assault on facts, science, the media, and our political institutions with grave implications for American democracy. 

The mobilization of sustainable capital

Within your sector, what do you think are some of the biggest challenges in the impact space (standing in the way of efficient and fast solutions)?

This one is easy: the mobilization of capital. As a fundraising professional, I’m sure I’m biased, but as far as I can tell, the fanfare and headlines about massive flows into ESG funds are largely unsubstantiated. You see these eye-popping figures like $30T or $40T and even the tiniest bit of digging into the article’s citation reveals that their calculation includes all assets managed by any firm who claimed somewhere at some point in time that they considered environmental, social, or governance factors. It’s been refreshing to speak with some of the people on dedicated mission-aligned investing teams at the big advisory firms recently, because if you can get a candid answer out of them, they’ll often admit that they are seeing lots of client interest in sustainable investments, but not yet seeing major allocations to intentional thematic sustainable strategies.

The impact of climate-focused investments

Tara, tell us more about how you measure & quantify impact, and about the long-term vision you have for your work.

Terra Alpha has always published its Environmental Productivity (EP) performance directly alongside our financial returns, reporting the weighted-average environmental (carbon, waste, and water) intensity values of our funds to our investors on a quarterly basis. We calculate our funds’ carbon, water, and waste impacts (i.e., the resource streams our funds are “responsible” for via our investment in companies) on an annual basis. We don’t make investment decisions with the intention of reducing our portfolio’s natural resource footprint. Our strategy naturally gravitates towards companies with significantly lower carbon, water, and waste footprints than those of their industry peers and of the overall economy, translating into better environmental outcomes. A $5 million investment in the Terra Alpha diversified strategy would have avoided 2,912 tonnes of CO2e vs. the same dollar amount invested in the iShares MSCI World ETF over the course of our flagship strategy’s first five years. To put this in perspective, that’s 83% less (or the equivalent of the average American’s carbon footprint over 182 years) than that investor would “own” had she instead invested in our benchmark index. I think that makes for a pretty compelling story when paired with the financial outperformance we’ve generated on both an absolute and relative basis. Many investors don’t appreciate that their investments often account for the lion’s share of their total footprint.

Multinational corporations and the incorporation of sustainability

Through your work, what are some of the misconceptions you’ve noticed regarding what “impact” is all about?

I love my job. I interact with a diverse group of investors and sustainability stakeholders every day, and they all have one thing in common: they really care. Some folks question whether we can truly drive impact through the public equities market, and that’s OK! Our theory of change doesn’t need to be everyone’s cup of tea. We need to fundamentally redesign many different pieces of the global financial system as we know it today.

Major multinational corporations are perhaps most responsible for the climate crisis that is now rapidly encroaching. Those same institutions, however, are also the economic participants with the infrastructure and resources to provide climate solutions with global scale. If we can identify best-in-class companies across a diverse group of industries that are intentionally incorporating sustainability into their long-term business plans and their product and services mix, we think that we can create meaningful positive impact by investing in those businesses and engaging with those management teams. That doesn’t mean that the world needs private direct impact investments, innovative sustainable lending solutions, or concessionary program-related investment any less. It just means we chose a different lane.