News &
Thematic Insights

A core part of our mission at Cornerstone Capital Group is to help broaden investors’ awareness of how their assets can be put to work addressing the issues they care about most. The materials on this page define the current investment themes of the Cornerstone Capital Access Impact Fund and will offer news and insights related to those themes over time.

 

Circular Economy

Investing in Access to the Circular Economy

Investing in Access to the Circular Economy from Cornerstone Capital Group on Vimeo.

The Access Impact Fund seeks to invest in the Circular Economy by focusing on, among other things*:

  • Recycling technology (electronics, textiles, plastics, etc.)
  • Wastewater treatment and repurposing technology
  • Efficient reusable consumer packaging and recyclable packaging
  • “Recommerce” – companies that are involved in reselling existing products

Circular Economy is an emerging theme, one that is just beginning to gain traction within the investment community. We see interest in Circular Economy solutions as growing over time.

The term “circular economy” means an economy that is designed to be restorative and regenerative, one where items are refurbished, reused, and recycled to reduce or eliminate waste generation. According to the Ellen MacArthur Foundation, whose mission is to accelerate the transition to a circular economy, the key principles of a circular economy are “designing out waste and pollution, keeping products and materials in use, and regenerating natural systems.”

The two UN SDGs most closely aligned with the Circular Economy theme are SDG 11: Sustainable Cities and Communities and SDG 12: Responsible Consumption and Production. Secondary SDGs aligning with this theme include SDG 13: Climate Action; SDG 14: Life Below Water; and SDG 15: Life on Land.

* These are examples of the types of investments the fund might make and do not necessarily reflect current fund holdings.

You should carefully consider the investment objectives, risks, and charges and expenses of the Fund before investing. The prospectus contains this and other information about the Fund, and it should be read carefully before investing. You may obtain a copy of the prospectus by calling 800.986.6187. The Fund is distributed by Ultimus Fund Distributors, LLC. Cornerstone Capital Group is the adviser to the Fund. The U.N. Sustainable Development Goals (SDGs) are a collection of 17 global goals set by the United Nations General Assembly in 2015 for the year 2030. Investing involves risk, including loss of principal. Applying ESG and sustainability criteria to the investment process may exclude securities of certain issuers for both investment and non-investment reasons and therefore the Fund may forgo some market opportunities available to funds that do not use ESG or sustainability criteria. Securities of companies with certain focused ESG practices may shift into and out of favor depending on market and economic conditions, and the Fund’s performance may at times be better or worse than the performance of funds that do not use ESG or sustainability criteria.

Climate and Clean Energy

Investing in Access to Climate and Clean Energy

Investing in Access to Climate and Clean Energy from Cornerstone Capital Group on Vimeo.

The Access Impact Fund invests to address Climate and Clean Energy through a focus on, among other things*:

  • Renewable energy infrastructure such as solar and wind farms
  • Innovations in battery storage and alternative energy sources
  • Investments to expand access to clean water and supplies of clean water

The planet is in a race against time – literally – as we inch closer to the point after which climate change transforms into climate catastrophe. While climate impacts are already reshaping coastlines and disrupting economies, swifter adoption of clean energy can still help mitigate against the worst-case scenarios.

Investing in access to sustainable and clean energy is obviously connected to SDG 7: Affordable and Clean Energy as well as SDG 13: Climate Action. It is also critical to the achievement of SDG 8: Decent Work and Economic Growth, SDG 9: Industry, Innovation and Infrastructure, SDG 11: Sustainable Cities and Communities, and SDG 12: Responsible Consumption and Production. Oh, and SDGs 14 and 15: Life Below Water and Life on Land. Accelerating the conversion to clean, renewable energy is essential to our future.

* These are examples of the types of investments the fund might make and do not necessarily reflect current fund holdings.

You should carefully consider the investment objectives, risks, and charges and expenses of the Fund before investing. The prospectus contains this and other information about the Fund, and it should be read carefully before investing. You may obtain a copy of the prospectus by calling 800.986.6187. The Fund is distributed by Ultimus Fund Distributors, LLC. Cornerstone Capital Group is the adviser to the Fund. The U.N. Sustainable Development Goals (SDGs) are a collection of 17 global goals set by the United Nations General Assembly in 2015 for the year 2030. Investing involves risk, including loss of principal. Applying ESG and sustainability criteria to the investment process may exclude securities of certain issuers for both investment and non-investment reasons and therefore the Fund may forgo some market opportunities available to funds that do not use ESG or sustainability criteria. Securities of companies with certain focused ESG practices may shift into and out of favor depending on market and economic conditions, and the Fund’s performance may at times be better or worse than the performance of funds that do not use ESG or sustainability criteria.

Data Driven Solutions

Investing in Access to Data Driven Solutions

Investing in Access to Data Driven Solutions from Cornerstone Capital Group on Vimeo.

The Access Impact Fund seeks to address Data Driven Solutions by focusing on, among other things*:

  • AI
  • Big data
  • Internet commerce that reduces the need to generate carbon emissions typically produced through brick and mortar commerce
  • Education technology
  • Financial services technology

Technology has emerged as a driving force for change in society, allowing people to become more connected to each other, to improve their access to resources such as education and financial services, and to facilitate access to goods and services while reducing the environmental footprint required to procure these. Big data and artificial intelligence (AI) are also transforming the information available to society, which is increasing transparency and facilitating transactions.

The UN SDG that most directly maps to this theme is SDG 9: Industry, Innovation, and Infrastructure. We see it as a mid-stage investment theme that continues to evolve as technology develops. In other words, while data driven solutions are not a new area of focus for investors, the rapid pace of technological innovation means that opportunities continuously evolve.

* These are examples of the types of investments the fund might make and do not necessarily reflect current fund holdings.

You should carefully consider the investment objectives, risks, and charges and expenses of the Fund before investing. The prospectus contains this and other information about the Fund, and it should be read carefully before investing. You may obtain a copy of the prospectus by calling 800.986.6187. The Fund is distributed by Ultimus Fund Distributors, LLC. Cornerstone Capital Group is the adviser to the Fund. The U.N. Sustainable Development Goals (SDGs) are a collection of 17 global goals set by the United Nations General Assembly in 2015 for the year 2030. Investing involves risk, including loss of principal. Applying ESG and sustainability criteria to the investment process may exclude securities of certain issuers for both investment and non-investment reasons and therefore the Fund may forgo some market opportunities available to funds that do not use ESG or sustainability criteria. Securities of companies with certain focused ESG practices may shift into and out of favor depending on market and economic conditions, and the Fund’s performance may at times be better or worse than the performance of funds that do not use ESG or sustainability criteria.

Health, Wellness & Education

Investing in Access to Health, Wellness & Education

Investing in Access to Health, Wellness & Education from Cornerstone Capital Group on Vimeo.

The Access Impact Fund invests to address health, wellness and education through a focus on, among other things*:

  • Health care technology, including biotechnology
  • Innovations in health care delivery, such as wearable devices, telemedicine and robotics
  • Educational technologies that incorporate artificial intelligence and cognitive science, online educational tools and services, and “edutainment” geared toward engaging children.

Health, Wellness & Education is a broad investment theme, but one that is central to the achievement of a number of the UN Sustainable Development Goals. Chief among these, of course, are SDG 3: Good Health and Well-Being, and SDG 4: Quality Education. Less obvious but no less compelling is the role played by this theme in furthering SDG 5: Gender Equality and SDG 8: Decent Work and Economic Growth. For instance, access to reproductive health care services empowers women to plan for their futures; access to quality education directly influences a region’s ability to innovate and thereby its ability to generate good jobs; while access to health care is key to supporting a stable and productive workforce.

* These are examples of the types of investments the fund might make and do not necessarily reflect current fund holdings.

You should carefully consider the investment objectives, risks, and charges and expenses of the Fund before investing. The prospectus contains this and other information about the Fund, and it should be read carefully before investing. You may obtain a copy of the prospectus by calling 800.986.6187. The Fund is distributed by Ultimus Fund Distributors, LLC. Cornerstone Capital Group is the adviser to the Fund. The U.N. Sustainable Development Goals (SDGs) are a collection of 17 global goals set by the United Nations General Assembly in 2015 for the year 2030. Investing involves risk, including loss of principal. Applying ESG and sustainability criteria to the investment process may exclude securities of certain issuers for both investment and non-investment reasons and therefore the Fund may forgo some market opportunities available to funds that do not use ESG or sustainability criteria. Securities of companies with certain focused ESG practices may shift into and out of favor depending on market and economic conditions, and the Fund’s performance may at times be better or worse than the performance of funds that do not use ESG or sustainability criteria.

Innovation and Economic Opportunity

Investing in Access to Innovation and Economic Opportunity

Investing in Access to Innovation and Economic Opportunity from Cornerstone Capital Group on Vimeo.

The Access Impact Fund invests to address Innovation and Economic Opportunity through a focus on, among other things*:

  • Financial inclusion such as alternative banking solutions and fintech
  • Job training and skill development among employed populations
  • Technological development that pushes innovation within a society (IT, communications technology, etc.)

Innovation and Economic Opportunity focuses on the ability of a society to foster prosperity for all citizens by developing opportunities for fair job creation and economic stability. This theme touches several of the UN SDGs, including SDG 1: No Poverty; SDG 8: Decent Work and Economic Growth; SDG 9: Industry, Innovation, and Infrastructure; and SDG 16: Peace, Justice, and Strong Institutions. Together these SDGs, and this Access Impact Fund theme, reflect the belief that a stable and prosperous economy encourages a more peaceful and just society.

* These are examples of the types of investments the fund might make and do not necessarily reflect current fund holdings.

You should carefully consider the investment objectives, risks, and charges and expenses of the Fund before investing. The prospectus contains this and other information about the Fund, and it should be read carefully before investing. You may obtain a copy of the prospectus by calling 800.986.6187. The Fund is distributed by Ultimus Fund Distributors, LLC. Cornerstone Capital Group is the adviser to the Fund. The U.N. Sustainable Development Goals (SDGs) are a collection of 17 global goals set by the United Nations General Assembly in 2015 for the year 2030. Investing involves risk, including loss of principal. Applying ESG and sustainability criteria to the investment process may exclude securities of certain issuers for both investment and non-investment reasons and therefore the Fund may forgo some market opportunities available to funds that do not use ESG or sustainability criteria. Securities of companies with certain focused ESG practices may shift into and out of favor depending on market and economic conditions, and the Fund’s performance may at times be better or worse than the performance of funds that do not use ESG or sustainability criteria.

Reduced Inequality and Social Justice

Investing in Access to Reduced Inequality and Social Justice

Investing in Access to Reduced Inequality and Social Justice from Cornerstone Capital Group on Vimeo.

The Access Impact Fund seeks to address Reduced Inequality and Social Justice by focusing on, among other things*:

  • Companies that encourage diversity (gender, ethnic, and sexual orientation) across the organization
  • Affordable housing providers
  • Providers of quality education
  • Clean water and sanitation providers

The investment theme of Reduced Inequality and Social Justice focuses on the goal of developing a more just society for all individuals by encouraging diversity of thought and enabling access to the tools necessary to achieve social equity. This theme tackles issues such as affordable housing, clean water, education, and quality jobs.

The UN SDGs that this theme maps to most directly are SDG 5: Gender Equality and SDG 10: Reduced Inequalities. However, from an “access” perspective, this theme also maps to SDG 4: Quality Education; SDG 6: Clean Water and Sanitation; SDG 7: Affordable and Clean Energy; and SDG 8: Decent Work and Economic Growth.

* These are examples of the types of investments the fund might make and do not necessarily reflect current fund holdings.

You should carefully consider the investment objectives, risks, and charges and expenses of the Fund before investing. The prospectus contains this and other information about the Fund, and it should be read carefully before investing. You may obtain a copy of the prospectus by calling 800.986.6187. The Fund is distributed by Ultimus Fund Distributors, LLC. Cornerstone Capital Group is the adviser to the Fund. The U.N. Sustainable Development Goals (SDGs) are a collection of 17 global goals set by the United Nations General Assembly in 2015 for the year 2030. Investing involves risk, including loss of principal. Applying ESG and sustainability criteria to the investment process may exclude securities of certain issuers for both investment and non-investment reasons and therefore the Fund may forgo some market opportunities available to funds that do not use ESG or sustainability criteria. Securities of companies with certain focused ESG practices may shift into and out of favor depending on market and economic conditions, and the Fund’s performance may at times be better or worse than the performance of funds that do not use ESG or sustainability criteria.

Circular Economy

Circular Economy Adoption: What Will It Take?

Collaboration and innovation. To achieve a circular economy, companies, communities and organizations need to collaborate and rethink how they do things. For example, a food or consumer product company may need to work with its packaging supplier to minimize waste from spoilage or single-use packaging. Companies engaging in package and product design must consider recycling as part of their supply chain. Product designers need to be familiar with relevant recycling technologies to understand what type of product recycling can work effectively and profitably. Designing waste out of the manufacturing process must be cost effective and positive for the profit margins of companies.

Consumer behavior. Consumers are becoming increasingly aware of the impact of their choices. For example, wardrobe rental has become a lucrative business model, as has high-end reselliing of clothing. Nonetheless, it is important to meet consumers’ expectation for convenience. It’s not clear whether U.S. consumers will give up the convenience of single-use plastic containers and bags, although a number of municipalities have banned single-use plastics or Styrofoam. The solution may lie in creating biodegradable versions of such products.

Government policy has a critical role to play as well – for example, as more municipalities ban single-use plastics, business consumers such as restaurants and supermarkets will increasingly seek alternatives, creating demand for companies to produce more sustainable packaging.

Regulations regarding food expiration dates are an obvious area to reconsider: These labels are often misunderstood by consumers to mean food is no longer edible, when they actually reflect the manufacturer’s optimal quality standards (or desire to generate fresh revenue, for the cynical). Clarifying these labels and encouraging food retailers to better manage expiring products would help reduce food waste.

Recycling Recycling technology and collection systems need improvement. Better technology might incentivize better collection and recycling by consumer food and product companies.

Focused investment. Investors can drive change as well. There are a small but growing number of investment vehicles that focus on the circular economy, and others that focus on “best in class” companies across sectors – many of which are implementing circular design or logistics into their operations.

Circular Economy Examples

The need to redesign products and systems reaches across multiple sectors of the economy. Industries that create a lot of waste and would benefit most from a circular approach include apparel, food, consumer packaged goods, packaging (for food, ecommerce and otherwise), chemicals (plastics), and electronics. The water sector must also be considered, since so many manufacturing processes result in wastewater and pollution. The examples below illustrate what some companies are doing to incorporate circular economy principles into their business models.

Industry Circular Solution
Food Retailing Improve systems, sales and packaging to reduce food waste and quickly sell products approaching expiration.
Consumer Packaged Foods Phase out single-use plastics and replace with biodegradable and reusable packaging
Electronics Partner with retailers to collect old devices and recycle old components for use in new products
Apparel Collaborate with textile and recycling partners to resell, repair or recycle used or unsold apparel
Chemicals/Bioplastics Manufacture plant-based polymers instead of using petroleum for the production of plastic
Auto Industry Recycle more than 95% of components from end-of-life vehicles; world’s largest recycler of cars and trucks
Apparel and Textiles Transform old athletic shoes into material used for playground surfaces
Water Management Solve critical wastewater challenges by offering wastewater treatment and resource recovery

You should carefully consider the investment objectives, risks, and charges and expenses of the Fund before investing. The prospectus contains this and other information about the Fund, and it should be read carefully before investing. You may obtain a copy of the prospectus by calling 800.986.6187. The Fund is distributed by Ultimus Fund Distributors, LLC. Cornerstone Capital Group is the adviser to the Fund. Investing involves risk, including loss of principal. Applying ESG and sustainability criteria to the investment process may exclude securities of certain issuers for both investment and non-investment reasons and therefore the Fund may forgo some market opportunities available to funds that do not use ESG or sustainability criteria. Securities of companies with certain focused ESG practices may shift into and out of favor depending on market and economic conditions, and the Fund’s performance may at times be better or worse than the performance of funds that do not use ESG or sustainability criteria. 9109225-UFD-10/29/2019

Impact Investing Basics

Defining CCIIX’s Fossil Fuel Free, Tobacco and Weapons Criteria

The Cornerstone Capital Access Impact Fund is fossil fuel free, tobacco free, and does not invest in controversial weapons or small firearms for civilians. What does this mean?

Fossil fuel free excludes companies that earn more than 10% of their revenues from arctic oil and gas exploration and extraction, oil and gas production and oil and gas supporting products, oil sands extraction, thermal coal extraction and thermal coal power generation, and shale energy extraction.

Tobacco free excludes companies that earn more than 10% of their revenues from the production of tobacco and related products and services, and from the retail of tobacco related products.

Controversial weapons include landmines, cluster munitions, and tailor made and essential components of these weapons. Small firearms for civilians include assault weapons, non-assault weapons, and key components of firearms. The screen also excludes companies that earn more than 10% of their revenues from retailing or distributing small firearms for civilians.

You should carefully consider the investment objectives, risks, and charges and expenses of the Fund before investing. The prospectus contains this and other information about the Fund, and it should be read carefully before investing. You may obtain a copy of the prospectus by calling 800.986.6187. The Fund is distributed by Ultimus Fund Distributors, LLC. Cornerstone Capital Group is the adviser to the Fund. Investing involves risk, including loss of principal. Applying ESG and sustainability criteria to the investment process may exclude securities of certain issuers for both investment and non-investment reasons and therefore the Fund may forgo some market opportunities available to funds that do not use ESG or sustainability criteria. Securities of companies with certain focused ESG practices may shift into and out of favor depending on market and economic conditions, and the Fund’s performance may at times be better or worse than the performance of funds that do not use ESG or sustainability criteria. 9109225-UFD-10/29/2019

Impact Investing Basics

Why Invest for Impact?

A growing number of investors wish to integrate their investing activities with the values that inform the rest of their lives or their organizational missions. They want to invest in ways that pay heed to both their financial priorities and their commitment to environmental or social issues. Some investors believe that doing so will grant them a financial edge in the marketplace. Others wish to influence the direction of the economy because they see their own futures as inexorably linked to the future health and prosperity of the world.

Why is this trend becoming more mainstream now? Increasing demand for impact-oriented investments is being driven by a “perfect storm” of factors. The global financial crisis of 2007-08, the Deepwater Horizon disaster and other events have made investors increasingly conscious of the systemic risks facing their portfolios. Beyond financial instability and the risk of industrial accidents, these risks include climate change, globalization, and inequality. Also, technology is driving greater transparency and accountability for companies, even as more of their value is tied to intangible factors that are becoming harder to measure through traditional financial analysis.

Impact-focused investing strategies and financial performance. Traditionally, the mainstream financial world has claimed that strategies with an Environmental, Social and Governance (ESG) focus would underperform their more traditional counterparts. However, experience and research have shown that these investments have offered offer competitive returns. Recently, evidence has emerged that attention to ESG concerns may help both investors and companies mitigate risk and, in some cases, boost performance. Of course, investors may differ in the societal values that they bring to the market, just as they have differing risk tolerance and time horizons. Numerous strategies have evolved to help investors integrate their values into their investment portfolios. The best-known strategy, screening (positive or negative), remains important, but investors seeking social impact may also choose strategies such as active ownership, ESG integration or thematic investing.

You should carefully consider the investment objectives, risks, and charges and expenses of the Fund before investing. The prospectus contains this and other information about the Fund, and it should be read carefully before investing. You may obtain a copy of the prospectus by calling 800.986.6187. The Fund is distributed by Ultimus Fund Distributors, LLC. Cornerstone Capital Group is the adviser to the Fund. Investing involves risk, including loss of principal. Applying ESG and sustainability criteria to the investment process may exclude securities of certain issuers for both investment and non-investment reasons and therefore the Fund may forgo some market opportunities available to funds that do not use ESG or sustainability criteria. Securities of companies with certain focused ESG practices may shift into and out of favor depending on market and economic conditions, and the Fund’s performance may at times be better or worse than the performance of funds that do not use ESG or sustainability criteria. 9109225-UFD-10/29/2019

Impact Investing Basics

Understanding the Language of Impact

There are numerous labels used to describe investing activities that incorporate environmental, social and governance factors alongside financial metrics with the intention of achieving long-term financial outperformance as well as positive societal impact. Cornerstone Capital Group does not distinguish between “impact investing,” “ESG investing,” and “sustainable investing.” We believe these terms reflect the same motivations and strategies. Indeed, we consider this mindful method of investing to be “radically practical.” However, because these labels do mean different things to different people, we provide these clarifying definitions.

Impact is defined as the societal and ecosystem change resulting from investment decisions. Because these changes are the collective result of the actions of every investor, no one individual or institution controls these ultimate results; but each investor contributes to their achievement.

At Cornerstone Capital Group, our overarching impact objective is sustainability, which we define as “the relentless pursuit of material progress towards a more regenerative and inclusive society.” We believe that companies and investors with a long-term perspective on value creation will pursue strategies consistent with this idea of sustainability.

Environmental, social, and governance (ESG) practices describe the actions investors and companies take to achieve progress towards sustainability. Although environmental, social and governance are often bundled together, they are different. From a corporate perspective:

Governance is the set of internal policies and management structures that establish the relationship among corporate stakeholders and define the objectives of the company. Governance policies establish mechanisms for oversight, incentives and culture that drive business operations and strategy.

Environmental and Social policies refer specifically to the policies intended to manage a company’s impact on society as well as how it measures and reports on its engagement with these issues.

From an investor’s perspective, ESG is an analytical discipline – a framework for assessing the potential outcomes and impact of an investment.

In conducting our own ESG analysis, we focus on materiality – the ESG issues that are most relevant to both social and financial performance of a company or industry over the long term.

You should carefully consider the investment objectives, risks, and charges and expenses of the Fund before investing. The prospectus contains this and other information about the Fund, and it should be read carefully before investing. You may obtain a copy of the prospectus by calling 800.986.6187. The Fund is distributed by Ultimus Fund Distributors, LLC. Cornerstone Capital Group is the adviser to the Fund. Investing involves risk, including loss of principal. Applying ESG and sustainability criteria to the investment process may exclude securities of certain issuers for both investment and non-investment reasons and therefore the Fund may forgo some market opportunities available to funds that do not use ESG or sustainability criteria. Securities of companies with certain focused ESG practices may shift into and out of favor depending on market and economic conditions, and the Fund’s performance may at times be better or worse than the performance of funds that do not use ESG or sustainability criteria. 9109225-UFD-10/29/2019

Impact Investing Basics

Investment Strategies Designed for Impact

Investors employ a wide variety of strategies in seeking positive impact, with diverse objectives and approaches that can be incorporated into most styles and asset classes.

“Best in class” investing: Often called “positive screening,” this strategy invests in, or overweights, the top environmental, social and governance (ESG) performers within each sector, with the intent to direct capital towards beneficial business strategies. Some managers combine “best in class” analysis with more traditional financial analysis in the hopes of identifying companies that will outperform in the long term. Best in class investing is typically associated with public equities but can be applied to fixed income as well.

Advocacy/engagement: Shareholder advocacy, sometimes called shareholder engagement, is the use of the shareholder’s ownership stake in a company to effect positive change in corporate policy and practice. Shareholders engage with corporate management in direct dialogue over corporate practices that may not be aligned with shareholder values or long-term performance. Some of the tools of shareholder advocacy include proxy voting, shareholder proposals, and public statements or signed letters by multiple investors on a single sector or issue. This strategy is best known as part of a public equities strategy but can also be employed in fixed income and is particularly powerful in real estate, real assets and private equity, where investors may have substantial influence because they own large stakes.

ESG integration: ESG integration entails the consideration of non-traditional but material issues alongside traditional financial analysis with the goal of improving investment performance. Typically, managers identify those issues they consider “material” for the investment performance of a company or sector, then incorporate these issues into their analysis along with more traditional financial criteria. ESG integration can be used across public equity, fixed income, and alternative investments, including private equity, real estate, real assets and others.

Screening or divestment: Many investors choose not to invest in activities that violate their core values. “Negative screens” are criteria that exclude from portfolios companies that engage in activities investors consider misaligned with their core principles or organizational missions. Screens can be used in all asset classes but are most common in equity and fixed-income strategies.

Thematic investing: Investors can direct capital to funds that are dedicated to addressing a specific issue. Examples include renewable energy funds, gender lens investments, certified timberland or green bonds. Thematic investments are narrow in scope but may have a significant impact on the relevant issue. Thematic investments can be found in any asset class.

Community development and microfinance: Investors may deploy capital, sometimes at below-market rates, to financial intermediaries that serve local communities directly. Community Development Financial Institutions (CDFIs) provide a variety of financial services within local communities in the US and developing countries, including business and housing loans, insurance, savings vehicles and other services. This type of investing is considered fixed income or alternative, depending on the type of investment.

It is common for asset managers to employ more than one of the approaches above in a single investment strategy. Before allocating capital to an investment strategy, it is important for investors to understand how a manager is applying ESG criteria, how it is likely to impact the portfolio, and how those approaches align with a manager’s experience and capabilities.

You should carefully consider the investment objectives, risks, and charges and expenses of the Fund before investing. The prospectus contains this and other information about the Fund, and it should be read carefully before investing. You may obtain a copy of the prospectus by calling 800.986.6187. The Fund is distributed by Ultimus Fund Distributors, LLC. Cornerstone Capital Group is the adviser to the Fund. Investing involves risk, including loss of principal. Applying ESG and sustainability criteria to the investment process may exclude securities of certain issuers for both investment and non-investment reasons and therefore the Fund may forgo some market opportunities available to funds that do not use ESG or sustainability criteria. Securities of companies with certain focused ESG practices may shift into and out of favor depending on market and economic conditions, and the Fund’s performance may at times be better or worse than the performance of funds that do not use ESG or sustainability criteria. 9109225-UFD-10/29/2019

Fund News

Erika Karp, Cornerstone’s founder, was recently interviewed by Bloomberg...

Erika Karp, Cornerstone’s founder, was recently interviewed by Bloomberg about the launch of the Cornerstone Capital Access Impact Fund. Read more here.

By clicking the link above, you will be redirected to a website maintained by a third party.

You should carefully consider the investment objectives, risks, and charges and expenses of the Fund before investing. The prospectus contains this and other information about the Fund, and it should be read carefully before investing. You may obtain a copy of the prospectus by calling 800.986.6187.

The Fund is distributed by Ultimus Fund Distributors, LLC. Ultimus Fund Distributors, LLC. is not affiliated with the firms referenced in the Bloomberg article.

The Fund’s gross expense ratio is 2.47%. Applying ESG and sustainability criteria to the investment process may exclude securities of certain issuers for both investment and non-investment reasons and therefore the Fund may forgo some market opportunities available to funds that do not use ESG or sustainability criteria. Securities of companies with certain focused ESG practices may shift into and out of favor depending on market and economic conditions, and the Fund’s performance may at times be better or worse than the performance of funds that do not use ESG or sustainability criteria.

Impact Investing Basics

Good ESG Analysis Vital for Impact Investing: Interview

Erika Karp recently appeared on Bloomberg’s Daybreak Asia radio program. She discussed the rise in interest in sustainable and impact investing. She also noted that some concerns about “greenwashing” — misleading efforts to promote an eco-friendly image — are warranted, and explains the value of in-depth ESG analysis.

Listen to the Bloomberg interview.

You should carefully consider the investment objectives, risks, and charges and expenses of the Fund before investing. The prospectus contains this and other information about the Fund, and it should be read carefully before investing. You may obtain a copy of the prospectus by calling 800.986.6187. The Fund is distributed by Ultimus Fund Distributors, LLC. Cornerstone Capital Group is the adviser to the Fund. Investing involves risk, including loss of principal. Applying ESG and sustainability criteria to the investment process may exclude securities of certain issuers for both investment and non-investment reasons and therefore the Fund may forgo some market opportunities available to funds that do not use ESG or sustainability criteria. Securities of companies with certain focused ESG practices may shift into and out of favor depending on market and economic conditions, and the Fund’s performance may at times be better or worse than the performance of funds that do not use ESG or sustainability criteria. 9535267-UFD-2/13/2020

Impact Investing Basics

Sustainability, Capitalism and the Critical Role of Data: Notes from Davos

Recently, Cornerstone CEO and CCIIX portfolio co-manager Erika Karp spend some time in Davos, Switzerland, during the World Economic Forum. She shared her impressions during a video interview with Worth Media, which we have condensed.

A major focus of the WEF 2020 was embracing stakeholder capitalism, which fuses capitalism and sustainability. Erika discusses what’s needed to make stakeholder capitalism a reality: data and a common language.

Data

We need data, we need accountability, we need measurability, we need intentionality — all the things that we talk about with impact investing. And if you think about it, any board of directors needs to serve their shareholders. They need to serve their employees. They need to serve their customers. You can't optimize profitability without doing all three. But it has to be about long-term profitability. We have to stop externalities from not being accepted by the users of capital. We have to think about financial capital, but also human capital, natural capital. We have a long way to go.

A Common Language

When it comes to the whole idea of sustainable investing, there's no common language. Cornerstone uses a very clear definition. We think sustainable investing is the systematic integration of material environmental, social, and governance factors into the investment process. That is sustainable investing. It's not ideological. It's not political. It's not divisive. It is about pragmatism and enhanced analytics. It is a discipline. Ultimately it's just going to be called investing and investment research, but we're not there yet. So sometimes you'll hear people say, ESG investing. There is no such thing as ESG investing. There's ESG analysis, and so we have to bring this into the realm of finance, not ideology.

You should carefully consider the investment objectives, risks, and charges and expenses of the Fund before investing. The prospectus contains this and other information about the Fund, and it should be read carefully before investing. You may obtain a copy of the prospectus by calling 800.986.6187. The Fund is distributed by Ultimus Fund Distributors, LLC. Cornerstone Capital Group is the adviser to the Fund. Investing involves risk, including loss of principal. Applying ESG and sustainability criteria to the investment process may exclude securities of certain issuers for both investment and non-investment reasons and therefore the Fund may forgo some market opportunities available to funds that do not use ESG or sustainability criteria. Securities of companies with certain focused ESG practices may shift into and out of favor depending on market and economic conditions, and the Fund’s performance may at times be better or worse than the performance of funds that do not use ESG or sustainability criteria. 9518902-UFD-2/12/2020

Innovation & Entrepreneurship

Systems Thinking and Entrepreneurship: Notes from Davos

Recently, Cornerstone CEO and CCIIX portfolio co-manager Erika Karp spend some time in Davos, Switzerland, during the World Economic Forum. She shared her impressions during a video interview with Worth Media, which we have condensed.

For me, the biggest takeaway from Davos is the extent to which we need more systems thinking if we're going to meet these huge challenges. We need not just a high-level conversation — that conversation needs to go down to the grassroots level. And so I wonder sometimes… if everyone who needs to be in the room is in the room.

I would love for Davos to take up the issue of entrepreneurship. We know that in a global economy, impact comes from entrepreneurship, new companies revitalizing economic growth. (The fact that we have the world's monetary authorities driving the stock market is not okay.) I'd like to see the conversation truly be a catalyst for growth. Focus on the idea of entrepreneurship — in fact, impact entrepreneurship. That's where growth comes, that's where new companies come from. Why don't we have a discussion about great companies that know how to disrupt themselves and innovate from inside. And then of course, the outside companies, the innovators, the disruptors. I think it has to be about entrepreneurship because that is ultimately how we're going to face the big challenges of the world.

You should carefully consider the investment objectives, risks, and charges and expenses of the Fund before investing. The prospectus contains this and other information about the Fund, and it should be read carefully before investing. You may obtain a copy of the prospectus by calling 800.986.6187. The Fund is distributed by Ultimus Fund Distributors, LLC. Cornerstone Capital Group is the adviser to the Fund. Investing involves risk, including loss of principal. Applying ESG and sustainability criteria to the investment process may exclude securities of certain issuers for both investment and non-investment reasons and therefore the Fund may forgo some market opportunities available to funds that do not use ESG or sustainability criteria. Securities of companies with certain focused ESG practices may shift into and out of favor depending on market and economic conditions, and the Fund’s performance may at times be better or worse than the performance of funds that do not use ESG or sustainability criteria. 9518793-UFD-2/12/2020

Fund News

How to Disrupt Investment Management

Garvin Jabusch, the Co-founder and Chief Investment Officer of Green Alpha, recently interviewed Cornerstone Capital Group CEO and CCIIX portfolio co-manager Erika Karp for his column in Worth. They discussed their shared vision of a sustainable and inclusive economy.. Green Alpha is one of the subadvisors of the Access Impact Fund. Read the story here.

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You should carefully consider the investment objectives, risks, and charges and expenses of the Fund before investing. The prospectus contains this and other information about the Fund, and it should be read carefully before investing. You may obtain a copy of the prospectus by calling 800.986.6187.

The Fund is distributed by Ultimus Fund Distributors, LLC. Cornerstone Capital Group is the adviser to the Fund. Investing involves risk, including loss of principal. Applying ESG and sustainability criteria to the investment process may exclude securities of certain issuers for both investment and non-investment reasons and therefore the Fund may forgo some market opportunities available to funds that do not use ESG or sustainability criteria. Securities of companies with certain focused ESG practices may shift into and out of favor depending on market and economic conditions, and the Fund’s performance may at times be better or worse than the performance of funds that do not use ESG or sustainability criteria. '9640617-UFD-3/3/2020'

Innovation and Economic Opportunity

Forever Changed: COVID-19 and Impact Investing

On March 19, 2020, Cornerstone Capital Group held a conference call addressing concerns about the current coronavirus pandemic and its impact on the markets, the economy, and importantly, the changes in how we think about the infrastructure of our society over the longer term. Cornerstone’s Erika Karp, Craig Metrick and Michael Geraghty were joined by two equity managers on the Cornerstone platform: Cathie Wood of Ark Investment Management, and Garvin Jabusch of Green Alpha Advisors. The full call replay can be accessed here.

Managing Portfolio Risk Through Integrated Analysis

The participants on the call focused on the benefits of integrating environmental, social and governance (ESG) factors into the investment process in an effort to de-risk long term portfolios and identify critical growth opportunities. Both Ark and Green Alpha look at multiple risk factors at a systemic level to minimize exposure to threats such as climate change. This extends to investing in methods to address risk -- such as pandemic crisis. In their view, by focusing on innovation and the future while considering all stakeholders instead of only shareholders, investors may experience better long-term returns with lower volatility.

Kicking off the discussion, Erika highlighted that “sustainable investing is a proxy for quality. It’s a proxy for innovation and a proxy for resilience. And that is precisely what we need right now.” She asked whether, when we emerge from this current crisis, we would be forever changed:

“We have to think about issues like distance learning, telecommuting, distributed health systems. We have to think about supply chain logistics. We have to think about surge capacity. We have to think about virtual entertainment, emergency service centralization, obviously food safety, water quality, hygiene standards. We have to think about mental health provision. We have to think more proactively and in an innovative way about investing. Going forward to attack these challenges, we remind everyone that impact and sustainable investing is just investing. But a more conscious, predictive way to invest. Impact investing is the new cornerstone of capitalism.”

Michael Geraghty, Cornerstone’s market strategist, discussed the volatility of the markets under the current coronavirus situation. He doesn’t believe the markets will stabilize until the virus is either contained or a vaccination is developed and made available to the public. Michael notes, however, that this is a short-term shock to the system and not a structural one. That’s not to say that this pandemic won’t have a profound effect on the economy or the markets near term. The consumer accounts for 70% of U.S. Gross Domestic Product (GDP). If consumers are staying home and hunkering down, a cut in rates by the Federal Reserve and a payroll tax cut by the Federal government won’t have a strong impact on consumer behavior.

Craig Metrick noted that Cornerstone focuses on long term investment objectives while creating an investment plan which is designed to achieve social and environmental impact. He then interviewed Cathie and Garvin as to their views on the longer-term implications of the current crisis.

Investing in Disruptive Innovation and Strong Governance

Ark Investment Management focuses on investing in disruptive innovation over a five-year time frame. Its five core themes are: DNA sequencing, robotics, artificial intelligence, energy storage and blockchain technologies. Cathie Wood noted that the companies her firm invest in are not typically in any indices. Other managers are selling these names while buying names in the indices, such as the S&P 500, giving firms like hers an opportunity to buy these innovative company stocks at lower valuations. Over the long haul, she believes these investments should outperform older economy names that still dominate the indices.

Garvin Jabusch noted that a recession is already priced into the markets and his firm is looking for companies that will perform well out of the downturn. Bottom-up analysis is key, in his view. He looks for companies that are good stewards of capital, are innovative and create solutions that will make the economy more productive. Green Alpha is a long term buy and hold manager. The firm focuses on innovative companies that can help de-risk the economy such as those engaged in decarbonization, biotech and electrification.

Summing up the discussion, which included a very lively Q&A, Erika noted: “When it comes to ESG analysis, the “G,” governance, is first among equals. Because if we’re talking about a well-governed company, then by definition it is looking at environmental and social issues. And if a company is not looking at environmental and social issues, it is by definition not well-governed. It's tautological.”

Click the link to view standardized performance and the Fund’s top ten holdings:

https://cornerstonecapitalfunds.com/quarterly-commentary

You should carefully consider the investment objectives, risks, and charges and expenses of the Fund before investing. The prospectus contains this and other information about the Fund, and it should be read carefully before investing. You may obtain a copy of the prospectus by calling 800.986.6187. The Fund is distributed by Ultimus Fund Distributors, LLC. Cornerstone Capital Group is the adviser to the Fund. Investing involves risk, including loss of principal. Applying ESG and sustainability criteria to the investment process may exclude securities of certain issuers for both investment and non-investment reasons and therefore the Fund may forgo some market opportunities available to funds that do not use ESG or sustainability criteria. Securities of companies with certain focused ESG practices may shift into and out of favor depending on market and economic conditions, and the Fund’s performance may at times be better or worse than the performance of funds that do not use ESG or sustainability criteria.

9827671-UFD-3/23/2020

Fund News

ESG Fund Performance in Volatile Markets

There has been tremendous volatility in the price of most asset classes since the onset of the coronavirus-related financial crisis. That includes the price of sustainable equity funds. Given that much of the growth of sustainable investing has taken place in the past five years, many environmental, social, and governance (ESG) strategies have experienced relatively few periods of market volatility. What can we expect in terms of the performance of ESG funds in this period of extreme volatility?

The Benefits of ESG Discipline in Times of Market Volatility

In theory, the performance of ESG funds should hold up well in times of market volatility. At the company level, the managers of a sustainable business will likely have given plenty of thought to contingencies. They will focus on risk issues and make business continuity plans. While even the best-governed companies likely wouldn’t have prepared sufficiently for a pandemic of this scale, they are still in a relatively strong position to act decisively given their strong leadership.

Risk management is an important factor at the portfolio level, and here too ESG provides an edge. When the CFA Institute conducted a 2017 survey of portfolio managers and asked, “why do you take ESG issues into consideration in your investment analysis/decisions?” the vast majority replied, “to help manage investment risks.”

In addition, many ESG funds completely avoid or limit their exposure to fossil fuels and other industries heavily reliant on oil and gas (e.g., airlines and cruise ships), which has insulated them from the recent volatility associated with the collapse in the price of oil.

ESG and Market Volatility: Some Studies

There have been several studies of the performance of ESG funds in times of market volatility.

  • An April 3, 2020 analysis by Morningstar entitled “Sustainable Funds Weather the First Quarter Better Than Conventional Funds” found that 24 of 26 ESG-tilted index funds outperformed their closest conventional counterparts. The author of that analysis, Jon Hale, head of sustainability research for Morningstar, was quoted as saying “it’s not like a massive outperformance, but it’s consistently better than average… that’s a great sign that ESG investing is not just some kind of bull market phenomenon, and it’s more and more of an all-weather type of approach.”

  • A March 13, 2020 analysis by Bloomberg revealed that, in the current volatility, the average ESG fund declined less than the S&P 500 and, also, that older ESG funds have been outperforming newer ESG funds in the current volatility. The fact that ESG investment funds with longer track records are outperforming their newer rivals suggests that managers at older ESG funds have more experience investing through an ESG lens than do the newcomers, and so are able to execute more effectively.

  • In 2018, Arabesque, an asset management and research firm that focuses on ESG issues, performed an analysis of all U.S. stocks using data going back to 2007. It found that stocks that finished in the top quintile based on their ESG metrics outperformed those in the bottom quintile in the four worst years for the stock market in that period: the financial-crisis years of 2007-08, as well as 2011, and 2015. The margin ranged from 1.8 percentage points in 2007 13.5 points in 2008.

  • A 2016 academic study concluded that, during the 2008 financial crisis, firms with high social capital, measured as corporate social responsibility (CSR) intensity, had stock returns that were four to seven percentage points higher than firms with low social capital. The authors observed “this evidence suggests that the trust between the firm and both its stakeholders and investors…pays off when the overall level of trust in corporations and markets suffers a negative shock.”

Conclusion

The evidence strongly suggests that ESG funds are performing relatively well during the current period of market volatility, and this is consistent with their performance in prior periods of volatility. As Cornerstone’s CEO Erika Karp notes, “In the final analysis, when considering ESG factors, ‘Governance’ is first among equals. It is a proxy for quality, a proxy for innovation, and a proxy for resilience. In times of volatility, when there is a vacuum of information, those companies that consistently embrace their principles, their workforces, and their unique competitive advantages will outperform.”

Please contact fundinfo@cornerstonecapinc.com if you would like more detail on the studies cited in this post.

You should carefully consider the investment objectives, risks, and charges and expenses of the Fund before investing. The prospectus contains this and other information about the Fund, and it should be read carefully before investing. You may obtain a copy of the prospectus by calling 800.986.6187.

The Fund is distributed by Ultimus Fund Distributors, LLC. Cornerstone Capital Group is the adviser to the Fund. There is no affiliation between Ultimus Fund Distributors, LLC and the other firms referenced in the material.

Investing involves risk, including loss of principal. Applying ESG and sustainability criteria to the investment process may exclude securities of certain issuers for both investment and non-investment reasons and therefore the Fund may forgo some market opportunities available to funds that do not use ESG or sustainability criteria. Securities of companies with certain focused ESG practices may shift into and out of favor depending on market and economic conditions, and the Fund’s performance may at times be better or worse than the performance of funds that do not use ESG or sustainability criteria.

10001559-UFD-4/9/2020

Climate and Clean Energy

A Deep Dive into Water Investing with KBI Global Investors

Cornerstone recently held a video webinar with KBI Global Investors, whose Water Strategy is a key component of the Access Impact Fund at approximately 25% of the fund’s allocation. CCIIX portfolio co-manager Jennifer Leonard, CFA, was joined by Matt Sheldon, Senior Portfolio Manager at KBI. The session was moderated by Michael Wright, Managing Director, Fund Distribution at Cornerstone.

The discussion focused on the Water Strategy’s investment philosophy and the nuances of investing in access to clean and plentiful water, which spans the industrials, utility and technology sectors. Matt also discussed the impact of the coronavirus pandemic on the strategy, including ways in which water-related companies are contributing to relief efforts.

Please contact fundinfo@cornerstonecapinc.com if you would like more detail on the studies cited in this post.

You should carefully consider the investment objectives, risks, and charges and expenses of the Fund before investing. The prospectus contains this and other information about the Fund, and it should be read carefully before investing. You may obtain a copy of the prospectus by calling 800.986.6187. The Fund is distributed by Ultimus Fund Distributors, LLC. Cornerstone Capital Group is the adviser to the Fund. The U.N. Sustainable Development Goals (SDGs) are a collection of 17 global goals set by the United Nations General Assembly in 2015 for the year 2030. Investing involves risk, including loss of principal. Applying ESG and sustainability criteria to the investment process may exclude securities of certain issuers for both investment and non-investment reasons and therefore the Fund may forgo some market opportunities available to funds that do not use ESG or sustainability criteria. Securities of companies with certain focused ESG practices may shift into and out of favor depending on market and economic conditions, and the Fund’s performance may at times be better or worse than the performance of funds that do not use ESG or sustainability criteria. 10496850-UFD-6/24/2020

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A core part of Cornerstone Capital Group’s mission is to build and support the field of sustainable and impact investing. In addition to the articles posted here, you may wish to explore our thought leadership further at cornerstonecapinc.com.

 

Investing involves risk, including loss of principal. Applying ESG and sustainability criteria to the investment process may exclude securities of certain issuers for both investment and non-investment reasons and therefore the Fund may forgo some market opportunities available to funds that do not use ESG or sustainability criteria. Securities of companies with certain focused ESG practices may shift into and out of favor depending on market and economic conditions, and the Fund’s performance may at times be better or worse than the performance of funds that do not use ESG or sustainability criteria. Investments in foreign securities involve risks that may be different from those of U.S. securities. Foreign securities are subject to individual country risk, less favorable reporting and disclosure risks, currency exchange risk, greater volatility, and potential for higher liquidity risk than U.S. - registered securities. Diversification does not ensure a profit or guarantee against loss.

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