Steven Mesirow, grandson of Norman Mesirow, founder of the eponymous Chicago-based financial firm, is honoring the values he inherited from his grandfather in an innovative way. Mesirow says his grandfather espoused three key management principles: Be good to your employees; Treat your customers how you would like to be treated; Give back to your community. Now, the younger Mesirow has translated those values into a forward-thinking investing strategy called Mesirow Impact Management, which launched on Dec. 31.
“If I can make a living and make the world just a little bit better, that is a good way to live your life,” Mesirow says. “Not everybody sees the economic merits of this, but I am convinced there is a big demand.”
Indeed, within 12 days of its launch, Mesirow Impact Management had attracted about a dozen investors and $12 million. Investors will have separately managed accounts based on a portfolio Mesirow has assembled of companies that are working proactively to make the world a better place.
Mesirow says he was never impressed by traditional socially responsible investing, which typically uses negative screens to eliminate so-called “sin stocks” like tobacco companies. He says just because companies aren’t involved in a business that is viewed as harmful doesn’t mean they necessarily do anything to make the world better or generate superior investment returns.
“The bias in the investment community is very strong that socially responsible investing will produce inferior results, and that you are giving up return,” Mesirow says. “In years past, I never had anything I was satisfied with, so we would tell people, ‘Just invest and then give to the causes you like.’”
With Mesirow’s new Impact Management strategy, investors can now put money into a stock portfolio that is directly aligned with their values. Rather than using negative screens to eliminate certain kinds of companies, Mesirow has conducted an exhaustive search to identify corporations that treat employees and customers well and that give back to the community. That might mean the companies give grants to civic organizations, engage employees in community service projects, appear on lists of the best companies to work for, or form diversity and inclusion councils.
“We searched a lot of companies, basically all of the Fortune 1000,” Mesirow says. “Most companies don’t adhere to these principles because it takes a long time for these dividends to work out.”
While doing right by employees, customers and the community may not increase profits next quarter, Mesirow says companies that follow those principles tend to have a longer-term view and, ultimately, a competitive advantage. That’s why, he says, socially-conscious investors don’t have to give up financial gain in order to invest in companies that share their values. Although past performance is not a guarantee of future results, Mesirow back-tested the portfolio of stocks he is offering to clients as part of Mesirow Impact Management, and he says he found very positive financial results. He says he is confident he’ll be able to provide clients with both solid monetary return, as well as “impact return” based on the positive effects the portfolio companies have in their communities.
“When we review a client’s account performance, I am also going to give them a list of the accomplishments of the stocks in their portfolio — this company donated X amount of food, this company recycled, this company instituted a diversity council or did something for their employees,” Mesirow says.
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