Verger’s ESG Evolution: An Interview with Leaders Jim Dunn & Vicki West

In the non-profit community, Environmental, Social, and Governance (ESG) factors are increasingly important to organizations and their stakeholders. While the range of topics under this heading can be broad, some common examples of ESG factors include carbon emissions, employee/stakeholder relations, and Board structure.

We asked our CEO and CIO, Jim Dunn, along with our COO, Vicki West, to share how the Verger team thinks about ESG factors and incorporates them throughout the firm, or business, and the investment portfolio.

How has Verger’s approach to ESG developed since its founding in 2014?

Jim: I see our ESG work as constantly evolving. The evolution is happening organically for two reasons.

First, because we’ve been mission driven from the start. We’re primed to think of our team culture and our relationships with clients in terms of “investing in the lives of others,” or, to put it another way, the positive impact we are creating.

Second, because serving non-profits is in our DNA. We were intentionally designed out of an endowment, and we work exclusively with non-profit organizations. Our entire team shares a passion for advancing our clients’ missions.  

Vicki: To echo Jim’s comments, I’ll highlight that our commitment to constant evolution is evident at the CEO level and all the way through the organization. It’s embedded in our core values – especially, “challenge the status quo.”

When we founded the ESG Task Force in 2020, we created a platform for gathering up all the ESG work we’d done to date, formalizing our practices and policies, and fostering continued evolution. The independent industry experts on the Task Force pointed out that much of a firm’s long-term ESG potential is rooted in its culture, and that Verger’s commitment to our mission had built a culture that is very well aligned with ESG principles.

How are some specific ESG factors woven into Verger’s cultural DNA?

Jim: Verger’s business is built on a deep understanding of the social factor. We believe that team members are one of, if not the most, important part of an investment process. This is why team building at Verger is so important, why we start our investment due diligence process by focusing on a potential manager’s people, and why we place so much value on building relationships with our managers and our clients.

Our business is also built on a strong connection with our community stakeholders. Particularly with the Wake Forest University community, given our origin. We are accountable to our community as well as our investors, and our governance structure reflects this. We have always encouraged a great deal of interaction between our Board of Managers and our staff, which shows not just our commitment to transparency, but also to continued learning and growth.

Vicki: To speak to the social factor, we were founded with an intentionally flat organization structure and a goal of progressing employee ownership opportunities over time. The Verger Women’s Leadership Initiative is an example of an Employee Resource Group that formed organically from the staff’s understanding that there is leadership at every level of the firm.

At the same time, we have a robust governance structure. In addition to our Board of Managers, we have our Advisory Board and our more recent ESG Task Force. These advisory bodies create a network of expertise. We rely on this network for an ecosystem of best practices, and we continuously integrate shared learnings into our operational and investment processes.  

What were some of the early outcomes from the introduction of Verger’s ESG Task Force?

Vicki: Early on the Task Force focused on Verger as a business. In taking inventory of our employee benefits and how they reflect our mission, we found some informal practices that we could evolve into formal policies. For example, we implemented formal employee benefit policies around Volunteer Time Off and Charitable Gift Matching. In reviewing the environmental impact of our corporate office, we found that some key inputs were outside our immediate control, so we partnered with Climate Vault to offset our entire corporate carbon footprint.

Jim: The Task Force also encouraged us to examine how our unconstrained idea generation and our focus on people in the investment due diligence process translated to diversity in our portfolio of managers. We undertook an assessment and found that 43% of our managers were women or minority-owned firms.[1] To encourage further evolution in this area, we joined the Institutional Allocators for Diversity Equity & Inclusion consortium, which maintains a shared database of diverse managers.

How has the work with the ESG Task Force evolved Verger’s investment process?

Jim: One of Verger’s core values is “focus on what makes you great.” In our investment process, our rigorous due diligence and our resulting deep relationship with our managers is one of the things that makes us truly great. As part of this ongoing and evolving process, we’ve developed a dialogue with our managers that focuses on improving mutual ESG outcomes over time. We call this “ESG engagement.”

Through the course of our work with the Task Force, Verger published Investing in the Lives of Others: A Strategy for ESG Engagement — a Whitepaper detailing how we think about ESG engagement and why it is a crucial component of our fiduciary duty to our clients. While the practice was not new for us, this was the first time we discussed it publicly and thereby expanded the breadth of our accountability. We point out that it is an ever-evolving process – one we are continually refining and adjusting.

Vicki: The paper also highlights that when we allocate capital we’re investing in the manager’s firm and its team, not simply its strategy. Part of the engagement process is a 2-way dialogue about operations and culture where we can learn and share opportunities to improve ESG outcomes at the business level. We point out that ESG issues can influence a manager’s and Verger’s ability to build and manage a sustainable business.

This was a meaningful moment, in terms of publicly discussing the mutual standard of accountability for us and our managers. Another one of Verger’s core values is “be humble.” It was important that, in the paper and in practice, we acknowledge that Verger still has ground to cover and is up for the challenge. We are committed to continuing to learn and grow our knowledge in the ESG space to inform, evaluate, and grow our efforts over time.

How do you see Verger’s ESG approach continuing to evolve long-term?

Vicki: As we near the 2-year anniversary of its formation, the ESG Task Force continues to work with Verger leadership and staff to formally establish a long-term, proactive approach to responsibly managing ESG risks and opportunities in our business and investment portfolio. The ESG engagement strategy Jim and I described earlier remains a central feature of this approach.

We are constantly reevaluating our ESG approach in Verger’s business operations. Recently, we expanded our ongoing commitment to offset our carbon footprint with Climate Vault. Now, we’ve offset not only our corporate office footprint, but also all Verger employees’ personal carbon footprints.

Jim: I reflect on this question quite often. I hope it’s clear from our comments here that Verger’s objective is to never stop learning, never stop evolving. This is true for our ESG approach and for all aspects of our business.

I’ll highlight one more example on the business side. Recently, in pursuing charitable initiatives, we’ve focused on finding partnerships that connect Verger to its community, its industry, and target specific ESG issues. To start, Verger has partnered with HBCUvc, a non-profit that develops the next generation of venture capital leaders in communities where entrepreneurs face barriers to accessing capital. This initiative also ties back to our long-term investment process, as we are constantly seeking out more diverse talent across our manager portfolio and see a role to play in growing this talent pool over the long-term.

Vicki mentioned earlier that we are up for the challenge. We certainly are. And we will meet this challenge by staying focused on our mission and staying hungry for opportunities to grow and change.

[1] Verger defines diversity in the portfolio as women or minority-owned investment management firms or those for which at least 25% of ownership is held by women or racial/ethnic minorities. Verger Capital Fund figures as of 3/31/2022.


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