Morgan Stanley
  • Women Financial Advisor Forum
  • Sep 13, 2021

Three Lionesses of Socially Responsible Investing

The Lily Group’s Lily Engelhardt, her daughter Natalie Engelhardt, and LiliAnn Stafford manage a large book of clients with one priority in common: the desire to have a positive impact on the world.

Only when the last tree has died and the last river has been poisoned and the last fish has been caught will we realize we cannot eat money. 

This Cree Indian proverb, taped to the back of a computer monitor, is one of the first things you see when walking into the office of the three women who are The Lily Group. High up on the 43rd floor of One Penn Plaza in New York City, lush green plants flourish in the bright light from the west-facing floor-to-ceiling windows. This is where founder Lily Engelhardt, her daughter Natalie Engelhardt and LiliAnn Stafford put their heads together each day to manage a large book of clients who have one priority in common: the desire to have a positive impact on the world – the environment, people and communities.

That’s what The Lily Group has been doing since the start of Lily’s career in 1981, yet it was an unconventional approach for the times. 

Anti-Apartheid Activism

It began with the anti-apartheid movement. Lily, at age 23, had come to the U.S. from Israel in 1980 to complete her engineering studies. She got a job in 1981 at a small brokerage firm in New York City that managed investments for a lot of union pension funds. (She met LiliAnn during that job interview, and they’ve been together ever since.)

Gold funds were quite popular then. Yet given apartheid and the social inequity in South Africa then, she and her clients felt it was wrong to invest South African minded gold. So her firm took a stand by keeping their clients out of gold funds. This led to referrals and calls from other pension funds, which also wanted to divest out of that country.

“It ended up being a way to distinguish ourselves,” said Lily, “but doing nothing was never an option. It is one thing to read the papers and say, ‘poor South Africa;’ quite another to say ‘what can we do to help?’ Society cannot just stand by; we have a responsibility as human beings to do something.”

Push for Domestic Partnerships

In 1987, after having transitioned to Morgan Stanley and with a reputation for being progressive, Lily got a call from the executor of the will of a well-known figure in the gay rights movement amid the HIV/AIDs epidemic. He wanted to fulfill the wishes of his client to see that his monetary legacy was left to help gay rights efforts.

This led Lily to pursue, with the help of several third-party money managers, a shareholder resolution requesting that a Fortune 500 company provide benefits for gay employees in domestic partnerships. “There were so many people getting sick, needing treatment, but not being able to get it because they weren’t covered by their partner’s insurance,” said Lily.

The resolution passed, and the company became one of the first of many to start recognizing employee domestic partnerships. 

Calls for Environmental Protections

Soon the Lily Group found itself taking stands on environmental issues, such as when it stopped investing in the once popular municipal nuclear power bonds. One issuer did not have “good enough” solutions for managing its nuclear waste, Lily explained. “We dug in and got no real answers to our questions on security measures and effects of supporting the power bonds. We wanted to make a stance by not supporting the highly rated AAA and tax-free status for nuclear power plant debt.”

All of these efforts illustrate the power of divesting – of withholding your money when the issuer isn’t doing the right thing. “The truth is, so many foundations and progressive organizations try to highlight and bring aid to causes, but we all know that money speaks volumes, and when people see the investment dollars going elsewhere, it’s a tangible awakening,” said Natalie, who joined her mom’s group in 2014 after working at L’Oreal in global product development, then launching and selling her own business, then entering wealth management at a boutique firm.

Today, the movement of ethically aware investors has a name: socially responsible investing, or impact investing. “Instead of taking a negative screen,” added Natalie, “we can now seek out those companies that are taking proactive measures toward social or environmental justice.” Some examples range from looking for high R&D investments in alternative energy by traditional oil companies, to financial institutions with the best workplace LGBTQ inclusion, to corporations with the highest levels of women among their boards or management ranks. They also do research on plastics usage, greenhouse gas emissions, food waste, sustainable palm oil sourcing and transparency around pay equality, to name a few.

The Lily Group is currently active in shareholder resolutions that will push transparency on minimum wage and equal pay. “Half the battle has been getting companies to be transparent,” said Natalie. “We, along with our partner asset managers, present companies with research that shows how diversity can increase margins and performance. It’s not only about doing the right thing; it’s about doing the smart thing.”

Lily, LiliAnn and Natalie are not about “forcing anyone to do anything, but we can bring a constructive conversation to the table, one that the public needs to have,” said Lily.

Lilies and Lionesses

A recent Huffington Post article referred to the Lily Group as “a pack of lionesses: strong, fierce, forward-thinking women who are doing their part to protect the pride known as humanity,” and they’re okay with it, said Lily: “I’ve always said we are in the belly of the beast and that we should use our position to be ethical investors.”

And that’s what keeps them going. Natalie, a Certified Financial Planner, CFP ®, likes to describe herself as “an activist and a financial advisor.” She points out that many clients are women, and the group prides themselves on empowering them through financial education.

“We thrive on our ability to help people, not just financially,” said LiliAnn. “We help people, who want to be activists, figure out a way to do make a tangible difference in the world, and that’s a great feeling.”