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Separate Account Managers in Sustainable and Responsible Investing

Strategy Profile:
Portfolio 21 Global Equity Fund Download as PDF for Printing PDF Download

Jump to: About This Strategy | About The Company | Specific Screening Information by Category


About This Strategy - [Return to Top]

Assets Under Management (AUM): $500M (in US$ millions)

Required Minimum: $1 million

Benchmark used: MSCI ACWI

Strategy type: International/Global

Strategy description: Portfolio 21’s passion is finding exceptional companies that provide competitive returns for investors while mitigating the environmental impact of their business activity, operating in a manner respectful of society and managing within ecological limits. The firm’s rigorous selection criteria integrates financial and environmental research to seek high quality growth companies at a reasonable price, resulting in a conservative equity strategy with positive risk-adjusted return. Portfolio 21 concentrates on owning outstanding companies as opposed to mirroring a market index. Portfolio management is geared to provide exposure to opportunities throughout the world and across economic sectors. Global diversification: Historically, over half of the portfolio has been held in companies outside of the United States, with exposure to most developed countries and some emerging markets. Economic sector diversification: The portfolio has large over weights and under weights to sectors, based on the most attractive opportunities. While the portfolio tends to have exposure to most sectors, there is no direct exposure to fossil fuels or extractive industries due to environmental risk. Size of companies: The team considers companies of all sizes, but invests predominantly in large companies. Portfolio 21 uses a bottom-up approach, concentrating on the specific characteristics of individual companies from the global universe of securities. From this broad and inclusive opportunity set, the team identifies companies that have good growth potential and excellent environmental practices, applying financial, social and environmental criteria appropriate to a company’s economic sector and industry. Portfolio 21 believes that valuation is an important aspect of security selection, and analyzes a company’s stock price relative to its history, the market and its peers in an effort to avoid overpaying for excellent companies. All investments include risk and have the potential for loss as well as gain. Our investment strategy generally includes investments in foreign securities, which are subject to the risks of currency fluctuations, differing accounting standards, as well as political and economic instability, particularly when investing in emerging markets. Our environmental, social, and governance (“ESG”) policies could cause us to make or avoid investments that may result in underperforming similar portfolios that do not have an ESG policy. Diversification does not assure a profit or protect against a loss. Portfolio 21 publishes this information to convey general information about our firm's investment philosophy and not for the purpose of providing investment advice. You should consult an advisory representative of Portfolio 21 for investment advice regarding your specific situation.

Strategy web link: External Link

 

About The Company - [Return to Top]

Institution Name:
Portfolio 21

Approach to Sustainable & Responsible Investment: Portfolio 21 is a private company, independent and employee owned. Founded in 1982 and headquartered in Portland, Oregon, the firm is a pioneer and ongoing leader in environmental investing. The Portfolio 21 investment management team features a group of experienced investment and research professionals who share a deep commitment to investment excellence and environmental stewardship. Drawing on the firm’s proprietary database of information and research methods, built and honed over thirty years as a leader in environmental investing, the team collaborates to make investment decisions for all clients.

Research conducted: Internally

Researcher name: Staff Research Analysts

Contact info:
721 NW Ninth Ave., Ste. 250
Portland, OR 97209-3449
United States
Phone: (877)211-0034
Fax: (503)224-5633
Email: welcome@portfolio21.com
Web: http://www.Portfolio21.com (Opens in a new window)

 

Specific Screening Information by Category - [Return to Top]

Environment

  • Climate / Clean Technology: Positive Investment - Portfolio 21 seeks companies that are involved in the development and sale of clean technology goods and products. We believe that impacts of climate change are driving the demand for low or no greenhouse gas emitting technologies.
  • Pollution / Toxics: Positive Investment - Portfolio 21 believes that companies focused on the reduction of resource consumption and utilization of non-toxic substances will be more competitive.
  • Other Environmental: Positive Investment - Companies shall demonstrate an understanding of the ecological limits that exist for their business and address their specific impact areas through a range of verifiable initiatives.

Social

  • Community Development: Combination of Positive and Restricted/Exclusionary Strategies - If a client would like community development investments in combination with a fixed or balanced portfolio we can assist with recommendations.
  • Diversity & Equal Employment Opportunity: Combination of Positive and Restricted/Exclusionary Strategies - Companies governance policies and practices shall be transparent, supportive of stakeholder engagement, board diversity and overall ethical conduct.
  • Human Rights: Combination of Positive and Restricted/Exclusionary Strategies - Companies shall assure that they are not directly, or indirectly through their supply chain, involved in egregious labor practices.
  • Labor Relations: Combination of Positive and Restricted/Exclusionary Strategies - Companies shall demonstrate strong employee relations initiatives and low turnover.
  • Sudan: Combination of Positive and Restricted/Exclusionary Strategies - Portfolio 21 monitors if the company has programs, guidelines, and policies in place to avoid corrupt business dealings.

Governance

  • Board Issues: Combination of Positive and Restricted/Exclusionary Strategies - Companies' governance policies and practices shall be transparent and supportive of stakeholder engagement, board diversity, and overall ethical conduct.
  • Executive Pay: Combination of Positive and Restricted/Exclusionary Strategies - Companies' governance policies and practices shall be transparent and supportive of stakeholder engagement, board diversity, and overall ethical conduct.

Products

  • Alcohol: Restricted/Exclusionary Investment - Portfolio 21 does not invest in companies involved exclusively in the alcoholic beverage industry, or in diversified companies that derive more than a small percentage of revenues from the manufacture of alcohol.
  • Animal Welfare: Restricted/Exclusionary Investment - Portfolio 21 evaluates companies involved in animal testing on a case by case basis, depending on purpose and methods. For instance, pharmaceutical companies are often required by law to conduct animal testing prior to a drug’s approval. In cases where animal testing is not a regulatory requirement, Portfolio 21 prefers to invest in companies that do not test on animals. If a company is involved in animal testing, Portfolio 21 ensures it is actively working to develop alternatives.
  • Defense/Weapons: Restricted/Exclusionary Investment - Portfolio 21 takes a cautious investment approach to companies that are associated with the military and/or the production of weapons. Warfare and conflict cause widespread human and ecological devastation, therefore we limit our exposure to companies involved in the manufacturing of weapons and military contracting for weapons-related products and services. However, we do invest in some companies that maintain military contracts as we recognize that the military often provides research and development (R&D) funding for new technologies that provide inherent environmental benefit (e.g., renewable energy). These R&D contracts can enable beneficial new technologies to be commercialized for both military and civilian use.
  • Gambling: Restricted/Exclusionary Investment - Portfolio 21 does not invest in companies with direct interest in gambling. Portfolio 21 has chosen to avoid this sector based on the social problems, including crime, prostitution, compulsive gambling behavior and drug and alcohol abuse that often exist in parallel with the sector. Additionally, Portfolio 21 views this sector’s business model as unsustainable, wrought with poor business practices, and high exposure to labor management concerns.
  • Tobacco: Restricted/Exclusionary Investment - Portfolio 21 does not invest in companies that generate the majority of their revenues from the production or sale of tobacco. According to the World Health Organization, tobacco kills up to half of its users and consumption of tobacco products is increasing on a global basis, particularly in low and middle income countries. Cigarette smoke contains a complex mixture of over 4000 chemicals, over 60 known to cause cancer. These chemicals are produced by the burning of tobacco and its additives. Many tobacco companies purchase their tobacco leaves from large suppliers located in emerging markets where labor, safety, and environmental regulations are rarely enforced. The lack of regulations, combined with the labor and resource intensity of this crop, exposes farm workers to pesticide and nicotine poisoning while creating biodiversity and land pollution concerns.

Other

  • Other/Qualitative: Fossil Fuel: Portfolio 21 does not invest in companies directly involved in the extraction and production of fossil fuels ─ coal, oil, and natural gas. Natural gas has a lower greenhouse gas (GHG) emissions profile than either oil or coal. Despite natural gas’s lower GHG profile, it is a combustible mixture of hydrocarbon gases, formed primarily of methane. Deposits are found at varying depths beneath the Earth’s crust, both onshore and offshore, requiring the use of both conventional and unconventional extraction methods. Given the elevated environmental risks associated with extraction, Portfolio 21 will not invest in extraction and production. However, due to the current limitations of renewables (in terms of current capacity and financial attractiveness), and the lower GHG profile of natural gas, Portfolio 21 will invest in companies involved in the transmission and distribution of natural gas as well as in utilities that utilize natural gas as a fuel source. Nuclear: Portfolio 21 will invest only in energy companies that have limited capital investments dedicated to the expansion of new nuclear generation. We do not support the expansion of nuclear power because we consider the cost of new nuclear installations to be high relative to the environmental, health, and safety risks associated with nuclear reactors and waste. A typical reactor will generate 20 to 30 tons of high-level nuclear waste annually. There is no known way to safely dispose of this waste, which remains dangerously radioactive until it naturally decays, which according to the U.S. Environmental Protection Agency is approximately 10,000 years.
  • Shareholder Engagement - Private Dialogue: Conducted with companies on environmental, social or governance issues
  • Proxy Voting: Actively voted by my institution for this investment strategy in support of environmental, social or governance issues in accordance with formal guidelines

 

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