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Separate Account Managers in Sustainable and Responsible Investing

Strategy Profile:
Brown Advisory Large-Cap Sustainable Growth Strategy 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): $298M (in US$ millions)

Required Minimum: Typically $5 million

Benchmark used: Russell 1000® Growth Index

Strategy type: Equity Large Cap

Strategy description: The Brown Advisory Large-Cap Sustainable Growth Strategy seeks competitive risk-adjusted returns over a full market cycle through a concentrated portfolio of companies that we believe offer durable growth potential, sustainable competitive advantages and compelling valuations. The Brown Advisory Large-Cap Sustainable Growth Strategy due diligence process focuses on both fundamental and environmental business drivers. All portfolio decisions are guided by a detailed and constantly updated risk/reward analysis model. The portfolio will typically hold 30 to 40 securities; a self-imposed “one in, one out” discipline is used to consistently test portfolio holdings against new ideas. Risk is managed through intensive research into business quality, as well as disciplined portfolio adjustment based on valuation considerations.

Strategy web link: External Link

 

About The Company - [Return to Top]

Institution Name:
Brown Advisory

Approach to Sustainable & Responsible Investment: Brown Advisory is a leading independent investment firm that offers a wide range of solutions to institutions, corporations, nonprofits, families and individuals. Our mission is to make a material and positive difference in the lives of our clients by providing them first-rate investment performance, customized strategic advice and the highest level of personalized service. We follow a philosophy that low-turnover, concentrated portfolios derived from sound bottom-up fundamental research can generate attractive performance results over time. We have a culture and firm equity ownership structure that help us attract and retain professionals who share those beliefs, and we follow a repeatable investment process that helps us stay true to our philosophy

Research conducted: Internally

Researcher name: In the Brown Advisory Large-Cap Sustainable Growth Strategy, MSCI and Ethix are utilized for initial ESG screens.

Contact info:
901 South Bond Street, Suite 400
Baltimore, MD 21231
United States
Phone: 4105375400
Web: http://www.brownadvisory.com (Opens in a new window)

 

Specific Screening Information by Category - [Return to Top]

Environment

  • Climate / Clean Technology: Positive Investment - The Strategy believes that companies are operating in a resource-constrained environment. Within this rapidly changing landscape, leading companies that seek to drive greater efficiency have the potential to outperform those companies that do not. The Strategy integrates sustainability research into the fundamental bottom-up equity research process. The extent to which sustainability factors, including a company’s operating efficiency, impact of a company’s long-term growth outlook is, for example, a significant component of our investment analysis.
  • Pollution / Toxics: Positive Investment - We seek to identify companies that are making a concerted effort to reduce waste generation, and the use of hazardous or toxic substances. The Strategy integrates sustainability research into the fundamental equity research process. This includes an analysis of how a company manages waste production and its future plans for waste reduction. The extent to which sustainability factors impact a company’s long-term growth outlook is a significant component of the Strategy's investment analysis.
  • Other Environmental: Positive Investment - While Brown Advisory employs bottom-up fundamental analysis, the Strategy also believes that rising population growth, resource scarcity, water scarcity and higher energy costs are creating significant environmental risks and opportunities. The Strategy aims to identify companies that have long-term focused management teams who are aware of the factors stated above; these companies are better aligned with the Strategy's investment philosophy and more likely to achieve attractive long-term growth.

Social

  • Community Development: Positive Investment - The Strategy takes into consideration the positive impact that a company’s products or operations have on a community. The portfolio managers believe that companies that positively impact community development will increase shareholder value.
  • Diversity & Equal Employment Opportunity: Positive Investment - The Strategy seeks to identify a company’s exposure to risks associated with diversity and labor relations during the due-diligence phase of the fundamental equity research process. If the portfolio managers believe that diversity and equal employment opportunity issues will negatively impact shareholder value, we will seek further clarification from management. The portfolio managers also take into consideration a company's ability to attract and retain talent.
  • Human Rights: Positive Investment - The Strategy seeks to identify a company’s exposure to risks associated with human rights during the due-diligence phase of the fundamental equity research process. If the portfolio managers believe that human rights issues will negatively impact shareholder value, we will seek further clarification from management. Moreover, the Strategy takes into consideration the positive impact that a company’s products or operations have on human rights issues. The portfolio managers believe that companies that work to improve existing human rights issues will increase shareholder value.
  • Labor Relations: Positive Investment - The Strategy seeks to identify a company’s exposure to risks associated with labor relations during the due-diligence phase of the fundamental equity research process. If the portfolio managers believe that labor relations will negatively impact shareholder value, we will seek further clarification from management. Moreover, the Strategy takes into consideration the positive impact that a company’s operations have on labor relations. The portfolio managers believe that companies that work to improve existing labor issues will increase shareholder value.

Governance

  • Board Issues: Positive Investment - The Strategy seeks to identify risks associated with board issues and executive pay. If we believe governance issues will negatively impact shareholder value, we will seek further clarification from management. Moreover, the portfolio managers believe that companies with strong governance practices will increase shareholder value.
  • Executive Pay: Positive Investment - The Strategy seeks to identify risks associated with board issues and executive pay. If we believe governance issues will negatively impact shareholder value, we will seek further clarification from management. Moreover, the portfolio managers believe that companies with strong governance practices will increase shareholder value.

Products

  • Alcohol: No Screens - The Strategy addresses the risks associated with the sale and manufacturing of alcohol during the due diligence discovery phase of the fundamental equity research process. If we believe that business involvement with alcohol will negatively impact shareholder value, we will seek further clarification from management.
  • Animal Welfare: No Screens - The Strategy addresses the risks associated with animal welfare during the due diligence discovery phase of the fundamental equity research process. If we believe that animal welfare issues will negatively impact shareholder value, we will seek further clarification from management.
  • Defense/Weapons: No Screens - The Strategy addresses the risks associated with defense and weapons business involvement during the due diligence discovery phase of the fundamental equity research process. If we believe that business involvement with defense and weapons will negatively impact shareholder value, we will seek further clarification from management.
  • Gambling: No Screens - The Strategy addresses the risks associated with gaming and gambling during the due diligence discovery phase of the fundamental equity research process. If we believe that business involvement with gambling will negatively impact shareholder value, we will seek further clarification from management.
  • Tobacco: No Screens - The Strategy addresses the risks associated with the sale and manufacturing of tobacco during the due diligence discovery phase of the fundamental equity research process. If we believe that business involvement with tobacco will negatively impact shareholder value, we will seek further clarification from management.

Other

  • Other/Qualitative: Research Process: We provide an investment strategy that adheres to the belief that Environmental Business Advantages (EBA) can drive financial performance. The Strategy focuses on companies that exhibit EBA, defined by the managers as positive environmental attributes that have the potential to drive financial performance and stock valuation. This EBA-driven approach is a focused form of sustainable investing that looks for specific environmental investment situations: tangible examples of environmentally driven revenue growth, cost improvement, or enhanced franchise value. The process includes a business-focused assessment of the company’s environmentally-driven opportunities, such as particular product lines which satisfy demand for an environmental solution, or a business model whose environmental attributes convey an overall cost advantage or other advantage to the company. The managers stress-test their environmental thesis about each potential portfolio holding through interviews with customers, competitors and, in particular, thorough in-depth discussions with the company’s senior executives and sustainability personnel. A Fundamental Risk Assessment is also published for every company in the Strategy with the goal of uncovering any undesired risks associated with the company that might not be revealed by a traditional investment research review. The managers look at a variety of factors, including environmental impacts/benefits of the company’s operations, distribution systems and facilities; the quality of the company’s environmental policy and management system; the company’s compliance with environmental regulations, and the potential for future violations inherent in the company’s business model; the quality of the company’s resource management practices (level of consumption of raw materials, efficient use and reuse of materials, effective management of waste streams); and, the company’s reputational risks as they relate to potential shifts in consumers’ environmental preferences.
  • 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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