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Investment Approach to Core Issues

Environmental Stewardship

Because stress on Earth’s limited resources impacts people and ecosystems worldwide, we view environmental stewardship as a bottom-line issue for any institution. For us as sustainable investors, that means seeking out corporations and bond issuers who are transparent on environmental performance, clear on sustainability goals, and able to demonstrate ongoing commitment to environmental stewardship.

Specifically, when looking at investments, Prentiss Smith & Company may consider environmental sustainability factors such as waste and water management, deforestation, sustainable sourcing, air quality and chemical safety, along with our priority focus on climate change. We believe our investment strategy can help drive progress, by rewarding institutions that take these issues seriously with investment capital. We additionally seek out investments in companies whose products can actively advance environmental stewardship, e.g. by measuring air and water quality.

Our research always emphasizes transparency. In general, institutions that track and report environmental data are more likely to take action on that data, because they want to demonstrate to shareholders and customers that they are committed to progress. For larger institutions, a corporate social responsibility (CSR) or sustainability report is a good indication of this commitment and provides a good starting point for our research on environmental stewardship issues. For smaller institutions whose reporting may be resource-constrained, we frequently engage in direct dialogue to get our questions answered.

The most straightforward path from transparency to action is via goal-setting. When institutions set ambitious but achievable goals in areas like emissions and energy use, waste and water management, or supply chain impacts including deforestation and good sourcing practices, we believe they demonstrate a significant commitment to both long-term environmental and financial sustainability. Once these goals are set, companies and bond issuers under intense shareholder and public scrutiny can ill afford to go astray. In the most forward-looking institutions, individual compensation may be tied to such goals, making leadership’s commitment to sustainability a personal one as well.

Finally, for established institutions in particular, we take a careful look at their record. We seek clear progress from those who have tracked and reported environmental data over multiple years; for those who haven’t (typically due to newness, size and resourcing constraints, or prior leadership strategy), we look at the legal record, at how products and services are being developed and delivered today, and how governance structures are (or are not) evolving to help support greater environmental stewardship.

Of course, we also screen from consideration any investments we consider to be clearly destructive, negligent, or unresponsive to current environmental concerns, including mining and fossil fuel companies. But ultimately, we go beyond negative screening to evaluate the full picture in supporting the greatest possible environmental progress.
For more information on how Prentiss Smith & Company rewards good environmental stewardship in our approach to investment, please contact us.