Responsible Investing: Is Your Portfolio Melting the Polar Caps?

Responsible investing means many things, but I think we can agree investing in our planet makes sense. Even cents? 

So climate change is happening. Scientists have told us that the earth has warmed 0.8 percent since the late 1800s. They have also reported that the concentration of carbon dioxide has gone from 280 parts per million in 1750 to over 400 parts in 2013. But what does this have to do with my 401k or investment portfolio you ask? Quite a lot, actually.

When you click the BUY button in your brokerage account, you are becoming an owner in the stock of a company, just as if you were buying a pint of ice cream from the local Whole Foods (WFM) USSIF’s most recent paper, Investing to Curb Climate Change, outlines the various, fairly simple ways people can make positive changes to their portfolio when it comes to sustainable investing.

Direct ownership of stocks

Every investor decides whether or not a tobacco company or polluting oil company is in their list of stocks. If you agree with their business practices, you can easily sell or divest yourself of these firms. When you have some free time, consider reviewing a company's 10k Report (Section 1A discusses any risk factors the company feels it may be facing).

Or go to the company website and search for a sustainability report. If you don’t see one, well, don't panic. But consider whether such a report would be meaningful to you as an investor. If the company has a link to a corporate social responsibility (CSR) report, or a profile on CSRHub, see what kind of targets they have set for reducing CO2.

Be sure to vote your proxy. You voted in the last Presidential election, right? Perhaps even more important than this is to vote on any shareholder resolutions listed. Do you want to have a say as to whether or not Denny’s (DENN) should be using cage-free eggs? I do.

Don’t be bashful. If you have owned a stock for at least one year, you may be eligible to voice concern through a fairly simple 500-word statement to the CEO and Board of Directors. This proposal could be put on millions of proxy statements and even give you a five minute spot to speak directly to the CEO and executives of any company at their annual shareholder meeting.

Mutual funds or ETFs

Often investors own funds which hold individual stocks. If that is the case, learn more about the funds. In the prospectus of the fund, it will list every single stock position along with an investment philosophy. Because you are a paying customer of these fund families, you have every right to contact them to ask if they are considering the integration of any environmental or social screen within the fund. If they say no, you can ask them why not. 

Banking

Though a component of the overall finance world, where we bank can also be a sustainable investment decision. For instance, some banks are still lending to companies involved in mountaintop removal coal mining. One report, the Annual Coal Finance Report Card, provides bank customers with a list of the banks involved in such lending. 

Investing ideas

We compiled a list of stocks based on data from our partner CSRHub, searching for those names with high environmental ratings.

First we used CSRHub's database to find publicly traded companies with an environmental score of 70 or higher, meaning they earn high marks for initiatives like environmental policy and reporting, waste management, energy use, and climate change policies.

To limit our results, we only included publicly traded businesses that also scored well overall - with a rating of 65 or higher across all categories combined.

We were left with three stocks on our list. In due time, perhaps, sustainable and responsible investing will be the norm.

Click on the interactive chart below to see data over time. 

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Do you take climate change into consideration when you invest? Use the list below as a starting point for your own analysis.  

1.Pier 1 Imports, Inc. (PIR, Earnings, Analysts, Financials):Operates as an importer and specialty retailer of imported decorative home furnishings and gifts in the United States, Canada, and Mexico. Market cap at $2.07B, most recent closing price at $19.02. 

CSRHub Environmental rating: 86. CSRHub Overall rating: 66.

2.XO Group Inc. (XOXO, Earnings, Analysts, Financials):Provides multiplatform media services to the wedding, newlywed, and pregnancy markets in the United States. Market cap at $331.28M, most recent closing price at $13.25.

CSRHub Environmental rating: 75. CSRHub Overall rating: 67. 

3.Valassis Communications Inc. (VCI, Earnings, Analysts, Financials):Operates as a media and marketing services company primarily in the United States. Market cap at $1.11B, most recent closing price at $28.11.

CSRHub Environmental rating: 78. CSRHub Overall rating: 67. 

Use Kapitall's Tools: Looking for ways to analyze this list?Use this article snapshot as a launch pad: Simply click on the links, and use Kapitall's tab navigation to browse through the data...

  

Analyze These Ideas: Getting Started

Read descriptions for all companies mentioned Access a performance overview for all stocks in the list Compare analyst ratings for the companies mentioned Compare analyst ratings to annual returns for stocks mentioned Real-Time Opinion: Scan the latest tweets about these companies (feed will open in a new window)

Dig Deeper: Access Company Snapshots, Charts, Filings

Pier 1 Imports, Inc.(PIR, Chart, Download SEC Filings) XO Group Inc.(XOXO, Chart, Download SEC Filings) Valassis Communications Inc.(VCI, Chart, Download SEC Filings) Adapted from the original Sustainvest blog post, available here. List compiled by Emily Smykal. Environmental ratings sourced from CSRHub. Analyst ratings sourced from Zacks Investment Research. All other data sourced from Finviz. Dale Wannen, a Kapitall contributor, is the coolest eco-conscious advisor out there, and President of Sustainvest Asset Management, an investment advisory firm focused on integrating environmental, social and governance (ESG) principles into investment portfolios. He frequently writes and speaks on the topic of sustainable and responsible investing and believes that triple bottom line investing is something that all investors should be approaching. To learn more, Dale can be reached at dale@sustainvestmanagement.com. Sustainvest Asset Management, LLC is a registered investment advisor based in Petaluma, CA which focuses on sustainable and responsible (SRI) investing.  As an independent practice, we are able to give clients an objective view without any conflict of interests. This independence allows us to make decisions in the best interest of our clients. Sustainvest Asset Management does not sell financial products and is free to explore the best solutions for our client’s needs. Disclosure: The information contained in this letter has been prepared from sources we believe to be reliable, but we make no guarantee as to its accuracy. No information herein is intended as an offer or solicitation of an offer to sell or buy or as a sponsorship of any company or entity. Opinions expressed herein are subject to change without notice. The writings of authors do not necessarily represent the views of Sustainvest Asset Management LLC. There are certain risks involved with investing.

 

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