Easy Things You Can Do To Have An Impact

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Presentation by Steve Heim, Boston Common Asset Management, at the Take Action! 2010 Impact Investing Conference in Boston.

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Easy Things You Can Do To Have An Impact

  1. 1. BOSTON COMMON ASSET MANAGEMENT, LLC Take Action! Boston 2010 Easy Things You Can Do To Have An Impact September 16, 2010 Steven Heim, Director of ESG Research & Shareholder Engagement Boston Common Asset Management, LLC 84 State Street, Suite 940, Boston, MA 02109 702 Marshall Street, Suite 611, Redwood City, CA 94063 Tel: (617) 720-5557 Fax: (617) 720-5665 Web: www.bostoncommonasset.com [email_address]
  2. 2. Integrated Investing Financial Return & Social Change Financial Factors Sustainability Factors Sustainable Financial Returns Results Fundamentals Valuation End-Market Growth Social Governance Environmental Integrated Investment Portfolio Shareholder Engagement
  3. 3. ESG Investment Matrix The information provided in this report should not be considered a recommendation to purchase or sell any particular security. There is no assurance that the securities discussed herein will remain in the account’s portfolio at the time you receive this report or that securities sold have not been repurchased. The securities discussed do not represent an account’s entire portfolio and in the aggregate may represent only a small percentage of an account’s portfolio holdings. It should not be assumed that any of the securities transactions or holdings discussed were or will prove to be profitable, or that the investment recommendations or decisions we make in the future will be profitable or will equal the investment performance of the securities discussed herein. Stock Selection ESG Research Portfolio Construction Quantitative Screening
  4. 4. Sustainable Guidelines Example: Climate Change <ul><li>Favor investment in companies that: </li></ul><ul><ul><li>Develop and market renewable energy technology </li></ul></ul><ul><ul><li>Provide products or services to increase energy efficiency </li></ul></ul><ul><ul><li>Develop innovative programs to reduce direct and indirect GHG emissions </li></ul></ul><ul><ul><li>Achieve significant progress in cutting greenhouse gas emissions </li></ul></ul><ul><ul><li>Respond to Carbon Disclosure Project </li></ul></ul><ul><li>Avoid investment in the following types of companies: </li></ul><ul><ul><li>Major coal producers </li></ul></ul><ul><ul><li>Major producers of coal-to-liquids fuels without plans for carbon sequestration </li></ul></ul><ul><ul><li>Electric utilities that primarily use coal fired generation </li></ul></ul><ul><ul><li>Major opponents of federal climate change policies </li></ul></ul>
  5. 5. Investing in Sustainability Environment We invest in companies… Whose products are part of the solution Whose technologies enable cleaner manufacturing/products Whose product profiles include sustainable products Whose practices promote sustainability Vestas Wind Systems First Solar Praxair Cummins Emerson Electric Honda Staples Canon The information provided in this report should not be considered a recommendation to purchase or sell any particular security. There is no assurance that the securities discussed herein will remain in the account’s portfolio at the time you receive this report or that securities sold have not been repurchased. The securities discussed do not represent an account’s entire portfolio and in the aggregate may represent only a small percentage of an account’s portfolio holdings. It should not be assumed that any of the securities transactions or holdings discussed were or will prove to be profitable, or that the investment recommendations or decisions we make in the future will be profitable or will equal the investment performance of the securities discussed herein.
  6. 6. ESG Initiatives Beyond Screening <ul><li>To improve the corporation’s long-term social and environmental performance and promote sustainable growth, we initiate: </li></ul><ul><ul><ul><li>Constructive Dialogue with Corporate Management </li></ul></ul></ul><ul><ul><ul><li>Targeted Data Gathering </li></ul></ul></ul><ul><ul><ul><li>Shareholder Resolutions and Representation at Annual Shareholders Meetings </li></ul></ul></ul><ul><ul><ul><li>Collaboration with US and International Organizations </li></ul></ul></ul><ul><ul><ul><li>Public Policy Testimony </li></ul></ul></ul><ul><ul><ul><li>Proxy Voting to Favor Best Practices </li></ul></ul></ul>The information provided in this report should not be considered a recommendation to purchase or sell any particular security. There is no assurance that the securities discussed herein will remain in the account’s portfolio at the time you receive this report or that securities sold have not been repurchased. The securities discussed do not represent an account’s entire portfolio and in the aggregate may represent only a small percentage of an account’s portfolio holdings. It should not be assumed that any of the securities transactions or holdings discussed were or will prove to be profitable, or that the investment recommendations or decisions we make in the future will be profitable or will equal the investment performance of the securities discussed herein.
  7. 7. Collaborations Work with U.S. & International Organizations <ul><li>Leverage via Institutional Investor Networks </li></ul><ul><ul><ul><li>ASrIA – Association for Sustainable & Responsible Investment in Asia </li></ul></ul></ul><ul><ul><ul><li>Carbon Disclosure Project – Institutional investors asking companies for climate change data & disclosure </li></ul></ul></ul><ul><ul><ul><li>Conflict Risk Network – Initial focus on Sudan </li></ul></ul></ul><ul><ul><ul><li>Eurosif – European Sustainable Investment Forum </li></ul></ul></ul><ul><ul><ul><li>Investor Environmental Health Network – Focus on toxics and safer chemicals </li></ul></ul></ul><ul><ul><ul><li>Interfaith Center on Corporate Responsibility – For faith-based and other institutional investors </li></ul></ul></ul><ul><ul><ul><li>Investor Network on Climate Risk a project of Ceres - for institutional investors & financial institutions </li></ul></ul></ul><ul><ul><ul><li>Social Investment Forum – International Working Group, Sustainable Investment Research Analyst Network, Indigenous Peoples Working Group </li></ul></ul></ul><ul><ul><ul><li>UNPRI (Principles for Responsible Investment) – A leading global network for institutional investors </li></ul></ul></ul>
  8. 8. Multiple Stakeholders Environment Social Governance Government Shareholders Ecology Customers Employees Communit y Corporation Management
  9. 9. Multi-Stakeholder Engagement <ul><li>Types of Engagement </li></ul><ul><ul><li>Direct Engagement with Companies and Industries </li></ul></ul><ul><ul><li>Coalition Building </li></ul></ul><ul><ul><li>Cross-Industry Collaboration </li></ul></ul>
  10. 10. <ul><li>Identify core issue to client mission and corporate operations </li></ul><ul><ul><li>Coal-fired, electric power plants generate over a quarter of total U.S. greenhouse gas emissions </li></ul></ul><ul><ul><li>JPMorgan Chase & Co. has been lead lender for utilities developing new coal-fired power plants in the U.S. </li></ul></ul><ul><ul><li>Regulation of greenhouse gas emissions is a risk to lenders </li></ul></ul><ul><li>Engage company management </li></ul><ul><ul><li>File shareholder proposal asking JPMorgan to publicly disclose its due diligence process when extending loans to utilities with new fossil fuel plants under construction </li></ul></ul>Direct Engagement Coal Financing
  11. 11. <ul><li>Outcomes </li></ul><ul><ul><li>JPMorgan reports publicly on number of financial transactions to utilities with coal-fired generation under development, and how it implemented enhanced due diligence for those transactions </li></ul></ul><ul><ul><li>Subjects all future engagements with companies involved in mountaintop removal mining to “enhanced review” </li></ul></ul><ul><li>Next Steps </li></ul><ul><ul><li>Take engagement beyond reporting to reduce lending to electric utilities developing new coal-fired generation </li></ul></ul>Direct Engagement Coal Financing
  12. 12. Cross-Industry Collaboration Mineral trade and conflict in the Democratic Republic of Congo <ul><li>Identify core issue to client mission and corporate operations </li></ul><ul><ul><li>More than 5.4 million casualties have resulted from conflict in the DRC, fueled in part by a lucrative trade in minerals that supply the electronics, automotive, and aerospace industries, food producers, medical device companies and tool manufacturers (e.g. cobalt and tantalum) </li></ul></ul><ul><ul><li>Procurement of key materials from unstable regions presents business risks </li></ul></ul>
  13. 13. Cross-Industry Collaboration Mineral trade and conflict in the Democratic Republic of Congo <ul><li>Engage company management </li></ul><ul><ul><li>Investors organize to publicly condemn use of minerals sourced in the DRC </li></ul></ul><ul><ul><li>Investors contact over 100 companies in various industries, asking them to identify where their raw materials originate </li></ul></ul><ul><li>Outcomes </li></ul><ul><ul><li>Industries used different approaches, which investors shared broadly to establish new tools </li></ul></ul><ul><ul><li>Identified “leaders” and “laggards” and encouraged companies to meet and exceed steps taken by peers </li></ul></ul><ul><li>Next Steps </li></ul><ul><ul><li>Continue to facilitate multi-stakeholder process </li></ul></ul>

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