An introduction to ESG (Environmental, Social and Governance) Investing from Artifex Financial Group, a leader in ESG portfolio research and management.

1. A Guide to Successful ESGInvesting
C o -Fo u n d er an d C h i ef I n vest m en t O f f i c er
A r t i f ex Fi n an c i al G r o u p
Doug Kinsey,CFP® , AI FA® , CI M A®

2. "Being outdoors,hiking through forests and fields,and
wading the rivers has impacted my thinking about our
world and how we should be good stewards of it.
When it comes to my personal investments, I'm a little
more critical of companies that don't exhibit a
stewardship attitude toward the environment, their
employees,and society in general. In short,I am an
ESGinvestor,and you can be as well."
DougKinsey, CFP®,AIFA®,CIMA®
Chief Investment Officer
"I've always loved nature. But I didn't
really start to care about the
environment until I became a
fly-fisherman."
Artifex ESGpresents | A Guide to Successful ESGInvesting

3. About Artifex ESG
Introduction
Identifying your
preferences
Investment analysis
Conclusion
Resources
04
06
07
09
14
16
Artifex ESG presents | A Guide to Successful ESGInvesting

4. About Artifex ESG
Artifex ESGpresents | A Guide to Successful ESGInvesting

5. Art ifex ESG is an area of concent rat ion wit hin Art ifex
Financial Group, a fee-only Regist ered Invest ment
Advisor and financial planning firm founded in 2006 by
Doug Kinsey, CFP®, AIFA®, CIMA® and Darren Harp,
AIF®. Art ifex works wit h over 220 individual client s
and corporat e 401(k) plans t hroughout t he Unit ed
St at es, and has t hree offices in t he st at e of Ohio.
We st art ed creat ing Environment al, Social and
Governance port folios in 2014 aft er wit nessing
increased demand from our client ele. This has been no
anomaly. According t o USSIF: The Forum for
Sust ainable and Responsible Invest ment , as of
year-end 2015, one out of every five dollars under
professional management in t he Unit ed st at es - $8.72
t rillion or more-was invest ed according t o SRI
st rat egies. Addit ionally, as t his t ype of invest ing has
mat ured, we've been able t o ident ify best -in-class
invest ment opt ions t hrough more advanced screening
t ools and t echnology. We now feel confident in saying
t hat you can int egrat e your personal values int o your
port folio and not sacrifice invest ment ret urns. For
more informat ion on our firm, go t o
www.art ifexfinancial.com/art ifex-esg.
It's exciting when a client's values can be
successfully matched up with investments that
he or she can feel good about,and when the
portfolio shows strong performance over time.
Artifex ESGpresents | A Guide to Successful ESGInvesting

6. There are many t erms for t his t ype of invest ing -
Sust ainable, Responsible, Impact (SRI); Environment al,
Social & Governance (ESG); Impact invest ing; Values
Invest ing; Fait h-Based Invest ing; "Green Invest ing" et c.
We chose ESG as our focus, as it represent s t he
broadest crit eria t hat our client s and our t eam are
most int erest ed in. Impact invest ing is a similar t erm,
but can imply a more act ive st yle of management (i.e.
proxy vot ing for cert ain causes, put t ing fort h invest or
resolut ions on mat t ers, et c.). Fait h-Based invest ing is
cert ainly somet hing we can do for specific client s, but
we don't build our offering around it . So, we set t led on
t he acronym "ESG". You should know t hat t his asset
class, for want of a bet t er t erm, is a bit of a dangerous
place t o t read alone, wit hout t he advice of a qualified
fiduciary firm like ours. There are several reasons t hat
we feel t his way, but here are just a few:
- Bad Investment Vehicles- As t his st yle of
invest ing has grown in popularit y, many
invest ment firms have joined t he part y, from
large Wall St reet firms t o small bout ique shops
wit h t heir own mut ual funds. Many do not have
a very long or consist ent t rack record and some
are ESG in name only.
- Mutual Funds or ETF's may not adequately reflect
your personal preferences - I recent ly reviewed a
new "SRI" Exchange Traded Fund (ETF)
int roduced by a large t rust company only t o find
out t hat Exxon Mobil was t he fourt h largest
holding! I do not know many ESG invest ors who
would find t hat accept able.
- It 's t he Wild West out t here - Wit h so many new
part icipant s in t his space, I believe t hat you
have t o possess some experience t o be able t o
sort out t he good invest ment s from t he bad,
t he t rust wort hy vendor from t he charlat an,
and reliable research from t hat which is
unt est ed and not applicable.
While not a "how-t o" guide, It 's my hope t hat t his
report will help you underst and t his st yle of invest ing,
avoid mist akes, and aid you in t he select ion of a
qualified ESG invest ment manager or consult ant .
"Sustainable investors aim for strong financial
performance,but also believe that these
investments should be used to contribute to
advancements in social,environmental and
governance practices. " --USSIF
Artifex ESGpresents | A Guide to Successful ESGInvesting

7. IdentifyingYour Preferences
Artifex ESGpresents | A Guide to Successful ESGInvesting

8. The first st ep is clarifying what it is you would like t o
accomplish by creat ing an impact port folio. A good
place t o st art is by using our preferences survey. This
t ool will help you ident ify t he t ypes of act ivit ies you
would like t o exclude or emphasize in your port folio.
Whet her t he implement at ion involves mut ual funds,
individual st ocks, individual bonds, or ETF's, t his
blueprint will guide your ult imat e select ions.
Pursuing an ESGInvestment program makes no sense
unless you first define what you want to emphasize and
what you would like to exclude from your portfolio.
Additionally,you should think about areas for compromise,
i.e.how much of a role an asset should play (if any) in
your portfolio if it fails only a portion of your screen.
Artifex ESGpresents | A Guide to Successful ESGInvesting
Once your preferences are confirmed, t he next
st ep is t o screen for possible invest ment s (we use
t wo dist inct t ools at t his point - depending on t he
asset - individual st ock or mut ual fund). This is
where t hings get int erest ing as good screening
t ools are rare and t end t o be expensive, even for
mut ual funds. So it will pay you t o hire a fee-only
advisor who specializes in t his st yle of invest ing
t o help you, even if it 's simply for a short -t erm
consult ing project .
Aft er t he init ial screening, t he result ing
candidat es should t hen be screened based on
invest ment fundament als, such as valuat ion
met rics, financial charact erist ics and fut ure
prospect s. An eye t oward maint aining adequat e
port folio diversificat ion is also imperat ive at t his
point . At Art ifex, we use four addit ional
analyt ical t ools t o assist us wit h t his phase .
Finally, t he result ing port folio should be reviewed
in t ot al, and, if accept able, implement ed and
monit ored on an ongoing basis.

9. Investment Analysis
Artifex ESG presents | A Guide to Successful ESGInvesting

10. In addition to the standard procedures for
investment analysis,such as reviewing financial
statements,press releases,corporate news,analyst
calls,etc.an ESGportfolio requires additional
layers to the analytic framework. As previously
mentioned,your personal values are step one.
Step two involves screening for securities or funds
that meet your criteria,and the third step is the
fundamental analysis on the investment to
determine whether it meets our standards.
Given the changing landscape and the growing
participation by asset managers,mutual funds and
brokerage firms,you cannot assume that investing
in a mutual fund that says it is SRI,ESG,Impact or
RI (Responsible Investment) will actually represent
your interests. As a matter of fact,I recently
evaluated 5 of the top exhange-traded funds by
asset size,and discovered that anywhere from 18%
to 30% of their holdings would not pass our ESG
screens. In a fund with 100 stocks,that means that
18-30 of them would not be suitable for the vast
majority of our ESGclients.
In my opinion,there are two reasons for this:
1. There's a mad rush for investment firms to
enter this space and get their share of client
dollars. So some of these companies are
slapping labels on their funds just to attract
your money and your attention.
2. Responsible investment research tools and
standards are all over the map. Some are
very good,and some are terrible. Not only
that,but there's a dearth of experience in
this sector of the profession. So what
passes as an ESGinvestment for one
manager may not even come close for
another - and they can each substantiate
their choice.
The bottom line is that if you have a significant
portfolio,you may want to build it piece-by-piece
with the help of an experienced advisor. Or
subscribe to some of the better research tools and
do-it-yourself,if you are so inclined.
ESGportfolio analysis is multi-layered
Artifex ESGpresents | A Guide to Successful ESGInvesting
Sample ESG report on a major exchange-traded
ESG fund showing a 30% failure rate. (Ideal Ratings)

11. Artifex ESGpresents | A Guide to Successful ESGInvesting
Here are two of our most commonly-used report
formats for ESG portfolio holdings. The report on the
right is a summary of detailed ESG criteria available on
one (Analog Devices) of over 11,000 domestic and
international companies. We can screen using your
preferences and then review each potential holding in
detail. Conversely, we can take an existing portfolio
and evaluate it's quality from an ESG perspective. If
you are viewing this brochure online, you can click on
each report and page through it to become familiar
with the format.
Sample ESG Asset Reports
LThe report on the left is an example of a mutual fund
review. In this case, we are looking at an ESG fund, the
Parnassus Endeavor Fund. Using analysis such as this
enables us to determine how a fund rates on a variety of
criteria, and whether or not it belongs in your portfolio.
If the prospective holding passes your initial screen, the
next step is to evaluate each according to fundamental
and fiduciary analysis, for which we employ multiple
proprietary and third-party resources. During this phase
of the review, we consider the tenure of the fund manager,
the expense ratio of the fund, performance, risk, and
multiple other factors.
Constructing a portfolio of individual equities involves
intense fundamental analysis after the initial ESG screen,
focusing on various valuation and financial metrics of a
company before presenting it for inclusion.

12. Sample Fundamental Investment
Analysis
Artifex ESGpresents | A Guide to Successful ESGInvesting
Once we've identified suitable holdings for a client's portfolio
from an ESG perspective, we move on to the fundamental
analysis. For this we use multiple sources, but provide you
with samples of two such reports here. The report on the left
is a Fiduciary Analytics report on the Parnassus Endeavor
mutual fund. In addition to standardized performance and
expense data, this tool give us detailed information on 11 key
metrics that evaluate the fund's adherence to sound fiduciary
principles. If we don't get a good score here, we often do not
proceed. Again, you should be able to click on each report
for a better view.
Including individual securities in a portfolio requires
additional diligence, and we often start with
detailed financial summaries provided by
GuruFocus, which is an outstanding resource for
equity evaluation. We consider such things as the
company's value on a Discounted Cash Flow (DCF)
basis, Return on Equity, Return on Invested Capital,
trends, forecasts, balance sheet, income statement
and statements of cash flow, among others. We will
then check our analysis versus other analytical
research that we subscribe to.
If you are unable t o view t hese report s, send me an email at doug.kinsey@art ifexfinancial.com and I'll send
t hem t o you.

13. ESGinvesting can not only result in a
portfolio aligned with your values,but
also in more consistent and improved
performance
Artifex ESGpresents | A Guide to Successful ESGInvesting
As ESG investing matures, it has become possible to
obtain returns that are equivalent, if not better than
comparable indexes. This is a result of better
information, more participants in this niche, and
more robust research and analytics. When you
consider that some of the key variables
that indicate a strong investment from an ESG
perspective can also be evidence of a quality
company, the result can be better overall
performance. Consider variables such as concern for
the environment, ethical treatment of employees, and
other indicators of concern for others and our planet.
Who wouldn't want to invest in companies like that?
As an example, we created a plain-vanilla SRI
portfolio in 2014 by filtering companies in our large
company core model and adding a few where we
needed diversification. We continue to manage
this portfolio and track it versus relevant
benchmarks. You can see from the chart at left
that the model (the blue line) has performed very
favorably vs the S&P 500 (yellow) and an ESG Index
(red) during this timeframe.
Additionally, the chart at right illustrates
favorable risk-return characteristics of the
model. While the standard deviation is higher by
1-1.5%, the return is also higher at 10.15%
versus 8.57% for the ESG benchmark and 9% for
the S&P 500.
The point is not that the model delivers
lights-out returns, but that a strategy such as this
can deliver competitive results.

14. Conclusion
Artifex ESG presents | A Guide to Successful ESGInvesting

15. We believe that the most successful investors work
as much from their heart as their head. How else
can you describe the amazing success of the few
great investors like Warren Buffett and Peter
Lynch? As much as the public tries to understand
the financial process that great investors follow,we
sometimes overlook the synergy between their
financial wisdom and what their heart (or gut) tells
them. Warren Buffett historically has not
purchased companies he didn't believe in,or that
didn't have quality products or that have poor
management. Same for Peter Lynch when he ran
the Magellan Fund for Fidelity Investments. He
preached buying companies you know and do
business with. Would you do business with a
company you didn't like? If not,why own a
company you don't admire in your portfolio? And
in the end,you just may end up influencing the
world we live in for future generations.
If you want tolearn more about thistopic,andhow
we can helpyou toexpressyour values,visit usat
artifexfinancial.com/artifex-esg
In conclusion,we applaud your interest
in this investment discipline,and
encourage you to pursue it as a viable
strategy and as a way to express your
values to the world.
Artifex ESGpresents | A Guide to Successful ESGInvesting

16. Ensogo Analytics - www.ensogoanalytics.com ESG
Research for mutual funds and ETF's.
Ideal Ratings - www.idealratings.com ESG,Shariah,
SRI screening and analytics for domestic and
international equities.
USSIF - The Forum for Sustainable and Responsible
Investment - www.ussif.org. Resources and
information for Responsible Investing.
Ceres - www.ceres.org - ESGresearch on
publicly-traded companies.
CookESGResearch - www.cookesg.com - information
on carbon and climate risk.
Guru Focus - www.gurufocus.com - non-ESGequity
research and screening tools.
A few of the more-established mutual fund families
specializing in ESGinvesting (not a recommendation,
but good educational sources)
PAX World Funds - www.paxworld.com
Parnassus Funds - www.parnassus.com
Calvert Funds - www.calvert.com
And of course,call us at 855.752.6644 or visit our
website at www.artifexfinancial.com/artifex-esg.
ESGResources
Artifex ESGpresents | A Guide to Successful ESGInvesting