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Parnassus Investments

PRI reporting framework 2017

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You are in Direct - Listed Equity Incorporation » ESG incorporation in actively managed listed equities » Implementation processes » (A) Implementation: Screening

(A) Implementation: Screening

LEI 06. Types of screening applied

06.1. Indicate and describe the type of screening you apply to your internally managed active listed equities.

Type of screening

Screened by

Description

Parnassus Investments applies exclusionary screens to the entire investment universe. The spirit of these exclusionary screens is to avoid investment in companies with negative impacts that outweigh any potential benefits from their business activities. Parnassus Investments does not invest in companies that derive significant revenue from the following activities:

  • Manufacture of alcohol or tobacco products
  • Direct involvement with gambling
  • Manufacture of weapons
  • Generation of electricity from nuclear power
  • Business involvement with Sudan

Additionally, the Parnassus Fund and Parnassus Endeavor Fund avoid investing in companies engaged in the extraction, exploration, production, manufacturing or refining of fossil fuels; each Fund may invest in companies that use fossil fuel-based energy to power their operations or for other purposes. 

Screened by

Description

Parnassus Investments seeks to invest in companies with positive performance on ESG criteria. The ESG factors the investment team evaluates include:

  • Corporate governance and business ethics
  • Employee benefits and corporate culture
  • Stakeholder relations
  • Product, customers and supply chain
  • Environmental impact

06.2. Describe how the screening criteria are established, how often the criteria are reviewed and how you notify clients and/or beneficiaries when changes are made.

Parnassus Investments has extensive experience applying environmental, social and governance (ESG) screens to investment strategies. Parnassus Investments has applied ESG screens to the investment universe since the founding of the firm in 1984. 

The spirit of the exclusionary screens is to avoid investment in companies with negative impacts that outweigh any potential benefits from their business activities. Parnassus Investments believes these lines of business do more social harm than good, and excludes companies with significant involvement for that reason. The majority of these screens have been applied to the firm's investment strategies since its inception. The Sudan screen was added in 2006 when the international community recognized the Darfur region conflict as genocide.

ESG performance for portfolio companies are re-evaluated on an annual basis. However, the investment team conducts a quarterly review of all investments, and during this review the ESG research team reassesses any material ESG factors that may affect the price of a stock. 

Changes to the criteria would require a prospectus update. If Parnassus Investments were to make a change at the time of a regular prospectus update, clients would be notified when they read the new prospectus (each client receives the new prospectus either electronically or via mail). If a change is made at a time other than that of the regular update, clients would be sent a supplement to the prospectus.   


LEI 07. Processes to ensure screening is based on robust analysis

07.1. Indicate which processes your organisation uses to ensure screening is based on robust analysis.

07.2. Additional information. [Optional]


LEI 08. Processes to ensure fund criteria are not breached (Private)


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