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.