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Boston Common Asset Management

PRI reporting framework 2019

You are in Strategy and Governance » Objectives and strategies

Objectives and strategies

SG 05. RI goals and objectives

05.1. Indicate if and how frequently your organisation sets and reviews objectives for its responsible investment activities.

05.2. Additional information. [Optional]

While we formally set annual engagement objectives under our core engagement pillars, we sit down at least quarterly to assess progress, challenges and next steps, 

 


SG 06. Main goals/objectives this year

06.1. List the main responsible investment objectives that your organisation set for the reporting year.

Responsible investment processes

Key performance indicator

          Development of Quarterly ESG briefings for all staff
        

Progress achieved

We provide clients and consultants with quarterly briefings on our ESG research and engagement activities.  We host regular monthly updates for our Client Relationship Managers and other client-facing staff on existing engagement work and emerging issues so they can brief and respond to client questions more effectively.

In addition to an annual Impact Report, we write quarterly impact reports, marking milestones and identifying remaining tasks.  We also publish periodic  reports on our work including case studies on engagement focus areas, such as "Eco-efficiency", or Country reports such as on our work in Japan.

Key performance indicator

          Substantive changes identified in policies, processes or products in our portfolio companies, sector peers, or with policy makers/regulators.
        

Progress achieved

Since our founding, we have worked to advance clients’ objectives through ESG investment and shareowner engagement. First, we build diversified, high-quality portfolios that combine financial opportunity, solutions innovation, and ESG strength. We believe this is a necessary but not sufficient starting point for having Impact in Public Equities. Importantly, we take the next critical step towards creating Impact by using our shareholder voice in the form of direct communications, shareholder proposals and proxy voting to influence corporate behavior on environmental, social and governance (ESG) issues. The ESG issues we highlight are selected for their strategic importance to companies, based on our assessment of sector and business dynamics. We expect our work will improve the target company’s fundamentals, and will in due course, be reflected in the value of its shares.

We have meaningfully improved corporate practices in the U.S. and abroad through: • Sustained dialogue with senior management; • Supporting the widespread adoption of industry-specific best practices; • Creation of standards and metrics to measure sustainability; and • Effective use of proxy voting.

We issued two reports highlighting our Engagement Reach and Impacts in 2017 and 2018 and in 2018 reported on alignment with the Sustainable Development Goals. 

Key performance indicator

          Less volatile portfolios
        

Progress achieved


For Boston Common, a consideration of environmental, social and governance factors is a necessary part of our analysis of any potential investment opportunity - period. Analysis of ESG factors helps to complete our work on the financial side and provides a '360 degree' view of the long-term prospects of a company.  We aren't applying an overlay, or buying in a ranking or scoring system creating by an external firm.  We use a variety of sources to create our own proprietary assessment that seeks companies which are attractive financially and from an ESG perspective.
 
We use ESG analysis to help us navigate the short-term by giving us insights into the management quality of the firms that we invest in. We believe that a focus on sustainability will ultimately be tied to financial performance.  ESG analysis presents both the opportunity to mitigate risks (and act responsibly) but also to identify opportunities to address different societal needs.
 
This has enabled our portfolios to achieve better returns over the long term, with less volatility.  Our quality ESG portfolios typically achieve this by losing less in down markets.
 

          Expanding our ESG Integration and Engagement Reach in Emerging Markets
        

Key performance indicator

          Increasing the number of companies engaged in our Emerging Markets strategy
        

Progress achieved

We engaged a third of our companies in our EM Strategy - almost 75% were substantive in nature (custom letter-writing or dialogue).

2018 Global Access to Nutrition Index - We urged Grupo Bimbo to demonstrate better performance on nutrition including setting global portfolio goals.

Eco-Efficiency - Companies analyzed or engaged under this initiative include ENN, Beijing Enterprises Water, and Taiwan Semiconductor.  We engaged senior representatives of Beijing Enterprises Water to provide guidance on their sustainability disclosure and urged them to take the next step and respond to the CDP Water.   

Human Rights and Technology  - We met with the management of SK Telecom to discuss material sustainability issues including encouraging them to take more proactive steps to address digital human rights liked to the rights of user and data security.  We initiated similar inquires with Samsung Electronics and Tencent Holdings, which were evaluated by the Ranking Digital Rights 2018 Corporate Accountability Index focused on freedom of expression and privacy. 

Tax Transparency - We led the engagement with Dr. Reddy’s in India, which provided a comprehensive response to how the company is managing tax risks, the oversight role of the audit committee, and the level of county by country reporting.

 

 

Financial performance of investments

Key performance indicator

          Companies use our Eco Efficiency framework to retool policies, practices, products; Save money & reduce energy, water use & eliminate wastes;  improved reporting by companies,
        

Progress achieved

Selected portfolio companies (and others) endorse the EP 100 (Energy Productivity). Energy productivity refers to how much value that can be created from every unit of energy. The EP100 is a global, collaborative initiative of influential businesses that pledge to double their energy productivity.  For example, in 2016 we asked Air Liquide to undertake a water use and risk assessment for its entire global operations.   They did this analysis for approximately 5% of its locations where water was scarce in 2016.  We are pleased to report in 2018 Air Liquide committed to perform the water risk and use assessment globally. More details can be found in our new Eco-Efficiency report published in January 2019.

 

other description (1)

          Accelerate global bank (including our portfolio holdings) adoption of policies and sector restrictions to carbon intensive companies/sectors and increase financing to low carbon transition.
        

Key performance indicator

          Specific policy/procedure changes related to above goal with our portfolio companies/continued issue leadership.
        

Progress achieved

We assessed global financial institutions' climate strategy through a survey of 60 banks and substantive dialogue with international institutions across 14 performance metrics.  More detail can be found in our Banking on a Low Carbon Future February 2018 report cited elsewhere in this report.

ESG characteristics of investments

Key performance indicator

          Monitor the sustainability characteristics of our portfolios using our own internally developed benchmarks and external assessments such as a carbon footprint.
        

Progress achieved

We have used both external commercially available benchmarks and internally generated research to track and report back on the positive impacts we have achieved through the portfolio and have done so for many years.

We have used company research ratings from external groups to compare the overall sustainability characteristics of the portfolio to an underlying benchmark.  We have also used external vendors to track and report to our clients on the portfolio exposure to carbon via our carbon footprint report, which we have produced annually since becoming a signatory to the Montreal Carbon Pledge in 2015.  As a result of this analysis, we can confirm that all of our strategies can be accurately described as ‘low-carbon’ strategies.

Internally, we have identified companies within our portfolios which are providing solutions to sustainability challenges or are assisting in the transition to a more sustainable planet.

Our ‘solutions’ companies are those that derive at least half of their revenue from sustainability innovations. 50% of their revenues derive from one of eight sustainability themes:

Recycling/efficiency
Micro-finance
Access to Health
Renewable Energy
Education & Communication Empowerment
Micro-finance
Community Investing
Organic/non-toxic products
Water quality & Waste Management

 

Other description (1)

          Measuring the Carbon Footprint of the portfolio
        

Key performance indicator

          Carbon Emissions - normalized carbon footprint per million dollars 
Carbon Intensity - How efficient is my portfolio
Weighted average intensity: portfolio exposure to carbon-intensive industries
        

Progress achieved

In 2015, we took the first steps to measure, disclose, and set a baseline for the carbon footprint of our portfolios as an early signatory and ambassador for the Montréal Carbon Pledge, which is overseen by  Principles for Responsible Investment. In our 2016 analysis, we add metrics on carbon intensity and weighted average intensity besides total greenhouse gas (GHG) emissions. The results show that Boston Common’s major strategies produce fewer emissions and are less carbon-intensive than their respective benchmarks, primarily due to stock selection rather than allocation. For example, our Sustainable Climate strategy produces 70% fewer emissions and is 62% less carbon-intensive (weighted average) than its benchmark.

In 2017, our International Sustainable Climate Equity and All Country International Equity Strategies generate, respectively, 71% and 59% fewer emissions and are 52% and 34% less carbon intensive than the MSCI ACWIxUS Benchmark.

Our International Equity Strategy generates 47% fewer emissions and is 21% less carbon intensive than the MSCI EAFE benchmark.

Our US Sustainable Climate Equity and US Large-Cap Core Equity strategies generate, respectively, 73% and 70% fewer emissions and are 67% and 61% less carbon intensive than the S&P 500® benchmark.

Other description (2)

          Expanded report on the Sustainable Development Goals (SDGs) in our ESG Integration and Engagement Reporting.
        

Key performance indicator

          Added SDG alignment in our quarterly client report on engagement and developed a new slide on SDG alignment on related to portfolio exposure.
        

Progress achieved

In 2018, we developed a new reporting template to demonstrate alignment of our investment strategies with the SDGs.  We have done this for every strategy and have committed to update this information at least annually.  This information is shared with clients through our presentation materials.

We also added SDG alignment of our engagement activities in our quarterly client memos which are publicly disclosed on our website. Finally we added specific SDG metrics on engagement priorities and impact in our 2018 Impact Report.

Other activities

Key performance indicator

          Enhancing our own reporting on impact in the public equities space
        

Progress achieved

Boston Common published its first comprehensive impact report in 2017  "Achieving Impact in Public Equities," providing an overview of how we define impact, the tools and strategies we use, and lastly reporting out on engagement outcomes.  The report also contained a number of best practice case studies related to engagement.  We plan to report publicly on engagement impacts annually going forward. 

Our second annual Impact Report, Achieving Impact in Global Equities, -  highlighting our successful work to influence corporate behavior was published in the fall of 2018 and is available on our website. 

  • We mapped our Impacts to the corresponding UN Sustainable Development Goals to illustrate how we are investing to (1)end poverty; (2)protect the planet and (3) ensure prosperity for all
  • We achieved 60 concrete impacts in products/processes or policy commitments
  • We engaged 250 companies, half of our engagements were on climate related issues and half of our engagements were led or co-lead by BCAM

 

Key performance indicator

          Incorporation of case study examples into client materials and other public materials
        

Progress achieved

As part of our engagement impact reporting to clients and others, we have included a number of case studies in our materials in 2018 specifically in our quarterly social memos, client presentations, and in our Achieving Impact in Public Equities report from (October 2018).

We included case studies in our Banking on a Low Carbon Future and Eco-Efficiency reports.

Our case studies on engaging VF Corporation on water risks and our bank engagement on climate lobbying practices were included as case studies in 2018 PRI publications.

06.2. Additional information.


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