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Neumeier Poma Investment Counsel, LLC

PRI reporting framework 2020

You are in Direct - Listed Equity Incorporation » Outputs and outcomes

Outputs and outcomes

LEI 12. How ESG incorporation has influenced portfolio composition

12.1. Indicate how your ESG incorporation strategies have influenced the composition of your portfolio(s) or investment universe.

Describe any reduction in your starting investment universe or other effects.

The small-cap value equity universe (market cap $250 million - $3 billion) begins with about 2,000 stocks.  We reduce that universe to approximately 200 by applying our value criteria analysis and by excluding certain industries in our stock selection process, including, but not limited to: manufacture of guns; predatory lending; animal testing; companies whose products or services cause serious environmental degradation; companies whose products and services have a heavy fossil fuel/CO2 "footprint".  

We excluded fossil fuels from our portfolio and instead used renewable energy investments like wind and solar in our portfolio.  We believe this gave us a positive advantage during the year. 

Specify the percentage reduction (+/- 5%)

5 %

Select which of these effects followed your ESG integration.

          ESG analysis is included in our criteria for analyzing a company's value and future performance.
        

12.2. Additional information.[Optional]


LEI 13. Examples of ESG issues that affected your investment view / performance

13.1. Provide examples of ESG factors that affected your investment view and/or performance during the reporting year.

ESG factor and explanation

We held shares in a retail company where a stockholder proposal requested they prepare a human rights risk assessment report and make it available on their website. We voted for this proposal but it did not pass, yet we used this as an opening to engage with management about their corporate social responsibility reporting. We encouraged the organization to report on climate risk using the Taskforce on climate related financial disclosures as a framework to follow for reporting how the organization is addressing climate risk.   

ESG incorporation strategy applied Integration

Impact on investment decision or performance

The company has begun to update their website with ESG disclosures and will add reporting on climate change in the next few quarters.  This helps us remain positive on our investment in the organization.

ESG factor and explanation

We signed PRI's letter to the SEC on shareholder rights and proxy voting advisors in December 2019 to show we oppose the changes for proxy voting that limits the ability to build support for ESG proposals.  

ESG incorporation strategy applied Screening|Integration

Impact on investment decision or performance

Reminds us to continue voting our proxys and remain engaged with organizations to continue to build awareness in the investment community about the importance of ESG issues as it relates to an organizations performance and long term growth.

ESG factor and explanation

Buy side analyst reported 3 of our portfolio holdings scored high on governance factors.  The analyst relied on SASB Materiality Map for data.

ESG incorporation strategy applied Integration

Impact on investment decision or performance

This impacted our investment decisions to continue to hold and/or add to our positions.

ESG factor and explanation

We owned shares in a company and a long term investor who was an investment advisor felt the conpany was underperforming their peers and the broader market.  The shareholder was proposing that investors join them and elect 3 new members to the company 8 person board at the annual shareholder meeting.  This investor withdrew its board nominees after they held constructive discussions with the organization about increasing their disclosures and commitments to shareholders.

ESG incorporation strategy applied Integration

Impact on investment decision or performance

We vote our proxys and we appreciated that an investor, like us but larger, could get the attention of the organization to increase their disclosures.  This engagement by an investor gave us a greater conviction with our investment.

13.2. Additional information.[Optional]


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